If an executor spends all the money in an estate, the obvious consequence is that beneficiaries may not receive the inheritances they were promised. While this scenario is understandably upsetting, beneficiaries should avoid jumping to conclusions. In many cases, the executor was simply fulfilling their duties — paying debts, taxes and administrative costs — and the depletion of estate funds wasn’t due to any wrongdoing.
That said, if an executor treats the estate account like their personal bank account — using funds to benefit themselves or their loved ones at the expense of the beneficiaries — beneficiaries have every reason to be concerned. In such situations, it’s critical to act quickly by seeking legal help to recover the misused or misappropriated funds and to suspend or remove the executor before more damage is done. Fortunately, if the executor was bonded (as many are), the bond company will be liable for any damages caused by the executor, which the beneficiaries can recover against.
Luckily, it’s rare for an executor to drain an estate without raising red flags. Warning signs often appear in their behavior or in the documents they provide, such as inconsistent or incomplete accountings. In short, for an executor to spend all the money without anyone noticing usually requires beneficiaries to have not been paying attention.
Beneficiaries who are proactive by regularly checking in with the executor, requesting informal updates, reviewing accountings and understanding what assets comprise the estate can usually detect issues early. In most cases, signs of misconduct appear well before an executor is able to spend all the money.
Rather than worrying about worst-case scenarios, beneficiaries should focus on being involved in the estate administration process. Passive participation often emboldens misconduct; executors are more likely to cross ethical lines if they believe no one is watching.
It’s also important to understand that an executor doesn’t need to spend all the money for their actions to be considered misconduct. Even small instances of misappropriation can be serious and legally actionable.
Finally, just because the money is gone doesn’t mean it was stolen. There are many legitimate reasons an estate may be depleted, which we explore further in this article. If you have concerns about how an executor is managing the estate, your first step should be to consult with a probate attorney — not confront the executor. An experienced attorney can help determine whether any wrongdoing occurred and what steps to take next.
When Can an Executor of a Will Take Everything?
The only scenario in which an executor would be entitled to take everything in an estate is if they’ve fully settled all outstanding debts and liabilities and are the sole surviving estate beneficiary.
Outside of this rare exception, there are no circumstances under which an executor can legally take the entire estate for themselves.
What Can Be Paid Out of an Estate Account?
An estate account — a bank account opened by the executor to hold estate funds — can only be used to pay valid expenses related to the administration of an estate. Any use of these funds outside this limited scope likely constitutes executor misconduct.
It’s equally important that estate funds remain completely separate from personal or outside assets. Executors are strictly prohibited from commingling estate funds with their own money or with funds belonging to others. Whether intentional or not, commingling is considered a breach of the executor’s fiduciary duties.
All financial transactions on behalf of the estate must be conducted through the estate account. This includes both the depositing and withdrawal of funds. Withdrawals can generally only be made for legitimate estate-related purposes and must be properly documented in estate accounts with receipts, invoices or bank statements.
In the following sections, we’ll cover the types of expenses that can legally be paid from an estate account. If the executor spends estate funds on these authorized costs — and can provide proper documentation — their use of the funds is unlikely to be considered unlawful.
Outstanding Taxes
If a decedent owed taxes at the time of their death, those obligations don’t simply disappear — they transfer to their estate. In other words, the executor becomes responsible for satisfying the decedent’s outstanding tax debts.
If sufficient funds exist, the executor is legally required to pay these taxes. In fact, tax debts — particularly federal income taxes and estate taxes — often take priority over nearly all other types of debts.
Estate Administration Expenses
A wide range of expenses can arise during the administration of an estate, and in most cases, it’s entirely appropriate for the executor to use estate funds to cover them. The key requirement is that any expense must directly benefit the estate. If a cost cannot be shown to have provided a benefit, it may not be justifiable.
Estate administration costs can include:
- California probate fees
- Probate attorney fees
- Executor compensation
- Fees for the services of third-party professionals (e.g., attorneys, accountants, appraisers)
- Expenses related to preserving and improving estate property
As for executor compensation, the executor generally has little discretion in setting their fees. Ordinary services are compensated according to California Probate Code section 10800. Executors may request additional compensation for extraordinary services — such as managing litigation or selling real estate — but all executor fees, whether ordinary or extraordinary, must be pre-approved by the court.
That said, executors should avoid over-reliance on third-party professionals. Doing so can drive up estate costs and potentially reduce beneficiaries’ inheritances. Worse, it may result in outsiders having more control over the estate than the decedent may have intended. Executors should aim to only outsource tasks they are not qualified to handle themselves.
While there is always the potential for misconduct — such as an executor inflating the cost of third-party services and pocketing the difference — meticulous oversight of the executor’s financial activity can help mitigate this risk.
