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Can an Executor Override a Beneficiary

Can an Executor Override a Beneficiary
Yes, an executor can override a beneficiary and they often do. An executor technically may sell property, pay debts and make distributions without the beneficiaries’ input or overriding their direct wishes. But doing so may expose the executor to risks of litigation and liability even if the executor is not doing anything wrong.

An executor may do the following without asking the beneficiary:

  • Managing the estate assets including bank accounts, stock, bonds, retirement accounts, pensions
  • Taking inventory of assets, including personal and real property
  • Investing assets
  • Selling personal and real property
  • Distributing assets
  • Paying creditors and other claims including funeral expenses and any estate taxes that may be due out of estate assets
  • Contacting an employer to find out about the testator’s employee benefits
  • Managing the testator’s business
  • Making accountings
  • Communicate with the beneficiaries on a regular basis to keep them informed of important financial matters
  • Resolving disputes that may arise between beneficiaries
  • Winding up and settling the estate

An executor is technically allowed to override beneficiaries. But if the executor continues a pattern of overriding them with impunity, then the beneficiaries will lose their patience and will bring a proceeding to compel the executor to file a judicial accounting. A good executor will avoid this costly step. Accordingly, this is the kind of information that the executor should provide to the beneficiaries:

  • What is the executor planning to do
  • What stage is the probate in
  • Is there anything that the beneficiaries need to do
  • When are the beneficiaries getting forms to sign and what are the forms
  • How much money and assets are in the estate
  • What are the major expenses of the estate
  • Is the executor planning to sell real estate, and if yes, when
  • When is the executor sending out the distribution checks

When an executor is constantly overriding beneficiaries, they might feel upset and sue the executor. Technically, the executor is only required to provide legal notices and doesn’t really have to listen to the beneficiaries. But if the executor ignores the beneficiaries, then they think that the executor is hiding something from them. And they feel that the executor could be doing something that will result in the beneficiaries not getting their fair share of the estate from the executor. Here is what the beneficiaries suspect the executor of doing:

  • hiding money
  • hiding information
  • stealing money from the estate
  • taking property from the estate
  • making mistakes
  • not making the right decisions
  • ignoring executor responsibilities

Even though the executor is not required to communicate with the beneficiaries, they get upset when he does not, and that can lead to problems for the executor. An executor is a fiduciary, meaning that he has a duty to exercise the utmost good faith and undivided loyalty toward the beneficiaries throughout the relationship.[1] Does the duty to exercise “good faith and undivided loyalty” include a duty to communicate? An executor “must act in accordance with the highest principles of morality, fidelity, loyalty and fair dealing.” [2]

The executor should keep in mind that although they can override a beneficiary, it still makes sense to ask the beneficiaries for a waiver before doing important things like selling property or making distributions. An executor should strongly consider having a beneficiary sign a waiver before making any distributions. Failure to get a waiver creates a significant legal risk and exposure to lawsuits for the executor.

We often see beneficiaries of estates accuse executors of wrongdoing with no basis. Executors do have a wide latitude to act, as authorized by the court. Executors are often unjustly accused of taking funds or property of the estate and are accused of overspending on estate expenses, just because they override what the beneficiaries prefer.

An executor has to follow the will and the law and cannot perform self-interested transactions or steal money from the estate.

Beneficiaries wrongly accuse executors of doing all kinds of things. Executors are most often accused of stealing from the estate, inflating expenses and self-dealing. Unfortunately for an estate, when an executor is accused of stealing, they have to present an accounting to the court. In our experience, allegations against executors often have no basis. What beneficiaries fell is inappropriately overriding their concern is often allowed under New York estate laws. Sometimes, beneficiaries see executors using their own funds and mistake that for executors using estate funds. At other times, however, executors are not familiar with handling estates and may create a situation that makes them look bad. In such situations, we work with the executors to remedy the situation and put any misunderstandings behind them.

[1] Leon C. Lazer, et al., New York Pattern Jury Instructions – Civil § 3.59 (2d ed. 2006); see also Sokoloff v. Harriman Estates Development Corp., 96 N.Y.2d 409, 416, 754 N.E.2d 184, 729 N.Y.S.2d 425 (N.Y. 2001); Lamdin v. Broadway Surface Advertising Corp., 272 N.Y. 133, 138, 5 N.E.2d 66, 67 (N.Y. 1936);

[2] In re Estate of Naumoff, 301 A.D.2d 802, 803, 754 N.Y.S.2d 70 (3d Dep’t 2003).