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What if I am both estate executor and beneficiary?

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The Executor Adviser from Executor.org

The Executor Adviser is an advice column created by Executor.org for Legacy. Executor.org's experts aim to help readers with questions about executorship and provide comprehensive, free online resources to guide executors through this complex process.

The role of executor can be a real challenge. You’re likely grieving, trying to catch up on life, managing the expectations of multiple stakeholders, and battling through a 100+ step process for the first time.

Just to make things a “bit” more interesting, I have found that most people I talk to who are executors are also beneficiaries in the same estate. This adds another level of complexity to the equation as decisions you make could impact what you inherit in the process — sometimes at the expense of other beneficiaries.


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Are you in this situation?
 
If you are an executor and beneficiary of the same estate, you actually have quadruple incentive to make sure you are doing the best job possible.

1.    You want to honor the wishes of the person who named you as executor.
2.    You want to be honest and ethical.
3.    You want to deliver the most possible value to the beneficiaries — including yourself.
4.    You want to stay out of legal trouble.

So even with the complexity of the role and the many distractions you’re likely dealing with in your life, your desire to do a great job should be strong. But sometimes it’s more complicated than just “trying to do the right thing.”
 
Have you considered that sometimes the interests of the beneficiaries are at odds?
 
For example, one beneficiary may need cash money as quickly as possible. Another may be young and would benefit from a long-term investment that helps them save for their future. And another beneficiary may need to meet a combination of goals including funding a child’s college education and saving for retirement.  
 
These are all very different needs that don’t seem to fit together well.
 
Your financial decisions as executor impact them for better or for worse, including how much each could receive, when they’ll get it, and what related tax consequences they face when it is distributed.
 
Those are huge decisions to make concerning the financial goals of all the beneficiaries.

And you definitely don’t want to do only what’s best for yourself as a beneficiary. That will get you into legal trouble.  
 
You must do what’s best for everyone.
 
It's a simple principle — and can be easier said than done — but it’s a principle that will minimize family friction, legal risk, and stress in this complex process.

Hiring the right team of professionals will help. Because professionals should be unbiased, following their direction will likely be respected by other beneficiaries and defensible if there is ever a problem (assuming you have been honest and open with them). 

Open communication with beneficiaries can minimize potential issues. If you’re communicating regularly with beneficiaries about the decisions you plan to make, you’ll likely build consensus around those decisions. Regularly telling them to come to you with concerns may also help minimize problems. Who knows? They could have a great idea you hadn’t considered, or a different perspective on what is fair. 

Listening to the judge is incredibly important. Assuming the estate must go through probate court, you’ll hear from the judge on how things should proceed. You’ll want to make sure the judge is operating with all the facts (this may require you to make official submissions to the court), and that you’re complying with the requests of the courts.

Leveraging any other available tools can also help. In the digital age, tools like Executor.org can help guide you through this entire process. There are also tools like FairSplit.com, which is a tool that is focused specifically on helping you make sure assets are split fairly among beneficiaries. Most sites like this have a free version, and any costs should be reimbursable by the estate.

Know that you’re not the first person to navigate the executor process as a beneficiary too. It’s possible, but must be done with great care to ensure fairness and positive family relationships.

If you’d like to learn more about your role as an executor and get a free custom plan to help you understand and manage your executor duties, please visit Executor.org. You’ll get a free digital checklist of your required tasks, and have a place to store important information to help you stay organized. The site covers everything you’ll need to know to settle an estate as quickly and as easily as possible — and gives you a proven step-by-step approach to managing this complex process.

Have a question about executorship? Get an answer by sending an email to [email protected].


Patrick O'Brien is CEO and co-founder of Executor.org, a free, comprehensive online resource that helps executors manage their responsibilities and duties in this complex role. The free tools include a helpful step-by-step interactive guide for executors and invaluable tips on everything from planning a funeral and keeping beneficiaries happy to dealing with grief and managing estate assets.


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