When a person dies, her assets and liabilities pass into an estate. The estate is then responsible for dealing with the disposal of both the assets and liabilities. In most cases, an estate will have an executor who works to oversee this process. Though an executor has the power to make the needed decisions to settle an estate, these decisions are not necessarily final.
An executor of an estate is a person designated to protect, manage and distribute the assets of a person's estate. This includes paying off debts, overseeing investments, filing estate tax returns and other duties. An executor will generally have to make decisions regarding a person's estate based upon his own best judgment. For example, the executor may have to determine how to deal with money invested in the stock market until the final settlement of the estate, a process which may take up to a year to complete. This is where many disputes may occur as an heir may not agree with the executor on what is the best decision.
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Though executors can make decisions for the disposal of assets and liabilities without permission of the estate's heirs, most executors will listen to concerns that an heir has about a potential decision. An heir with a concern should consult with the other heirs as well as the executor to work out a decision that all parties can agree is best. If all of the heirs, or a majority of the heirs, agree to a specific solution, the executor will likely agree with the request.
Some estates will pass through probate court, which will work to solve disputes between an executor and the estate's heirs. However, even if the estate does not require probate, heirs can use the legal system to settle a dispute. If an heir is unsatisfied with the decision of an executor, the heir may file a lawsuit to stop the distribution of assets. In this case, a judge will determine whether or not the actions of the executor were appropriate. An heir may also file a lawsuit against an executor for financial damages if the executor makes a poor decision managing the finances of the estate. However, litigation will result in the heir and others paying significant expenses and an heir should avoid using the legal system to settle disputes whenever possible.
There are a number of estate planning steps that a person can take to avoid disputes between an executor and heirs. One step is to hire a professional to serve as executor. An attorney, financial trust officer or other person with knowledge of finance and the legal system can be a wise choice. A person should make as thorough of a will as possible specifying who should receive what and avoid making general statements in the will regarding asset distributions. Passing assets to heirs while alive is another possible solution to avoid estate problems.