When someone in BC writes a will, they get to choose beneficiaries to inherit from their estate and an executor (or executors) to distribute the estate after their passing. Sometimes a will-maker names a person as both executor and beneficiary.
While this is permitted in BC, the arrangement is sensitive; executors must administer the estate according to the will’s terms and fulfill their duty to all beneficiaries, even when they stand to inherit themselves. If an executor allows their personal interests to influence how they handle the estate, disputes can arise.
Can a Beneficiary Also Be an Executor?
Yes. It is common for will-makers to appoint a spouse, partner, family member, or other loved one to serve as executor while also leaving them an inheritance. A person can serve as the sole executor and sole beneficiary of a will, or act as the only executor while sharing the estate with other beneficiaries. When other beneficiaries are involved, the executor must fulfill their legal duties to those beneficiaries while administering the estate, even when their own inheritance is affected by the decisions they make.
What Does an Executor’s Fiduciary Duty Require?
Executors have a fiduciary responsibility to administer the estate honestly in accordance with the will and applicable laws. When an executor is also a beneficiary, they must not use their position to improperly benefit themselves at the expense of the estate or other beneficiaries.
In practice, an executor must:
- Follow the will’s terms: Distribute estate assets according to the will rather than changing beneficiaries or altering inheritance amounts to suit their own interests.
- Keep accurate records: Document estate transactions, expenses, and distributions so they can account for how the estate has been handled.
- Keep beneficiaries reasonably informed: Provide relevant information about estate administration and respond appropriately to requests for an accounting.
- Meet legal obligations: Address the estate’s debts, taxes, and potential claims before distributing assets.
If an executor fails to meet these obligations, their conduct may lead to disputes with other beneficiaries and, in some circumstances, personal liability for losses caused by a breach of duty.
What Executor Actions Can Lead to Legal Consequences?
Executors can be held personally liable if their actions or inactions cause losses. Certain mistakes or breaches of duty during estate administration can have financial consequences, particularly if estate assets are mishandled or legal obligations are overlooked.
Distributing the Estate too Early
Executors must address the estate’s debts, taxes, and potential legal claims before distributing assets. Giving out inheritances prematurely can leave an executor personally responsible for costs the estate can no longer cover.
In BC, executors must also consider potential wills variation claims from a spouse or child before distributing assets. Distributing an estate without accounting for applicable deadlines and legal requirements is likely to raise concerns among beneficiaries and potentially lead to legal action.
Failing to Keep Proper Records
Executors must keep accurate records of estate assets, expenses, transactions, and distributions. Beneficiaries have grounds to request a formal accounting if they have concerns about how the estate has been managed.
Missing records, unexplained withdrawals, or discrepancies in estate accounts can raise questions about whether the executor has fulfilled their duties. If estate funds are missing or losses result from a breach of duty, the executor could face legal action and potential personal liability.
Ignoring Court Orders or Legal Obligations
It is necessary for executors to comply with applicable legal requirements and court orders affecting the estate. For example, if a beneficiary brings a wills variation claim or a creditor dispute arises, the executor must account for the proceedings when making decisions about the estate’s assets and distribution.
Ignoring a court order or distributing assets contrary to legal requirements exposes an executor to legal consequences. Beneficiaries who believe an executor is disregarding their obligations should seek legal advice.
How Can Beneficiaries Hold an Executor Accountable?
Beneficiaries may disagree with an executor’s decisions, but disagreement alone does not mean the executor has breached their duties. The concern is whether the executor is meeting their legal obligations when administering the estate. For example, an executor who is also a beneficiary may have a conflict of interest if they make decisions that favour their own inheritance at the expense of other beneficiaries or misuse estate assets for personal gain.
If you are a beneficiary and have concerns about how an executor is managing an estate, there are steps you can take to protect your inheritance. As a beneficiary, you can:
- Request information about the estate: Ask for details about estate assets, expenses, transactions, and the expected distribution of inheritances.
- Seek a formal accounting: If there are concerns about how the executor has handled estate funds, seek a formal accounting through the legal process.
- Apply to the court for a remedy: If an executor has breached their duties, a court may be able to order an accounting, address losses, or remove the executor in appropriate circumstances.
Legal Help for Beneficiaries in BC
If you have concerns about how an executor is handling an estate, Stephens & Holman can help you determine whether their conduct raises legal concerns and what options may be available. Our estate litigation team can advise beneficiaries on disputes involving an executor’s duties, conflicts of interest, and the administration of an estate. Contact one of our offices today to discuss your situation and get counsel on how to move forward.