Can an Executor of Estate Decide Who Gets What?

Highlights:

• An executor's primary directive is to oversee the closing of a deceased person's estate. They are responsible for enacting the will, managing the estate, and distributing assets to surviving beneficiaries.
• Executor of estate's are often a friend of the deceased or a family member. As such, it's common for the executor of an estate to also be a beneficiary.
• An executor of estate cannot act in their own self-interest while administering an estate and are prohibited from altering the will in any way.

Estate law may differ from state to state. While this article offers general guidance, it's important to review the law specific to your location. For additional help, consider consulting an attorney familiar in the estate procedures for your area.

When you're grieving, managing a loved one's financial affairs is no easy feat. That's where an executor of estate steps in. An executor has the legal responsibility to enact the deceased's will, manage the estate and ultimately distribute money assets.

Estate law is explicit about what an executor of will is allowed to do. Is it up to the executor of estate to decide who gets what from the estate? Can an executor of estate also be a beneficiary? How much time does an executor of estate have to make sure an estate is settled?

Learn what executors of will can (and can't) do when it comes to settling an estate.

What is an executor of estate?

An executor's primary directive is to oversee the closing of an estate. They are responsible for wrapping up financial affairs and ensuring any instructions in the deceased's will are carried out.

An executor of estate is typically named in the will and must formally accept the position. If there is no executor named in the will, if the deceased passed away without a will, or if the appointed executor declined the responsibility, a probate court judge will generally appoint what's known as an administrator of the estate. Processes for the estate administrator appointment vary depending on state laws.

What an executor of will can do

An executor's exact responsibilities will vary depending on the law of the state that applies, the size of the deceased estate and the state of their financial affairs. However, most executors are expected to:

• Account for the assets of the deceased and distribute them according to the will.
• Notify courts, creditors, government agencies, heirs, beneficiaries and other interested parties of the individual's death.
• Settle financial debts and pay taxes on the deceased's behalf.
• Pay bills for the estate, including making real estate mortgage payments if the estate includes any properties.
• Manage any legal probate processes and hire legal representation, if necessary.

Depending on state law, executors may also have the authority to sell assets on behalf of the estate, provided the sale isn't prohibited within the will. For instance, they might sell a residential property to cover debts as long as that property isn't willed to a beneficiary.

Perhaps most importantly, executors are required to keep beneficiaries reasonably informed of any changes to the estate. For instance, if the estate sells a property or other asset, the executor of estate must disclose the sale to the beneficiaries. If you're a beneficiary, the executor should be open to working with you and keeping you informed — if they aren't, you may have legal recourse.

What an executor of estate cannot do

First and foremost, an executor cannot act in their own self-interest while administering the estate. If they do — for instance, if they sell a residential property to themselves at a discount or dip into the estate's funds — they can be subject to fines, lawsuits and criminal penalties.

To this end, executors are prohibited from altering the deceased's will. When it comes time to distribute assets to named beneficiaries, they may not change, override or ignore the will. Executors of estates are also discouraged from distributing assets to beneficiaries before the estate has been appropriately taxed.

There are certain other things that executors cannot do, such as:

• Begin estate proceedings before the creator of the will has passed away.
• Sign the will or other legal documents on behalf of the will's creator.
• Sell off assets below market value without approval from the beneficiaries.
• Sell any assets willed to a beneficiary.
• Prevent beneficiaries from contesting the will.

Can the executor change the will?

It's worth repeating: executors are prohibited from altering the will. They are legally bound to act in accordance with the deceased's instructions and cannot disregard the will or remove beneficiaries.

If any party named in the will thinks an executor is acting inappropriately, they may challenge such actions by filing a lawsuit.

Can the executor be a beneficiary of the deceased?

Executors are often a friend of the deceased or a family member, such as a surviving spouse, child or sibling. As such, it's common for the executor of an estate to also be a beneficiary. However, friends and family members aren't the only options when choosing an executor. Some people elect to assign executor duties to a more neutral party, such as a lawyer, to avoid conflicts of interest.

The legal requirements that determine who can be an executor vary by state.

How much time does an executor have to pay the beneficiaries?

If you're a beneficiary, you're not guaranteed to receive any assets until the estate is settled. The time it takes for an estate to completely settle varies. Small, relatively simple estates may be settled within six months. More complicated estates could remain unsettled for years.

If you're willed a specific bequest, you may receive it any time after the executor pays the estate's debts. However, if you were willed a percentage of the settled estate, also called a residual bequest, you won't be paid until the estate is entirely closed.

Executor vs. administrator: What's the difference?

You may hear the phrase “administrator” tossed around with executor. An executor and an administrator of estate have the same responsibility — to settle an estate after a person's death. Both terms are also sometimes referred to as a “personal representative.” However, an executor is generally named directly in your will, while an administrator may be appointed by a probate court in the event that you have no will or if the appointed executor declines the responsibility.

Executor vs. trustee: What's the difference?

If you're creating an estate plan, you may choose to establish a trust for some or all of your assets. A trust is a legal agreement that allows you to designate how specific assets are handled and distributed. A trustee is appointed in your will to administer the trust on behalf of the beneficiaries. A successor trustee may, for instance, invest or disburse funds in the trust. They may also file the trust's tax returns and manage the day-to-day upkeep of the assets.

Trustees and executors are both types of fiduciaries — third parties selected to act according to your instructions as they manage affairs on your behalf. Their duties, however, are different: a trustee manages only the assets designated for a trust, while an executor manages the entire estate.

Executor vs. power of attorney: What's the difference?

A power of attorney is a document that designates someone to make decisions for you in the event you become ill or incapacitated. Unlike an executor, someone with power of attorney assumes their role only while you're alive. They can act on your behalf until your death, at which point their authority is dissolved and the executor of estate's duties begin. It's not uncommon for the same person to be designated with power of attorney and to act as the executor of estate.

When building an estate plan for yourself or a loved one, remember that laws regarding executorship vary from state to state. Be sure to review the laws most relevant to your location.