Keeping an Estate Out of Surcharge Actions

Many people feel a sense of pride and honor when nominated to serve as an estate executor. For some, the process of administering the estate brings a sense of closure after a painful loss.


But serving as an estate executor is a job which should not be taken lightly. The personal representative has potential personal legal and financial liability for mistakes during the administration process. Executors have a duty to ensure the estate is administered according to the law and that the estate assets are distributed properly. Proper distribution includes payment of taxes, government claims for medical assistance, creditors and beneficiaries in the right amounts.


Any beneficiary of the Will, creditor of the deceased, or governmental entity with a claim may seek to enforce their right to be paid. These kinds of petitions are known as surcharge actions. A common type of surcharge action called a Petition for Formal Accounting is where the executor is called to account for the handling of the estate before an Orphans Court Judge.


What Situations May Result in a Surcharge Action?


Two of the most common persons who bring surcharge actions are beneficiaries and creditors of the estate. Beneficiaries may bring a claim when they believe the executor was negligent resulting in less distribution from the estate than what was anticipated. The alleged shortfall can occur due to improper investment of estate funds, loss of estate assets, or excessive executor fees. Maintaining the value of the estate is critical. All real estate should be properly maintained, secured and protected by casualty and liability insurance. The executor should also invest liquid assets conservatively. A loss in the market value of estate investment funds can result in a surcharge.


Creditors claims are most often brought when the estate is insolvent and there are insufficient funds to pay all creditors. Creditors with higher priority claims may petition the court if a lower priority creditor was paid without payment of the higher priority claim. These types of mistakes by executors can be catastrophic. Executors have a duty to know the order of priority of creditor claims and pay those claims in the proper order of priority.


What are the consequences to the executor?


Dealing with a surcharge action means essentially having a legal case filed against the executor and going before a judge to resolve the dispute. If the beneficiary or creditor petition is successful, the executor could be ordered to pay for the loss.


As a probate law firm for estate executors, we help settle estates efficiently and reduce stress. If you know someone faced with a probate process or roadblocks to an estate property sale, please have them contact us for a free evaluation at:


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