When a loved one passes away an executor is responsible for settling their estate, according to the terms of their will or trust. This includes the distribution of assets to the proper beneficiaries, although assets can also be placed in a trust for a beneficiary. All debts, expenses and estate taxes must be paid before a beneficiary can receive any assets, including money. The executor is bound to follow the directives of the will and must act in the best interest of the estate.
But can an executor withhold money from a beneficiary? Legally, the executor cannot change the will or refuse payment, but executors can breach their fiduciary duty, as explained below, leaving beneficiaries vulnerable to creditors. As a beneficiary, you are guaranteed certain rights, and understanding your rights is the first step to ensuring you receive the inheritance you deserve.
There are many ways an executor can breach their fiduciary duty, and violate the trust placed in them. Here are common examples of executor misconduct:
- Withholds accountings to beneficiaries – The accounting requires specificity, and any personal representative should maintain records to substantiate the estate transactions and have them readily available for inspection and review.
- Failing to pay creditors, taxes and other expenses – An executor is charged with settling a decedent’s financial affairs. This includes paying estate taxes and reconciling outstanding balances with creditors.
- Displaying favoritism – An executor must be impartial and treat all beneficiaries fairly.
- Misappropriating or stealing – Taking funds for personal gain can include unauthorized transfers of titles to properties, gifting assets to unnamed beneficiaries or using funds to pay their personal expenses, or to give themselves an unreasonable amount of compensation for their services.
- Estate asset mismanagement – not identifying and protecting all property.
- Withholding inheritance – Refusing to comply with the terms of the will or trust.
An executor should never make decisions designed to make a profit for themselves or to put their own interests ahead of the estates.
How to handle executor misconduct
If an executor is not competent, causes financial harm to the estate, or acts illegally, a beneficiary has the right to take legal action. Move quickly in taking action against the estate executor. You can file a lawsuit for damages in civil court and should be able to appear before the probate court to request an injunction. To be successful you must establish to the court’s satisfaction that the estate lost money and its beneficiaries were denied their rightful inheritance.
Estate planning or trust lawyers can petition courts to compel the executor to provide information about the accounting of the estate, the process of distributing the inheritance, and the amount of assets due to the beneficiaries. If that fails lawyers can request a judge to have the executor removed. In that case, you may be compensated, and your attorney’s fees might be paid by the estate or personal assets of the executor who was removed.
If you are a beneficiary and an executor is withholding inheritance from you, call an estate lawyer at once. Ensure you have top legal representation to recover the estate’s property.