Verlan Kwan, partner at Keystone Law Group, summarizes five things you should know about an executor overriding a beneficiary. Read the complete article below for more details. Click the YouTube subscribe button to be notified when new videos are posted.
How to Handle Executor Problems With Beneficiaries
Perhaps a beneficiary is pestering the executor of the estate to release their inheritance earlier than is advisable.
Perhaps the executor is not communicating with beneficiaries about administration of the estate, or a beneficiary is demanding information too frequently.
Perhaps beneficiaries are delaying administration by withholding required consent, or the executor is selling estate property against the will of beneficiaries.
How can such executor problems with beneficiaries be resolved?
Over the course of estate administration, which can take anywhere from six months to several years, it is not uncommon for conflicts to arise between beneficiaries and the executor of the estate. Beneficiaries sometimes falsely believe the lawyer for the executor represents their interests as well, but it is actually the executor who is charged with representing the interests of estate beneficiaries.
Who is the executor of the will? What does an executor of a will do? The main thing to understand about executors is that they’re fiduciaries, which means they must act in the beneficiaries’ best interests at all times.
If the executor is not complying with this duty, it is considered executor misconduct — a form of wrongdoing for which beneficiaries should consult with a skilled beneficiary rights lawyer, who can further investigate the matter, and if necessary, take legal action against the executor.
What Executors Can and Cannot Do
Executors are charged with protecting the interests of beneficiaries. Does that mean the decisions they make must always align with what the beneficiaries want?
For example, what if the executor is selling estate property the beneficiaries wish to keep? What if there is a will dispute because the executor’s interpretation of the will is different from the beneficiaries’ interpretation? Can an executor override a beneficiary in such matters?
Estate beneficiaries may feel powerless when an executor is not communicating with them or asking them for their input or consent when making estate-related decisions; however, in some instances, the executor is permitted to make unilateral decisions.
It’s important for beneficiaries to remember the will creator (called the testator) likely nominated the executor because it was someone they trusted to administer their estate according to the terms of their will.
That said, if the executor’s decisions are harming the estate, are beyond the scope of the executor’s authority, or are impinging upon the beneficiaries’ rights, beneficiaries can and should take legal action against the executor.
Resolving problems with executors can be challenging for beneficiaries to do on their own, especially if they are butting heads with the executor, so it is best for beneficiaries to work with a fiduciary misconduct lawyer to bring their claims.
Ways an Executor Can Override a Beneficiary
Most of the time, when beneficiaries express concern about an executor overriding them, it’s because the executor is planning to take an action they aren’t on board with.
For example, the executor may decide to sell estate property that one or more of the beneficiaries were hoping to receive as part of their inheritance. While the beneficiaries of the property generally would still receive proceeds from the sale (given that the proceeds weren’t used to pay the decedent’s creditors), they may be disappointed with this outcome, leading them to question if they have any recourse.
If a beneficiary disagrees with a proposed action by the executor, it is good practice for them to inform the executor early in the administration process. They should also consult with a probate lawyer to find out whether the executor has the right to take the proposed action without the beneficiary’s consent.
In most cases, whether an executor has the right to take a proposed action with consent from beneficiaries will depend on whether the court has given the executor “full authority” or “limited authority” under California’s Independent Administration of Estates Act (“IAEA”).
Actions an Executor Cannot Take Without Prior Court Approval
California Probate Code Section 10501 breaks down the specific actions requiring prior court approval for executors with full authority and executors with limited authority.
If the executor has been granted limited authority, for example, they can sell the decedent’s personal property (e.g., artwork, jewelry) without obtaining consent from the beneficiaries, but they cannot sell the decedent’s real property without obtaining approval from the court prior to making the sale.
On the other hand, if the executor has been granted full authority, they generally can take broad action on behalf of the estate without prior court approval and sell real property without obtaining permission from the beneficiaries; however, they will still need to serve beneficiaries with a Notice of Proposed Action prior to selling said property.
