When someone writes a will, they’re not just deciding who will inherit their assets; they also select the person they trust to carry out their final wishes and financial responsibilities. That individual is called the executor, and their duty involves managing and distributing assets, as well as paying off remaining debts. Overall, they must fulfill their role by acting in the best interests of the will-maker’s wishes, along with the best interests of the estate and its beneficiaries. In the event the will-maker fails to name an executor, a spouse, child, other family member, or relevant third party can apply to be appointed as the estate administrator in probate court.
But what happens if the executor doesn’t fulfil their obligations accordingly? Unfortunately, executor misconduct happens. One serious issue is executor conflict of interest. If you suspect this, it’s important to consult with an estate litigation lawyer to discuss the situation and your options.
What is Executor of Estate Conflict of Interest?
Executor conflict of interest occurs when the person chosen to handle estate affairs stands to benefit personally from their position of authority. An executor’s obligation to an estate, the will-maker, and beneficiaries becomes compromised if actions or inactions result in them gaining some kind of personal or financial benefit. It’s important to note that being named both the estate executor and a beneficiary isn’t automatically a conflict. Will-makers generally choose someone close to them to serve as executor, so it’s quite common for an executor to also be written into the will as a beneficiary.
Unequal or Disputed Distribution of Assets
Sometimes the executor is also a beneficiary set to receive gifts in the will. They could be tempted to act in their own interest in these situations. For instance, an executor could interpret vague language in a will to divvy out a particular asset or portion of a gift to themselves. They might also prioritize their own gift distribution over other beneficiaries, including those who are financially dependent on their inheritance. Additionally, this also applies in cases where the executor exhibits favouritism; they may communicate with and distribute assets with haste for select beneficiaries while keeping others waiting for their inheritance.
Business Dealings with the Estate
Executors should avoid situations where they or businesses they are involved with provide paid services to the estate unless all matters are fully transparent and fairly priced. For example, if the executor is also a real estate agent or a lawyer and is hired by the estate, other beneficiaries may wonder if the estate is truly receiving a competitive rate for the service or if the executor is leveraging their position for personal gain.
Purchasing Estate Assets
An executor who wants to buy estate property, such as a home or valuable item, should be extremely careful and forthcoming with their intentions. Even valid purchases could raise red flags with beneficiaries. For example, an executor could use their position to delay a sale, dismiss other offers, or purchase the asset at a below-market rate.
Serving as Both Executor and Creditor
Similarly to how an executor can also be a beneficiary, they can also be a creditor of the estate. However, this can create conflict. Part of an executor’s responsibility is to fulfill the estate’s debts. If they’re also owed repayment from the estate, they should be transparent and share this with beneficiaries. Without disclosure, there is a risk the executor could prioritize their repayment to themselves over maximizing the value of the estate for all beneficiaries.
Delays or Inaction
Executors who drag their feet, especially if they benefit from continued control over estate assets, will likely erode trust with beneficiaries. Whether it’s by postponing asset sales or stalling on distributions, beneficiaries may question whether the delays are justified or financially motivated.
What Can Be Done About Executor Conflict of Interest?
Beneficiaries who suspect an executor of inappropriate conduct or conflicts of interest that impact their duty are permitted to ask the court to intervene. A petition can be filed in court to pursue the removal of an executor for a conflict of interest. The court will give considerable deference to the will-maker’s choice of executor; removal isn’t automatic. There must be clear, compelling evidence that the executor’s actions or their failure to act jeopardized the fair and proper administration of the estate.
If removal is granted, a new executor or estate administrator will be appointed to ensure the estate is properly handled moving forward. In some situations, rather than removing the executor outright, the court may opt to monitor them more closely or impose conditions on how they carry out their role.
That said, an executor isn’t expected to be perfect in their role. Mistakes can happen, especially when handling complex estates. An executor’s intent and whether they’ve acted on a potential conflict of interest in a way that harms the estate or its beneficiaries matters. Courts will typically evaluate whether the executor’s behaviour suggests bias, self-dealing, or mismanagement rather than if a conflict exists on paper.
Limitation Period for Executor Conflict of Interest
Those considering legal action against an executor need to act promptly. Beneficiaries typically have two years from the date of the grant of probate or letters of administration to file a claim. However, there are some notable exceptions to this rule. If the executor is suspected of concealing information or engaging in fraudulent behavior, it’s possible to seek an extended limitation period.
When to Consult an Estate Litigation Lawyer
Executor issues can be complex and emotionally charged, especially when family is involved. If you’re concerned about a beneficiary executor conflict or are exploring the removal of an executor for conflict of interest, contact Stephens & Holman. Our experienced team can help you understand your rights, assess the situation, and take appropriate action if your concerns are valid.