What Does an Executor Have to Disclose to Beneficiaries in North Carolina?

Being named an executor of an estate is a huge legal responsibility. Understandably, you may be feeling a range of emotions, from confusion to grief, especially as it comes after you have just lost a loved one. You might have some questions, such as what an executor has to disclose to beneficiaries in North Carolina. With the help of a Waxhaw estate planning attorney, you can get the answers you need.

The Executor’s Fiduciary Duty

Per Chapter 28A of the North Carolina General Statutes, an executor is considered a fiduciary, meaning they are legally obligated to act with honesty, loyalty, and transparency when they are managing an estate. Fiduciary duty also requires the executor to have the responsibility of keeping beneficiaries reasonably informed during the entire estate administration process.

The required disclosures that the executor is responsible for include:

• Notice of probate. Within 60 days of being appointed, the executor must notify all beneficiaries named in the will that the estate has been opened. This is done through Form AOC-E-405, the Notice to Beneficiary.
• Inventory of assets. Executors must file a 90-day inventory of assets within three months of appointment and notify creditors within 75 days to the Clerk of Superior Court. The inventory will include all real estate, personal property, bank accounts, and other financial assets. The inventory is filed with the court, and beneficiaries are entitled to request and review it.
• Accounting of estate transactions. Executors must maintain detailed records of all financial transactions, from payments to creditors to tax filings. In formal probate proceedings, a final accounting must be submitted to the court and shared with the beneficiaries before the estate can be formally closed.
• Distributions. Beneficiaries must be informed of what they are entitled to receive under the will and when distributions are to be expected. Executors must also ensure that all debts and taxes are paid before making distributions, while communicating timelines and delays with beneficiaries.
• Ongoing communication and transparency. Beyond all the formal disclosures, executors must maintain open and transparent communication with beneficiaries throughout the entire process. This means responding to reasonable inquiries on time, providing updates, or informing beneficiaries of any significant developments or challenges.
• Final settlement and release. Before the estate can be officially closed, the executor might require beneficiaries to sign a Receipt and Release Form. This confirms that the beneficiary has received their full distribution and releases the executor from any liability.

Of course, all of this might feel like a ton of responsibility, especially for a person who is currently grieving the loss of a loved one. Executors will be entitled to a commission of up to 5% of the estate’s assets and receipts after approval by the Clerk of Superior Court. This can ease a little of the burden on the executor, but keep in mind, this income is taxable.

What Executors Are Not Required to Disclose

Executors are not required to share every detail of their day-to-day activities or to provide beneficiaries with access to the decedent’s private correspondence or unrelated financial records. But they must respond to reasonable requests for information and can’t withhold any facts that might affect a beneficiary’s interest in the estate.

Good Practices for Executors

The most effective way to avoid disputes and ensure the smoothest probate process possible, an executor should:

• Have a complete understanding of your fiduciary duties
• Keep detailed records of all estate transactions
• Communicate regularly and clearly with all beneficiaries
• Respond promptly to reasonable requests for information
• Consult with an experienced estate attorney

To avoid complications as an executor, hire an estate planning lawyer to ensure that all responsibilities are met with fidelity and to provide you with the right protections.

What Are the Consequences of Failing to Disclose?

If an executor is failing to meet their obligations, the beneficiaries can petition the court for an accounting or request the executor’s removal and replacement if the situation is severe. North Carolina courts take fiduciary breaches very seriously. An executor who is found to have breached their duties could be held personally liable for any losses incurred by the estate due to their negligence or misconduct.

FAQs

Q: What Are the Obligations of the Executor to the Beneficiaries?

A: An executor has a fiduciary duty to beneficiaries, meaning they must act in their interests. Their obligations will include providing notice of appointment, a copy of the will, and updates on probate proceedings. They are also required to create an inventory of assets, accounts, and information on debts. Lastly, the executor must communicate the final distribution plan and distribute all the assets according to the will or North Carolina law.

Q: Do Beneficiaries Have the Right to See the Will?

A: Beneficiaries do have the right to see the will. The will is public record once it is submitted for probate in the Clerk of Superior Court’s office. Beneficiaries are entitled to receive a copy of the will from the executor, or they may request a copy from the county Clerk of Court where the will was filed.

Q: Can an Executor Withhold Financial Details From Certain Beneficiaries?

A: An executor must keep all beneficiaries reasonably informed about the estate’s administration. An executor can withhold funds for the right reasons, like for unpaid debts or ongoing disputes, but they typically can’t keep financial information without justification from beneficiaries. The beneficiaries have the right to request the information if they are not receiving it, or they can petition the court for it.

Q: What Happens if the Executor Fails to Disclose Required Information?

A: If an executor fails to disclose any of the required information, this breaches their fiduciary duty. The beneficiaries then can petition the probate court to demand the information, or in more severe cases, ask for the removal and replacement of the executor. The executor may even be held personally liable for any financial losses to the estate caused by their misconduct.

Hire An Estate Planning Lawyer

The most effective way to avoid disputes and get through the probate process as smoothly as possible is through transparency. If you’re serving as an executor, you should consult with an estate attorney to make sure you are meeting all your obligations. If you’re a beneficiary with concerns, don’t hesitate to reach out and ask questions or seek legal advice. Contact the Law Offices of Huffman & Kendrick for more information.