Below is a list of all the actions for which executors must obtain prior court approval.a
Actions Requiring Prior Court Approval for Executors With Full Authority:
- Allowance for personal representative compensation (read our article on probate fees for more information)
- Allowance for compensation of the personal representative’s attorney
- Settlement of accounts
- Subject to California Probate Code section 10520, preliminary and final distributions and discharge
- Sale of property of the estate to the personal representative or to the attorney for the personal representative
- Exchange of property of the estate for property of the personal representative or for property of the attorney for the personal representative
- Grant of an option to purchase property of the estate to the personal representative or to the attorney for the personal representative
- Allowance, payment, or compromise of a claim of the personal representative, or the attorney for the personal representative, against the estate
- Compromise or settlement of a claim, action, or proceeding by the estate against the personal representative or against the attorney for the personal representative
- Extension, renewal, or modification of the terms of a debt or other obligation of the personal representative, or the attorney for the personal representative, owing to or in favor of the decedent or the estate
Actions Requiring Prior Court Approval for Executors With Limited Authority:
- All of the actions requiring prior court approval for executors with full authority
- Sale of real property
- Exchange of real property
- Grant of an option to purchase real property
- Borrowing money with the loan secured by an encumbrance upon real property
Beneficiaries who are concerned about an executor selling property they wish to inherit or taking any other undesirable actions should consider hiring a beneficiary lawyer to enforce their rights.
Ways an Executor Cannot Override a Beneficiary
It’s important for beneficiaries to keep in mind the ways an executor cannot override a beneficiary.
For example, an executor cannot change beneficiaries’ inheritances or withhold their inheritances unless the will has expressly granted them the authority to do so. The executor also cannot stray from the terms of the will or their fiduciary duties.
Something an executor generally must do, however, is pay all valid creditor claims and outstanding taxes before making any distributions to beneficiaries. If the estate does not have sufficient funds to fulfill these financial obligations, beneficiaries’ inheritances could potentially be reduced or eliminated.
It’s also improper for executors to interpret ambiguous language in a will themselves. For example, if the decedent stated in his will that his home should pass to his daughter, but the decedent had more than one daughter, the executor should not guess which daughter the decedent had intended to inherit his home, nor should the beneficiaries. Rather, the executor should file a Petition for Instructions with the court to try to obtain clarification.
The executor must remember that even if they know without a doubt the meaning of ambiguous language in a will, they should not go the route of interpreting it themselves. This is because executors have a fiduciary duty to remain impartial (i.e., to not favor one beneficiary over another). If, for example, the executor proceeds to distribute the home to the daughter they believe is its intended beneficiary, the decedent’s other daughters could bring a breach of duty claim against the executor.
Can an Executor Sue a Beneficiary?
When there are executor problems with beneficiaries, the executor may threaten to sue the problematic beneficiaries, leaving beneficiaries to wonder: What can and can’t executors do?
Executors have many powers and duties when it comes to the estate; it’s important for beneficiaries to familiarize themselves with these powers and duties so they can take legal action if the executor is abusing their authority or breaching their duties.
It is important to note that executors have a duty to the act in the best interests of the estate. This means they can take legal action against a beneficiary if it comes to light that the beneficiary may have engaged in misconduct that harmed the estate.
Reasons for an Estate Suing a Beneficiary
Perhaps a beneficiary was stealing valuable objects from the decedent’s home under the guise of caring for the decedent when they were ill.
Perhaps a beneficiary used excessive persuasion (i.e., undue influence) to convince the decedent to transfer property to them before they died.
Or, perhaps a beneficiary raided the decedent’s bank accounts using a power of attorney document before or after the decedent’s death (see our article on power of attorney abuse).
All of these examples would give the estate cause to sue a beneficiary to recover the misappropriated money or property.
