Beneficiary-Executor Conflict and How It Can Be Resolved

A beneficiary-executor conflict is a common occurrence in estates. The estate probate process can be long, confusing and complicated. People can get frustrated and get into disagreements along the way. It’s always best to resolve those disagreements peacefully. But unfortunately, that’s not always possible.

Estate beneficiaries and executors can have a conflict about how the estate should be conducted and when and how it should be distributed. This situation can be exacerbated by the fact that there is no will or no directions in the will.

The estate administrator or executor has the final say in estate distribution. When a distribution can be made in more than one way, it is often best to get beneficiaries involved in the decision-making process. This avoids later misunderstandings and even litigation.

The estate executor is the first person we turn to when attempting to resolve distribution issues. However, all of the executor’s distributions are subject to the court’s review, and major distributions are subject to the court’s approval. So if an executor fails to yield to a reasonable request of a beneficiary, sometimes the only thing for the beneficiary to do is to seek court intervention.

Negotiations don’t always work out

Here are some other reasons why negotiations don’t work and beneficiary-executor conflicts end up in court:

• Some people are not honest (with themselves or with others)
• Some people are stubborn
• Some people have a hard time making decisions
• Some people like to bully other people
• Some people think they deserve more than others
• Some people have unrealistic views on what is fair

The only way to resolve many of those situations is through court intervention.

Is the executor taking advantage of the estate?

One of the biggest problems that executors can face from beneficiaries is accusations of taking advantage of the estate. Executors are most often accused of

• stealing from the estate
• inflating expenses
• self-dealing

When an executor is accused of stealing, they have to present an accounting to the court, which sets forth all of the assets of the estates and all of the expenses of the estate, as well as the proposed distributions to the beneficiaries. This has to be done though the court.

Is the executor withholding money for a reasonable period of time?

Just because you are waiting doesn’t mean that the executor is withholding money – they may be doing other things. The executor can hold the money back for a period of time. Typically, the period of time is about seven months, but it could be longer based on the specific circumstances of the estate. But if the executor is unreasonably refusing to make distributions when the time for withholding has passed, it may be time to go to court.

Who gets what

With different items of similar value, who gets which item? The list of examples is endless – piano or guitar, boat or car, etc. If feasible, it might work to liquidate the items and split the proceeds so that both parties will end up with similar items (i.e., sell the boat, so that both beneficiaries can buy a car). In situations where selling an item is not an option, and a distribution conflict ensues.

Sell or keep?

If a substantial item of real estate is left to more then one person, some beneficiaries might want to sell the property, while other beneficiaries might want to continue using the property. We’ve seen this especially when some people think that the real estate market will go up, and some think that it will go down. It’s also a common scenario when one beneficiary is living in the house and the other beneficiaries want to sell it and split the money.

Items with intangible value

Personal items and items with intangible value or sentimental value, such as family mementos and jewelry are often subject of beneficiary – executor conflict.

Unique items

Items that are impossible to substitute or are one of a kind can be a subject of conflict.

Difficult to valuate items

Property with value unknown, or value that is volatile, is difficult to distribute. Patents, creative work such as music and art, can go up or down in value with time.

Small business

Small businesses are notoriously difficult to valuate. This is because private small businesses are difficult to sell on an open market but present tremendous value to the person who is trying to take over the business and run it. Sales of small businesses are also underreported, so it’s a challenge to find enough “comps” to make an accurate valuation. Let’s say we multiply a profit by seven and that would be the valuation, but the main value of a small business is not the profit but the proprietor’s income. A proprietor’s income times seven wouldn’t be fair because it’s not free money – the proprietor has to work for it. So a valuation is helpful, but even such valuation is not always accurate and varies from one appraiser to another, hence a valuation conflict.

Works of art

Choosing works of art is a matter of taste. What happens if both beneficiaries have the same preference, and both of them prefer painting “A” even though it’s valued the same as “painting B”?

At the Law Offices of Albert Goodwin, we take estate conflicts seriously, and are willing to invest the time and effort to achieve the best possible distribution for our clients. We are here for you. You can call us at 212-233-1233 or send us an email at [email protected].