Can an Executor of a Will Be a Beneficiary?
An executor is a person in charge of executing the will of a testator after their death. As this is a position of trust, many people assume that an executor must not have any conflicts of interest, and cannot also be a beneficiary of the will. On the contrary, there is no impediment to appointing a beneficiary as an executor, although there are reasons that a testator might choose not to do so.
What are the Duties of an Executor?
The duties of the executor are complex and can be time-consuming, especially if a will is challenged or contested. The chief role of an executor is to gather and protect the assets of the estate, discharge the debts of the testator, manage taxation affairs, and distribute the remaining assets to the beneficiaries. Additionally, the executor may help to arrange the funeral, obtain a death certificate and apply to the courts for a Grant of Probate. They may have to send notice of the testator’s death to insurance companies, superannuation funds, and government departments (such as the Australian Taxation Office and Centrelink). The executor must coordinate communication with both creditors and beneficiaries, and ensure that they transparently account for the estate.
Who Can Act as an Executor?
Legally, the only requirement for an executor is that they are over the age of eighteen, and of sound mind. These basic requirements ensure that the executor can administer the estate of the deceased competently.
Many people nominate the chief beneficiaries of their estate as their executors. Often spouses will act as executors for each other, or children for their parents. There is a clear rationale for this arrangement: close family members are usually best placed to know the wishes of the deceased and are often conveniently positioned to carry them out. The role of executor can be a burdensome one, and it is reasonable for the testator to ask the person who benefits most from the will to administer the estate.
What Problems Can Arise When a Beneficiary is Executor?
It is essential that every testator carefully considers whether an independent person, such as a solicitor, would be better placed to act as executor. Although a testator can avoid paying professional fees by appointing a beneficiary as executor, this approach may introduce some risk.
If a family member believes that they have not received adequate provision under a will, this can lead to disappointment and family disagreements. Where the executor is also a beneficiary, and there is no independent person to assist the family with the estate, these disagreements can result in irrevocable family rifts. Additionally, if there is a dispute involving a beneficiary who also acts as executor, then the entire administration of the will may be contested in court. If there is a high likelihood that there will be disputes amongst family members, it is sensible to appoint an impartial third party in the hope that they can mediate conflicts as they arise.
What if the Executor Named in the Will is Unavailable?
Sometimes the nominated executor of a will is unable, or unwilling, to perform their duties. It is for this reason that solicitors recommend that testators obtain agreement from their nominees before including their names in the will, and regularly check to make sure that the nominee is still willing and able to administer the estate.
If a nominated executor dies before the will is executed, then another executor named in the will assumes responsibility. For this reason, solicitors advise testators to nominate more than one executor in their will. If there is no reserve nominee named in the will, then someone will have to apply to the Supreme Court to be appointed administrator of the estate. Anyone, including a creditor, can apply to be an administrator of an estate.
Testators will sometimes appoint multiple executors for different administrative functions. While a family member may be the best person to handle personal matters, such as the funeral arrangements and the disposal of household items, a friend or professional may be appointed to administer the remainder of the estate. For instance, a solicitor can act as an impartial executor and handle the bureaucratic complications of a deceased estate. Regardless of who is appointed executor, the will must be well-drafted and unambiguous because this will make it easier for the executor to administer the estate and abide by the wishes of the deceased.
Choosing an executor is one of the most important decisions faced by a testator. The executor is the person entrusted with carrying out the deceased’s last wishes, and a competent executor can relieve a bereaved family of many burdens. For more information on appointing an executor, or help drawing up a will, please call Armstrong Legal on 1300 038 223 or send us an email to make an appointment.