Common Mistakes by Executors and Successor Trustees

Stop, document, and fix it before anyone else finds it. Most early mistakes are correctable at little cost if they are corrected promptly: money moved into a personal account can be moved back with a paper trail; an early distribution can be recovered or offset against that beneficiary’s final share; a missed trustee notice can be sent late with an explanation.

What makes a correctable mistake into a claim is concealment. A fiduciary who discloses the error in the next report, shows the correction, and explains it is in a very different position from one whose beneficiaries discover it in the bank records. Missouri’s trust code expressly lets beneficiaries ratify or release a trustee’s conduct (RSMo § 456.10-1009), and a court can approve a personal representative’s actions after the fact. Both are far easier to obtain when the fiduciary raised the issue.

If the mistake involved a distribution that cannot be recovered, a sale to yourself or a relative, or a loss from investment neglect, get advice before the next filing. The estate settlement work we do most often is exactly this: taking over an administration partway through and putting it on a defensible footing.

Yes. Good faith is not a defense to a breach of fiduciary duty; it goes to the remedy, not to liability. A personal representative who distributes before paying a valid claim, or pays claims out of order in an insolvent estate, can be surcharged for the shortfall on the settlement. A trustee is liable under RSMo § 456.10-1002 for the greater of the loss to the trust or the trustee’s profit, and under RSMo § 456.10-1001 a court can compel performance, enjoin the trustee, order an accounting, reduce or deny compensation, or remove the trustee.

Federal tax claims are the sharpest edge. Under 31 U.S.C. § 3713(b), a representative who pays other debts before a claim of the United States is personally liable to the extent of those payments. The IRS does not need to prove bad faith.

The reason this rarely happens to well-advised fiduciaries is that the protections are procedural: a separate account, a documented valuation, claims paid in order after the bar date, reports delivered on time, and releases collected before distribution. Each one closes a door.

The source of authority and the assets controlled. An executor, called a personal representative in Missouri, is nominated in a will but has no authority until the probate court issues letters. The court supervises, filings are public, and the deadlines in Chapter 473 apply. A successor trustee takes authority from the trust document itself when the prior trustee dies or becomes incapacitated, with no court appointment and ordinarily no court supervision, and controls only the assets titled in the trust.

The same person often holds both roles, running a probate for assets the decedent never moved into the trust while administering the trust for everything that was funded. Our post on executor versus successor trustee duties walks through where the two roles diverge; our probate and trust administration pages cover each process.

Both are fiduciaries, and the core duties of loyalty, prudence, impartiality, record-keeping and following the instrument are the same. The mistakes on this page apply to both unless stated otherwise.

Immediately after letters issue, or, for a trustee, immediately on accepting the trusteeship. The estate or trust obtains its own employer identification number from the IRS (free, online, in minutes) and opens an account in the fiduciary’s name as such. The decedent’s social security number should not be used for anything that happens after death.

Every receipt goes into that account and every disbursement comes out of it. Funeral expenses paid personally before the account exists are reimbursable as a class-four claim under RSMo § 473.397, with receipts. What should never happen is a running tab of personal outlays and informal repayments; that pattern is indistinguishable, in the records, from a fiduciary helping themselves.

Keep the account statements, every invoice, and a simple ledger. Missouri requires vouchers for settlement items over $75 (RSMo § 473.543), and beneficiaries are entitled to an accounting from a trustee. A fiduciary who cannot explain a transaction loses the argument about it.

Sometimes, and carefully. In a probate estate, no distribution is safe until the six-month claims period under RSMo § 473.360 has run and the known claims and taxes are provided for. After that, a partial distribution is common where the estate is clearly solvent, the remaining liabilities are known and reserved, and the court approves it or the administration is independent.

For a trust, the same logic applies without the statutory clock: distribute only what is clearly surplus to all known and reasonably anticipated liabilities, including the income tax on the trust’s own earnings and any federal estate tax exposure. Get a written receipt for every partial distribution, and state in it that the distribution is on account of the beneficiary’s share and subject to adjustment in the final accounting.

What a fiduciary should never do is distribute to end an argument. A beneficiary who is overpaid rarely returns the money voluntarily, and the fiduciary, not the beneficiary, is the one the court looks to for the shortfall.

Yes; it is the normal situation in a family estate. The law does not forbid a beneficiary from serving, but it holds the fiduciary-beneficiary to the same duty of impartiality as a stranger would owe, and every decision that favors the fiduciary’s own share will be examined with that in mind.

The practical rules: keep the personal-effects division transparent and in writing; do not occupy or use estate property without paying fair rent or getting the other beneficiaries’ written consent; do not buy estate assets without either the instrument’s authorization, court approval, or all beneficiaries’ informed written consent, since a sale to the trustee is voidable under RSMo § 456.8-802; and resolve genuinely close questions by asking rather than deciding.

Where the family is already in conflict, consider whether a neutral should serve instead, or whether the fiduciary should engage counsel whose advice goes to the estate rather than to the fiduciary personally. Our beneficiary representation page describes the other side of that relationship.