Creditor’s Claims
If the decedent left behind unpaid debts, creditors have the right to file creditor’s claims against the estate. Once a claim is submitted, the executor must review it to determine its validity. If the claim is legitimate, it should be paid using estate funds. If not, the executor is entitled to reject it, which could result in the creditor taking legal action to enforce the claim through a court judgment.
So long as the executor does their due diligence to confirm a debt hasn’t already been paid and is valid, using estate funds to satisfy it is standard practice.
That said, creditor claims are subject to strict deadlines and may be time-barred if not timely filed. Creditors must file a claim within four months from the date of the executor’s formal appointment or within 60 days of receiving notice of administration of the estate — whichever is later.
It’s important to stress that claims against a decedent generally must be submitted within one year of their death. Claims filed beyond this one-year mark are typically not considered, even if they have merit. For this reason, if you are owed a debt but probate has yet to be opened, and the one-year mark is quickly approaching, you may wish to consider filing for probate yourself to ensure your claim isn’t time-barred.
Litigation Costs
It is not uncommon for legal disputes to arise during the probate process. When litigation is necessary and in the best interest of the estate and its beneficiaries, an executor may use estate funds to cover the costs — provided the estate has the resources to do so. Remember, litigation can be time-consuming and costly, so if a resolution can be reached without it, that may be preferable.
Say a beneficiary contests a will, but the executor believes their case lacks merit. In this instance, not only might the executor be entitled to use estate funds to defend the will, but they may have a duty to do so.
If litigation arises between beneficiaries over a dispute that does not directly involve the estate or its administration, the executor typically should not intervene or fund the litigation. Doing so could constitute a breach of their duty of impartiality and a misuse of estate funds.
Because executors generally are entitled to request extraordinary fees for time spent litigating on behalf of the estate, they must be careful not to pursue litigation solely for personal financial gain, as this may be regarded as executor misconduct. Engaging in unnecessary legal battles is not only unethical, but it is contrary to the estate’s and beneficiaries’ best interests.
Settlements or Judgments
If an estate becomes subject to a court judgment or a settlement agreement that requires payment, the executor is generally authorized to use estate funds to satisfy these obligations. As long as the settlement or judgment is legitimate and binding, using estate assets to fulfill its terms is permissible.
Distributions to Estate Beneficiaries
Once all of an estate’s tax liabilities and debts have been settled, its disputes resolved, and its final account approved, the executor can begin distributing whatever assets remain in the estate to beneficiaries in accordance with the terms of the decedent’s will.
Executors cannot distribute more or less than what the will specifies unless valid expenses — such as taxes, administration costs or creditor claims — depleted the estate’s value. In most cases, these costs take priority over distributions, meaning beneficiaries may receive less than what the will leaves them.
While this outcome can be disappointing or even infuriating for beneficiaries, the law is clear: Debts and administration costs must be addressed before inheritances can be distributed. This legal order of operations generally cannot be disputed or altered.
However, once beneficiaries’ distributions have become due and payable, the executor is not entitled to withhold them for any reason.
What to Do if an Executor Spends All the Money
While it’s uncommon for an executor to deplete an entire estate without raising red flags, stranger things have happened. Fortunately, whether the executor misappropriated all the estate funds or just a portion, beneficiaries usually have legal recourse — and the process for pursuing justice is generally the same regardless of how much was taken. That said, the success of a claim often hinges on how quickly legal action is initiated.
Beneficiaries who actively monitor the estate’s administration are better positioned to spot unauthorized transactions early. Taking swift action while evidence is still fresh — and before misappropriated funds become harder to trace — significantly increases the chances of a favorable outcome in court.
1. Clarify the Terms of the Will
Upon being notified about the estate’s administration, beneficiaries should immediately request a copy of the will if it wasn’t included with the estate notice. If needed, they can obtain a copy from the courthouse where the will is lodged — wills are public record and generally are easy to access.
Once in hand, thoroughly review the will to understand your inheritance rights, as well as the executor’s powers and limitations. This can help you recognize when the executor may be overstepping their authority or disregarding the decedent’s wishes.
For additional clarity, also consider having a probate attorney review the will. They can verify the document’s validity and provide insight into its terms.
2. Review Estate Documents
Throughout the administration process, you’ll receive documents from the executor — including the estate inventory and annual accountings, among others. It’s crucial to scrutinize these records for inconsistencies or signs of mismanagement.
These documents serve as your window into the activity of an estate, detailing its assets, liabilities, sales, purchases and more. While some beneficiaries choose to waive their right to an accounting to streamline the administration process, doing so may limit your ability to track what’s happening.
Just like with wills, having a probate attorney review these documents can be invaluable. Their trained eye can often spot red flags that might otherwise go unnoticed.
