By Bernard A. Krooks, Certified Elder Law Attorney
A friend or family member comes to you and asks you if you would be willing to serve as executor of his estate. You have never done this before but you value the trust your family member has placed in you and you agree to serve as his executor upon his death. Have you ever thought about whether serving as executor could cause you to be personally responsible for any actions you take or fail to take? While the chances of you being held personally responsible for actions you take as a fiduciary are not great, they are not non-existent. A recent case highlights how things can go wrong if proper steps are not taken.
When Steven Jones (not his real name) died, he owned a home and some other liquid assets in a brokerage account. Steven had a last will and testament in which he nominated his good friend Charles to be executor. As nominated executor, Charles initiated a probate proceeding and was appointed executor of Steven’s estate. As executor, Charles was in charge of marshalling the estate assets, paying the debts of the estate, distributing estate assets to beneficiaries and settling the estate.
Promptly upon appointment, Charles listed Steven’s home for sale. The house was in a nice neighborhood and Charles received multiple offers for the purchase of the house. After a brief negotiation, a contract of sale was entered into between Charles and the prospective buyer, listing Charles as the seller. He did not indicate on the contract that he was acting in his capacity as executor of Steven’s estate.
As is common in these situations, the buyer’s lawyer sent a letter to the seller’s lawyer listing certain deficiencies in the house as identified by the engineer based upon the home inspection. At closing, the buyer’s lawyer maintained that Charles had failed to fix the problems listed in the engineer’s report; however, the closing did occur as scheduled. Charles signed the paperwork needed to transfer the house to the buyer. This time, Charles signed as executor of Steven’s estate and he even included the probate court file number.
When Charles was finished administering Steven’s estate, he filed the appropriate documents with the probate court and the estate was ultimately closed. Several months later, the home buyer filed a petition to reopen the probate proceeding. He argued that he still had unresolved claims against the estate. Those claims arose, he argued, from the failure to resolve his assertion that various items in the house were transferred to him in non-working order. The court denied his request to reopen the estate, holding that the probate proceeding was done, and the buyer’s claims (if any) were too late to be addressed.
Undeterred, the buyer also sued Charles individually, claiming that he acted in his individual capacity when he signed the contract without disclosing his status as executor. Charles moved unsuccessfully to have the case against him dismissed before trial. Charles pointed out that the paperwork transferring the house to the buyer was signed by Charles as executor of Steven’s estate. Although the case was ultimately decided in his favor, he personally incurred significant legal expenses. If Charles had signed the sales contract as executor, the lawsuit against him personally would likely also have been dismissed or, perhaps, have never been started in the first place. By way of example, he could have signed his own name, followed by “as executor of the estate of Steven, deceased.”
To add insult to injury, Charles had agreed to serve as executor of his good friend Steven’s estate without compensation. After all, he surmised “what could go wrong and how difficult a job can this be”? Well, we now know how that turned out for Charles. In hindsight, I am sure Charles would have done things differently. Serving as executor, or any fiduciary for that matter, is serious business.
Bernard A. Krooks, Esq., is a founding partner of Littman Krooks LLP and has been honored as one of the “Best Lawyers” in America for each of the last seven years. 914-684-2100, www.elderlawnewyork.com.