Four, in order of frequency. Not obtaining a date-of-death appraisal, which fixes the inventory value and the heirs’ income tax basis when the house is later sold; we explain the cost of skipping it in our post on date-of-death valuation. Letting the insurance lapse or failing to tell the carrier the house is vacant, which can void coverage. Allowing a family member to live there rent-free without the other beneficiaries’ consent. And selling to a relative, or to the fiduciary, at a price nobody else was offered.

If someone is occupying the house without a right to, Missouri’s new expedited removal statute may apply; we covered what it requires in our post on Section 534.602. If the house passed by beneficiary deed, it is not a probate asset and the personal representative has no authority over it, but the grantee still needs the appraisal and should understand the creditor rules discussed in Estate of Hicks.

Track every dollar spent on the house after death separately. Post-death improvements add to basis; ordinary carrying costs are administration expenses. Mixing the two costs the heirs money at closing.

Everything, and longer than you would think. At a minimum: the letters or trust acceptance; the death certificate; the inventory and every valuation supporting it; bank statements for the estate account from opening to closing; every invoice, receipt and canceled check; the claims filed and how each was resolved; the tax returns and the IRS and Missouri correspondence; the notices sent to beneficiaries and creditors; every report or settlement; and signed receipts and releases from each beneficiary.

Missouri requires a trustee to keep adequate records under RSMo § 456.8-810, and a personal representative’s settlements must be supported by vouchers under RSMo § 473.543. Beneficiaries can bring claims for years after the administration closes unless a proper report started the one-year clock under RSMo § 456.10-1005; otherwise the outside period is five years from the trustee’s removal, resignation or death, the end of the beneficiary’s interest, or the termination of the trust.

Keep the file for at least five years after the final distribution, and keep the date-of-death appraisal permanently; the heirs will need it whenever the property is sold.

Yes. A personal representative is entitled to the minimum compensation set by the schedule in RSMo § 473.153, a percentage of the personal property and real estate proceeds that steps down as the estate grows, and may ask the court for more where the work justified it. A trustee is entitled to reasonable compensation unless the trust provides otherwise, and must disclose the source and amount of it in the trustee’s report.

Fees are taxable income to the fiduciary; an inheritance generally is not. A fiduciary who is also the sole or principal beneficiary usually waives the fee for that reason. A fiduciary who is one of several beneficiaries should take the fee openly, on the schedule, with approval, rather than reasoning that the extra work “evens out” through informal advantages.

Never net a fee against a distribution without disclosing it, and never pay yourself before the claims period has run and the estate’s solvency is known. Compensation is a claim in the first class, but it is still a claim, and the court can reduce or deny it for a fiduciary who breached.

When any of these is present: real estate, a business interest, a taxable estate, a beneficiary with creditors or a disability, an out-of-state asset, an unfunded trust, an ambiguous document, a family in conflict, or a claim the fiduciary is not sure is valid. A small solvent estate with liquid assets, one or two cooperative beneficiaries and a clear will can often be handled with limited help, and Missouri’s small estate affidavit procedure exists for estates under $40,000.

The estate or trust ordinarily pays for the fiduciary’s legal advice as an administration expense, a first-class claim under RSMo § 473.397. Attorney compensation in a probate estate follows the same statutory schedule as the personal representative’s under § 473.153. Getting advice, in other words, rarely comes out of the fiduciary’s own pocket; getting it wrong frequently does.

One caution: the lawyer for the estate represents the fiduciary in that capacity, not the beneficiaries. A beneficiary who wants independent advice should retain their own counsel, which is what our beneficiary representation practice provides.

A straightforward supervised Missouri probate runs roughly nine to twelve months, driven by the six-month creditor period plus the time to file and approve the final settlement. Independent administration can close a little sooner. A funded trust with liquid assets can be finished in a few months, since there is no statutory claims window.

What extends either: real estate to sell, a business interest to value, a federal estate tax return (which alone typically holds an administration open past nine months while the IRS reviews it), an out-of-state property requiring ancillary administration, a will or trust contest, a beneficiary who cannot be located, and, above all, a fiduciary who does not do the work. The probate page sets out the statutory deadlines in order.

The mistakes that most often add a year are early distributions that have to be unwound, a house sale to a relative that has to be set aside, and an accounting that cannot be reconstructed because the records were never kept.

Both. A personal representative may resign with the court’s permission after filing a settlement, and a trustee may resign on notice to the qualified beneficiaries and co-trustees or with court approval (RSMo § 456.7-705). Resignation does not erase liability for what happened before it.

Removal is the beneficiaries’ remedy. A court may revoke a personal representative’s letters for neglecting duties, wasting or mismanaging the estate, or being unsuitable to execute the trust, among other grounds (RSMo § 473.140). A court may remove a trustee for a serious breach, for persistent failure to administer the trust effectively, or where co-trustees cannot cooperate (RSMo § 456.7-706).

If you are a beneficiary considering that step, or a fiduciary facing it, our contested estates page describes how those proceedings work. Many removal petitions are avoided by the fiduciary simply starting to communicate and account.