05-06-2010, 10:43 PM #1
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Can the executor of an unsettled estate 'borrow' money from the estate?
Jurisdiction / State: Nebraska
My father died several years ago with no will, and my brother was appointed executor of the estate. In retrospect, that might not have been a good decision on my or my sister's part, since things are still not completely finalized yet. My brother has been dragging his feet on getting things finalized (needed paperwork forwarded to the lawyer), and I just found out why.
He just told me that he borrowed what he considered to be his portion of the estate from the estate to prevent a foreclosure on his house...a fairly substantial amount. He said he'd hoped to get it replaced but has been unable to do so, and that he's putting together a spreadsheet to show us and the lawyer what the borrowed money was used for.
Pardon my legal ignorance, but wouldn't this be considered embezzlement? Once the lawyer receives paperwork that shows money missing from the estate, wouldn't he be obligated to alert (state?) authorities about it? And who would get to decide whether charges should be filed against my brother? Is it up to my sister and I or is this decision out of our hands?
And what would happen next? If charges are filed, would my sister or I then be asked to take over as executor? And if charges are filed, does this mean that the estate still cannot be settled until the money my brother took has been paid back? What if he is unable to do so? What happens to the balance of the estate?
05-06-2010, 11:31 PM #2
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What is an executor supposed to do?
The following excerpt briefly describes the duties of an executor.
One of those duties is to judiciously administer and PROTECT the assets of the estate.
Your brother has STOLEN, not borrowed the assets of the decedent, your beloved father.
That is a breech of his fiduciary duty.
If I were you, I'd speak to the local District Attorney or Prosecutor tomorrow.
How he spent it isn't the issue.
The funds have been misappropriated by your thieving brother.
It may be theft, embezzlement, misappropriation of funds; whatever it is, its a felony!
You'll never get that money back.
The estate may be deep in debt with unpaid back taxes.
This crook must be stopped.
He needs to be prosecuted.
Tell the prosecutor and let the authorities decide.
Don't feel sorry for him.
He felt nothing for either of you or his father.
No telling how much he has stolen, without an audit.
Executors who fail to perform the duties of the position or who have a conflict of interest with the estate may be petitioned for removal from the position. This request must come from someone who has a stake in the estate and that person must present evidence that removal is necessary. The executor does get a chance to show why they shouldn't be removed if the courts accept the possiblity that the person may not work out.
It's both an honor and a burden to serve as someone's executor. An executor is entrusted with responsibility for winding up someone's earthly affairs -- a big or little task, depending on the situation. Essentially, an executor is charged with protecting a deceased person's property until all debts and taxes have been paid, and seeing that what's left is transferred to the people who are entitled to it.
The law does not require an executor (also called a personal representative) to be a legal or financial expert, but it does require the highest degree of honesty, impartiality, and diligence. This is called a "fiduciary duty" -- the duty to act with scrupulous good faith and honesty on behalf of someone else.
Executors have a number of duties, depending on the complexity of the deceased person's financial and family circumstances. Typically, an executor must:
* Find the deceased person's assets and manage them until they are distributed to inheritors. This may involve deciding whether to sell real estate or securities owned by the deceased person.
* Decide whether or not probate court proceedings are needed. Most jointly owned assets pass to the surviving owner, without probate. And if the deceased person's property is worth less than a certain amount (how much depends on state law), it may be able to go through a streamlined probate process. (To learn more about probate, see Probate FAQ.)
* Figure out who inherits property. If the deceased person left a will, the executor will read it to determine who gets what. If there's no will, the person in charge (sometimes called the administrator) will have to look at state law (called "intestate succession" statutes) to find out who the deceased person's heirs are.
* File the will (if any) in the local probate court. Generally, this step is required by law, even if no probate proceeding will be necessary.
* Handle day-to-day details. This may include terminating leases and credit cards, and notifying banks and government agencies -- such as the Social Security Administration, the post office, Medicare, and the Department of Veterans Affairs -- of the death.
* Set up an estate bank account. This account will hold money that is owed to the deceased person -- for example, paychecks or stock dividends.
* Use estate funds to pay continuing expenses. The executor may need to pay, for example, utility bills, mortgage payments, and homeowner's insurance premiums.
* Pay debts. If there is a probate proceeding, the executor must officially notify creditors of it, following the procedure set out by state law.
* Pay taxes. A final income tax return must be filed, covering the period from the beginning of the tax year to the date of death. State and federal estate tax returns are required only for large estates.
* Supervise the distribution of the deceased person's property. The property will go to the people or organizations named in the will or those entitled to inherit under state law.
Last edited by army judge; 05-06-2010 at 11:41 PM.
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