If it’s discovered the beneficiary misappropriated estate assets when the decedent had been elderly or medically handicapped (i.e., the beneficiary committed elder financial abuse), the estate may have grounds to request attorney fees and costs and even punitive damages from the beneficiary in addition to the return of the assets.
Beneficiaries whose inheritances are under threat because of suspected misconduct can hire an estate lawyer to enforce their rights.
Can an Executor Change a Will?
Executors have many powers, but is changing the will one of them? Can an executor remove a beneficiary? Can an executor change a beneficiary? How much say does an executor actually have when carrying out the terms of a will?
When executors are faced with a beneficiary who is difficult (e.g., a beneficiary who is constantly demanding information or pestering them to be provided their inheritance early), the executor might resort to threatening the beneficiary with removal.
Or, perhaps the executor has a personal relationship with a particular beneficiary, and the other beneficiaries are concerned the executor might provide that beneficiary with a larger inheritance than they were left.
Would either of these actions be allowed?
Can an Executor Change a Beneficiary?
Executors are bound to the terms of the will, which means they are not permitted to change beneficiaries. The beneficiaries who were named by the decedent will remain beneficiaries so long as the portions of the will in which they appear are not invalidated through a successful will contest.
As previously mentioned, executors also cannot change the amount of a beneficiary’s inheritance. Executors especially cannot change a beneficiary with the intent of providing another beneficiary with a larger inheritance; doing so would not only violate the terms of the will but it would be a breach of the executor’s fiduciary duties.
If an executor has changed beneficiaries or the amount of beneficiaries’ inheritances, it is recommended the affected beneficiaries hire a fiduciary misconduct lawyer to enforce their rights and protect their inheritances.
Can an Executor Remove a Beneficiary?
As noted in the previous section, an executor cannot change a will. This means the beneficiaries who are named in a will are there to stay. Put simply, they cannot be removed, no matter how difficult or belligerent they are being with the executor.
The only exception to this rule would be if beneficiaries were to lose a will contest in which a no-contest clause was included in the will. A no-contest clause may stipulate that any beneficiary who contests the will and loses will be disinherited – although no-contest clauses can be difficult to enforce.
Nevertheless, beneficiaries should still consult with a trust and will contest attorney before contesting a will with a no-contest clause to ensure it would be safe for them to do so. In one particular case, a beneficiary lost a contest that resulted in the beneficiary having to forfeit their $10 million inheritance.
Unlike executors, beneficiaries can petition the court to have the executor removed if they are acting improperly or breaching their fiduciary duties. Beneficiaries can also petition the court to surcharge the executor if any of their actions financially harmed the estate. A probate lawyer can assist with this process.
Can an Executor Evict a Beneficiary?
An executor of the estate essentially steps into the shoes of the decedent following the decedent’s death. For instance, if there is a third-party tenant living in a property belonging to the decedent without paying rent, the executor has the right to initiate eviction proceedings, even if the tenant is a beneficiary of the estate.
There are also other contexts in which eviction issues could arise. Perhaps a member of the decedent’s family had been living with the decedent prior to the decedent’s death, and is now refusing to leave the decedent’s home, even though they are not entitled to inherit it. Perhaps multiple beneficiaries stand to inherit a real property that is currently being occupied by one of the beneficiaries.
If the person occupying the decedent’s property is entitled to the property under the decedent’s will, then an eviction may not be necessary. However, if there are other beneficiaries who are entitled to the property, or if the property needs to be sold to fulfill the decedent’s debts, an eviction may be required, especially if the tenant refuses to leave willingly.
Call our lawyers for help resolving executor problems with beneficiaries.
If you are a beneficiary who is at odds with the executor of the estate, you may be feeling powerless and frustrated.
You may have questions, such as: Can an executor override a beneficiary? Can an executor sue a beneficiary? Can an executor remove a beneficiary?
Luckily, our lawyers are standing by to provide answers to all of your questions and address any other concerns you may have. Call us today to request a free consultation.
