Tips for including this into your existing best practice procedures

In an executor context, Best Practice is about following a consistent procedure that minimizes the chance of a communication error that results in a professional claim for damages against the practitioner.

Communication is the key; executors need to understand before they assume the role that they have personal liability for the estate administration. They need to know how to minimize or avoid the risk altogether.

Here are some tips on how to keep the executor's personal risk during estate administration with the executor, not the estate solicitor's E&O insurer.

  • Identify the nature of the executor's risk in your engagement letter. "Personal Liability" is easier to understand than "Fiduciary Duty".
  • Point out the risk solutions; renouncing the role can be an option if done early enough. Executor Liability Insurance is another option to assuming unlimited personal liability.
  • Provide an application for insurance. Your law clerk or legal assistant can obtain a Proposal with a short phone call. If the client requires insurance, retain a copy of the policy in your file. If they don't require insurance, have them sign the waiver within the Proposal and retain it in your file. This document may be your primary defense in the event that the executor is served a Notice of Objection or similar proceeding that results in legal expenses or an award of damages that might have been covered by readily available Executor Liability Insurance.
  • Avoid trying to predict when you think an estate might need (or not need) insurance. Even if you drafted the Will, you can’t predict the individuals or circumstances that might give rise to a claim for damages against the executor, be it from a named beneficiary, creditor, dependent or another individual with a Family Law-based claim. Your client's decision to buy (or not buy) insurance will be driven by their appetite and ability to fund an unexpected financial disaster, not the size of your fee account – even a client that is reticent to invest in legal fees may still want insurance.
  • Finally, your legal assistant or law clerk should attend a fifteen minute orientation by phone or webinar. Let them put the theory into a Best Practice for your practice.

Do you have additional questions about Executor Insurance?
Visit our list of Frequently Asked Questions for Legal Professionals.

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