Can an Executor of a Will be a Beneficiary or is it a Conflict of Interest?
An important part of the estate planning process involves choosing an executor (or “personal representative”) who will be responsible for administering your final affairs. Among other tasks, an executor handles probate (to the extent necessary), works to satisfy your estate’s obligations to your creditor and distributes your remaining assets to your chosen beneficiaries. Due to the importance of the executor’s role, it is critical to choose someone you trust to fulfill these duties faithfully and in compliance with the law. But what if the person you trust most is also someone to whom you wish to leave a portion of your estate? Can you name someone as your executor and a beneficiary? Or does this create an impermissible conflict of interest?
Your Executor Can Be a Beneficiary
As a general rule, there is nothing inherently wrong with naming one of your beneficiaries as the executor of your estate. In fact, it is fairly common for a person to name a close family member (such as an adult child) as both an executor and a beneficiary. The executor’s role is to administer the deceased’s final affairs in the best interests of the estate and, in most cases, it is possible to do this without competing personal interests coming into play.
Considerations for Preparing Your Estate Plan
It is possible for issues to arise. For example, suppose you leave one half of your estate to each of your adult children, and you name one of your children as your executor. The executor is tasked with ensuring that each beneficiary receives half of the remaining estate (after payment of creditors). If you do not designate which half goes to which child, your executor will be left to divide your estate without it seeming as though he or she is taking advantage of the executor role.
To avoid this type of issue, you can build a number of protections into your estate plan. While each person’s circumstances are unique, some potential options include:
- Ensuring that you do not unnecessarily leave questions unanswered (such as which children are entitled to which assets);
- Using a trust to leave assets to your executor (and potentially your other beneficiaries);
- Naming co-executors who must make decisions jointly;
- Choosing an independent third-party to serve as executor.
Considerations for Serving as an Executor
If you have been named as executor and a beneficiary in a loved one’s will, there are a number of steps you can take to avoid potential concerns about conflicts of interest, including:
- Using unbiased or random methods of selection when decisions need to be made that affect multiple beneficiaries;
- Seeking independent appraisals for assets that are subject to division or distribution in the estate;
- Working with a probate lawyer who can help you avoid conflicts and document any decisions that may give the appearance of a conflict of interest.
Schedule a Confidential Consultation at Stearns‑Montgomery & Proctor
If you have questions such as, “Can an executor of a will be a beneficiary?” and would like to speak with an attorney, contact us today. One of our estate planning lawyers will be happy to meet with you personally and answer all of your questions in confidence. To schedule an appointment at your convenience, please call (678) 971-3413, or send us your information online and we will contact you as soon as possible.