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Executors as beneficiaries require a delicate balance

On Behalf of | Aug 18, 2022 | Estate Planning

Appointed or named to act in the best interest of the deceased individual, executors assume burdensome but vital legal duties. Many obligations concern those who will receive some benefit of the will—the beneficiaries. Only entrusted individuals should act in this capacity, especially since beneficiaries often serve as executors. While executors enjoy some discretion in handling an estate’s affairs, they remain accountable to beneficiaries in very specific ways.

Duties that executors owe to beneficiaries

Before all else, executors must notify the beneficiaries of their status. Accomplished most often through a written document, notification must include information about the estate and probate process, including an inventory of assets with a plan, generally, on how to eliminate the debt. Beneficiaries can inquire about estate property and know to whom to direct questions if they choose to contest the will.

Executors also must distribute assets to beneficiaries in a timely manner, a term whose meaning can vary significantly. Whatever the duration, the time limit prevents executors from delaying distribution. Annual expenses and accounting, such as taxes, demand that executors act swiftly.

Advantages vs. disadvantages

The duties of notification and timely asset distribution place executors in a difficult position if they serve in that role and have interests as beneficiaries. Advantages of this arrangement include a less emotionally awkward notification process, easier location of the assets and tax savings by waiving executors’ fees.

Conversely, the duties may aggravate and prolong the natural grieving process. In addition, there is an almost unavoidable conflict of interest. Executors may have to determine to apportion personal or other property they will receive, as well those of other beneficiaries, to satisfy debts.

Executors serve as legal managers. They balance legal obligations to beneficiaries of an estate with the practical requirements of establishing priorities, maintaining efficiency and abiding by legal standards. Attorneys familiar with the interests of all parties to the will can provide guidance.