3. Request Additional Information from the Executor If Necessary
Executors are appointed to act in the best interests of the beneficiaries, so beneficiaries shouldn’t hesitate to ask questions or request more information — such as bank statements or receipts — if something doesn’t add up.
While executors are only legally required to keep beneficiaries reasonably informed, they are obligated to respond to requests for information, either by providing the requested material or explaining why they cannot.
Beneficiaries who haven’t waived their right to an accounting should receive one annually, but they can also request an informal accounting at any time. Be specific about what information you’re requesting and why. If the executor refuses to comply, you may wish to petition the court to compel an accounting.
Whenever possible, communicate with the executor in writing to ensure there is a clear record of your requests and the executor’s responses — especially in the event legal action becomes necessary down the road.
4. Consult a Probate Attorney
If you strongly suspect the executor is mismanaging the estate or taking more than their fair share — but lack concrete evidence — a probate attorney can be an invaluable ally. They can help investigate your concerns and analyze the documents you’ve received to determine whether misconduct is likely.
If the attorney believes wrongdoing has occurred, they can advise you on what additional evidence to collect, how to preserve it and how to proceed. They may even intervene on your behalf to resolve the matter more efficiently.
5. File a Petition with the Court
If it becomes clear that the executor has wrongfully spent estate funds, the next step is to file a petition with the court. This document should outline the executor’s misconduct, how it harmed the estate, and the specific remedies you are seeking — such as compelling the executor to account and return stolen funds or even requesting their removal and a surcharge.
Given the complexity of this process, most beneficiaries choose to have an attorney handle the petition. A well-crafted petition can make all the difference; in many cases, simply seeing the strength of the evidence laid out may prompt the executor to settle the matter rather than face harsher legal consequences in court.
Although some cases proceed to trial, most are resolved through mediation — a less adversarial and more cost-effective alternative. For example, if an executor used estate funds for personal expenses, a settlement might involve them reimbursing the estate in exchange for avoiding additional penalties or a surcharge.
Executor/Administrator FAQs
If you’re still unsure about what an executor can or cannot do — particularly in cases where it seems like they’ve spent all the money in the estate — the frequently asked questions below may help clarify your concerns. For personalized legal guidance, don’t hesitate to contact our firm.
I am the executor and sole beneficiary. Do I need probate?
Yes, even if you are both the executor and the sole beneficiary of an estate, probate is still required in most cases.
Although many people associate probate solely with distributing estate assets, it also serves the critical function of settling the decedent’s debts and financial obligations. Because there’s no alternative legal process for resolving these matters, probate remains necessary even when only one person is involved.
That said, if the estate is small — typically valued at less than $184,500 — you may be eligible for a simplified probate process. Keep in mind that the decedent’s personal residence is in a separate category. It qualifies for a simplified probate process if it’s valued at $750,000 or less. In such cases, it may be possible to complete probate in just one court hearing using certain shortcut procedures.
Can an executor sell property to himself?
Yes, but only if the will doesn’t expressly forbid it and the executor obtains court approval. If an executor intends to sell property to himself, it's crucial he handle the transaction with care and transparency.
For example, executors cannot give themselves a favorable deal simply because they have control over the estate. They must sell the property at fair market value — or the highest competitive offer — and the sale should be structured to benefit the estate as a whole, not just the executor personally.
To ensure fairness and avoid potential legal disputes, the executor should obtain court approval. This gives beneficiaries the opportunity to object if they believe the sale is improper.
Can a sole beneficiary be an executor of a will?
Yes. A sole beneficiary can also serve as the executor of a will — and in fact, this is a common scenario.
Because there are no competing interests among multiple beneficiaries, concerns about conflicts of interest are significantly reduced. This is one of the few situations where the executor may rightfully retain all remaining estate funds — so long as they have first paid all debts, taxes and other liabilities owed by the estate.
Can an executor decide a beneficiary’s inheritance?
No, executors do not have the authority to change or decide a beneficiary’s inheritance. Their job is to carry out the terms of the will exactly as written.
The only time a beneficiary’s inheritance might be reduced is if the estate lacks sufficient assets to pay off debts and expenses. In that case, the law requires that debts be paid before distributions are made to beneficiaries.
An executor cannot decide who gets what, unless a will specifically grants the executor discretionary power — which is rare. Rather, they must distribute assets as directed by the will, without using personal judgment or preference.
Still concerned about the executor spending all the money?
If you suspect an executor is mismanaging or misappropriating estate funds, you don’t have to navigate the complexities of such a dispute on your own.
At Keystone Law Group, our team of experienced probate attorneys is here to help you understand your rights, protect your inheritance, and take swift legal action on your behalf when necessary.
Whether you’re seeking to challenge an executor’s actions or simply need clarity on their role and responsibilities, we offer personalized, strategic guidance tailored to your situation. Contact us today for help navigating probate and all it entails.
