Every estate that is established must have an executor. If you fail to appoint an executor, the probate courts will name someone to serve in that role as the administrator. It's also common for an appointed executor to hire an estate administration attorney to provide advice. There are a lot of things you should understand about the administrator's job, so here is a look at four of the biggest concerns.
An administrator has a fiduciary duty to all individuals and groups that have interests in the estate. This means they must deal with all issues involving the estate by keeping the best financial interests of those parties in mind. If there are questions about the disposition of assets during the interim period, for example, the administrator must protect as much of the value of the property and any cash in accounts as possible. This is meant to ensure that as much of the value of the estate as possible will be transferred to the beneficiaries.
Notably, fiduciaries can be held liable for fraud, mismanagement, and malfeasance. In most scenarios, a loss of value to the estate for these reasons will result in an administrator or executor having to pay the difference in value back to the estate. In extreme scenarios, though, an administrator may be subject to criminal penalties for egregious or reckless conduct.
It's important to establish what the value of each of the assets might be. When there are questions about valuations, administrators are empowered to use money from the estate to hire appraisers. A record of these valuations will be included in reports to the probate court to allow any parties who wish to dispute them to do so.
The estate's administration will also be responsible for paying any outstanding taxes the deceased still owed. Local, state, and federal taxes will be paid. If there are any necessary adjustments to previous returns, those will also have to be handled. The estate's proceeds can't be distributed to beneficiaries until the taxes are settled.
Identifying and locating beneficiaries is one of the biggest challenges an administrator faces. It's not uncommon for beneficiaries to move during the span from when the estate was last modified to the passing of the decedent. Beneficiaries also sometimes die before proceeds are doled out. The administrator has a responsibility to ensure that all rightful beneficiaries receive the appropriate proceeds of the estate.