Dangers of Bookkeeper as Executor
Being named the executor of an individual’s will comes with certain responsibilities and fiduciary duties. Executors generally take the deceased’s assets and distribute them to beneficiaries as set forth in the deceased’s will. At times seniors will designate a professional such as their accountant or bookkeeper as their executor. This is not always the best decision.
Demand for an Accounting
Beneficiaries can petition the Probate Court to obtain an “accounting” of the deceased’s estate in cases where there is suspicion of a mishandling of the assets. To make a proper accounting, the executor must create an inventory of all the estate assets including real estate, bank accounts, stocks and bonds, retirement investments, jewelry, automobiles, fine art, or other personal property. For this reason, some individuals designate their accountant or bookkeeper as their executor. Professionals named as executors should be aware of the dangers of this arrangement.
Professional Insurance Issues
One of the major concerns of naming a bookkeeper as an executor is whether the executor’s professional indemnity insurance will cover all claims made by beneficiaries if an asset distribution conflict arises. Most professional accountants carry malpractice insurance. It is important to determine whether that insurance will cover the accountant’s actions if they are named as the executor of a client’s will.
Many courts will hold professionals named as executors under a higher standard of care than other individuals. For this reason, is important for accountants to notify their professional malpractice insurance carrier immediately should they find themselves in this position.
Professional Conflicts of Interest
Another danger of selecting one’s accountant as an executor is the professional conflict of interest. Executors may not benefit financially from their role as a fiduciary of the deceased’s estate. Accountants generally charge for theirs in preparing an accounting of the assets, providing tax advice, or the handling of investment portfolios. This creates a potential conflict of interest for an accountant serving as executor. They may not retain their own accounting firm to supply accounting services. The bookkeeper who is also an executor cannot charge for their professional services. Given the large amount of time required in many estate distribution processes, a bookkeeper serving as an executor can find it difficult to recover properly for their services.
Seeking Legal Assistance
When an executor is under pressure from a beneficiary or a judicial order to present an accounting of the deceased’s estate the best course of action is to obtain legal assistance to ensure compliance with state and federal laws. When an accountant or bookkeeper is named as executor without prior notice, they can legally renounce the appointment. To avoid naming a bookkeeper or accountant as the sole executor, seniors should discuss all their legal concerns with a qualified Brooklyn elder law litigation lawyer who can guide them through complicated estate planning issues.
Brooklyn Elder Law Litigation Attorneys at Korsinsky & Klein, LLP Protect the Interests of Seniors
If you need assistance with appointing an estate executor, the experienced Brooklyn elder law lawyers at Korsinsky & Klein, LLP can assist you with all your estate planning needs. Our dedicated elder law litigation attorneys handle a wide range of elder law issues including those relating to executorships, guardianships, and durable powers of attorney. Our offices are conveniently located in Brooklyn, New York City and Lakewood, New Jersey to serve senior citizens and their families throughout Manhattan, Long Island, and Westchester, New York. To schedule an initial consultation with an experienced Brooklyn elder law litigation lawyer today, call us at 212-495-8133 or contact us online.