When an individual creates their last will and testament, they designate someone to execute their instructions. That person, referred to as the will’s executor, is tasked with ensuring that the will's provisions are followed. If a will lacks a designated executor, the probate court will name one for the job. The executor must act in the best interests of the estate as a whole, even if that is counter to the wishes of one or more beneficiaries. If the beneficiaries don’t want the instructions in the will carried out, the executor is obligated to follow the instructions of the deceased, not the beneficiary. It’s important to note that an executor cannot change or delete beneficiary designations.
What Is a Beneficiary?
Beneficiaries are the individuals or entities named in a will to receive distributions from it. A will may have both primary and contingent beneficiaries. If a primary beneficiary can’t receive the intended distribution (for example, if they have predeceased the will's author), the contingent beneficiary becomes the recipient.
Is it Allowable for a Beneficiary to Be an Executor?
It is certainly legal for the executor of an estate to be among the beneficiaries. The practice is also quite common for those who don’t have extensive or complex matters for the executor to sort out. Probate courts are inclined to select a family member as an executor when there isn’t one named in the will (or there is no valid will for the estate). It makes sense that someone close to the deceased would represent their interests fairly and fulfill their wishes in the disposition of their property. Often a surviving spouse or adult child will take on the job.
What Are the Risks for the Executor in That Scenario?
Whether the combined role of executor and beneficiary is fraught for the person involved depends on the circumstances. If the will was clear and straightforward, there should be few problems. However, in some circles, an executor/beneficiary will forego the compensation they are entitled to as executor. That step eliminates any appearance of conflict and levels the field with the other heirs, removing a potential source of concern.
However, if the estate is complex or the beneficiaries are in discord, the dual role can be stressful. The executor has a legal responsibility to follow the deceased's instructions and act in the estate's best interests. For example, suppose that the will directs that a particular property should be sold and the proceeds shared among the heirs. If the heirs prefer to hold the property, they may object to the executor following this instruction. As a beneficiary, it may also be in their best interest to disregard the directive, but they must.
There is an added risk that the other beneficiaries may perceive that the executor is acting in their personal interest rather than doing what is best for the estate as a whole. That’s why it’s vital for the executor who is also an heir to be scrupulous in their attention to the will’s instructions. For the will’s creator, it’s crucial to choose someone trustworthy and capable, which will help avoid misplaced suspicions.
This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.
Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation.
