Can an estate’s executor be held personally liable for losses?

When someone dies, the person tapped to manage their estate assumes a lot of responsibility. Among other things, they have to secure assets, pay valid debts, handle the taxes and more before eventually distributing what remains to the beneficiaries.

What happens, however, if they mismanage the estate? If they cause the estate losses through bad decisions or neglect of their duties, can the estate’s beneficiaries hold them personally responsible?

In Florida, executors are legally known as personal representatives. They have a fiduciary duty to act in the best interests of the estate and its beneficiaries. If they breach that duty and cause financial harm, they most certainly can be held personally liable under certain circumstances.

What mistakes can lead to personal liability?

Not every mistake or poor decision amounts to a breach of fiduciary duty and improper estate administration. Examples of conduct that could lead to liability include:

• Giving beneficiaries their inheritances before addressing valid creditor claims, taxes and other estate obligations, which can leave the estate unable to pay its debts and in the red. Also, failing to properly notify creditors can also lead to estate losses.
• Failing to secure real estate, allowing it to deteriorate due to vandalism and neglect, letting insurance policies lapse or selling it under market value for no valid reason, all of which can diminish an estate’s overall value.
• Taking estate money for their personal expenses, making unauthorized payments or mixing estate funds with personal money, all of which can constitute a breach of fiduciary duty.
• Using their position to benefit themselves (self-dealing) or improperly favoring one beneficiary over another can also be a violation of their fiduciary obligations.

Beneficiaries who suspect an estate is being mismanaged have several options. In general, they may need to ask for an accounting and/or raise their concerns with the probate court. Depending on the circumstances, they may have to petition the court to remove and replace the personal representative and pursue a claim for their financial losses.