Introduction to the Roles of Executor and Beneficiary

The executor is the person who is responsible for administration of the estate of a deceased person, including applying for probate, taking possession of assets, paying debts, lodging tax returns, resolving disputes, and distributing the estate to the beneficiaries named in the Will, or in the case of a partial intestacy, intestate assets will be distributed in accordance with the intestacy rules. 

Among an executor’s various duties and responsibilities is a duty to act in the best interests of the estate and the beneficiaries — this is referred to as a ‘fiduciary duty.’

A beneficiary, on the other hand, is a person or entity which is entitled to receive the bequest set out in the terms of the Will, or, in the case of intestacy, under the relevant legislation, such as the Succession Act 2006 (NSW). A beneficiary does not have a fiduciary duty to the estate or other beneficiaries. 

Can an executor also be a beneficiary of a Will?

Yes, an executor can also be a beneficiary of the Will. This is common, especially where the sole beneficiary is also appointed executor. Where a person leaves their estate to multiple beneficiaries but only names one of the beneficiaries to be executor, this can increase the risk of a dispute or conflict. 

An executor who is one of several beneficiaries must ensure they comply with their fiduciary duty to act in the best interest of the estate and all beneficiaries. If there is evidence that the executor has favoured their own interests over the interests of the other beneficiaries, this may give grounds to have the executor removed. 

If you have concerns about an executor’s conduct involving a potential conflict of interest or their lack of impartiality, contact Empower Wills and Estate Lawyers today to discuss your matter.

Duties of an Executor Who Is Also a Beneficiary

A person who is both an executor and beneficiary must place their duties and obligations as an executor before their rights as a beneficiary. 

Upholding the Will’s Intentions

Regardless of whether the executor is also a beneficiary, the executor is responsible for administering the deceased estate in accordance with the terms of the Will. The executor must act impartially, even if this impartiality will ultimately benefit another beneficiary.

If an executor wants to claim a larger share of the estate by challenging or contesting the Will, the executor may bring proceedings against the estate just like any other person, but an executor will usually be required to renounce their role before they commence the claim against the estate of the deceased person. 

Managing Estate Assets

The executor is a person responsible for obtaining possession of the estate assets (referred to as ‘calling in’ the estate assets), managing the assets, and ensuring assets are distributed in accordance with the terms of the Will. This will often include protecting the estate assets from wastage or damage and insuring relevant assets. 

Paying Debts and Taxes

Before distributing the assets to the beneficiaries, the executor is required to resolve all of the estate’s debts and liabilities. This may require the executor to sell assets (even those that are the subject of specific gifts) to cover the estate’s liabilities. If the executor distributes the estate before resolving all genuine estate liabilities, they may become liable to refund the estate.

Distributing the Estate According to the Will

Once the funeral, testamentary and administration expenses have been paid, the executor must distribute the person’s property according to the Will, or, in the case of a partial intestacy, in accordance with the intestacy laws. If the Will is unclear, the executor may apply to the Supreme Court of NSW for judicial advice. 

Communicating with Co-Beneficiaries

An executor has a duty to communicate with the beneficiaries. Executors should provide all beneficiaries with regular updates on the progress of the administration of an estate, issues that have arisen and give reasons for any delays. Good communication will often reduce the risk of disputes arising from delays. 

Legal Obligations and Avoiding Conflicts of Interest

An executor who is also a beneficiary must perform their executor role with impartiality. They should avoid any actions which directly favour or appear to favour their interests over those of the estate or other beneficiaries. An executor who encounters a potential conflicts of interest should seek legal advice to ensure their actions are lawful and proper.

The Process to Nominate an Executor Who Is a Beneficiary

Before appointing a beneficiary as an executor, the testator should consider whether the executor is eligible and suitable.

Anyone over the age of 18 is eligible to act as executor. 

When choosing an executor, it is important to carefully consider whether the person can be trusted to administer the estate in accordance with the terms of the Will. If there are doubts about the person’s honesty, integrity or trustworthiness, they may not be an appropriate choice. You may wish to select someone who can navigate complex family dynamics without favouritism and ensure your estate will be distributed according to your wishes. Common choices include a spouse or adult children. Where there might be rival siblings, it may be worthwhile appointing an executor who is a solicitor to act as an independent executor. 

Solicitors can assist in the estate planning and estate administration process. For instance, a solicitor can assist a testator to select the most appropriate executors before they pass away by advising the testator of the executor’s role and identifying family dynamics that may increase the risk of a disagreement having regard to the particular estate plan. In some cases, the appointment of an independent executor may avoid these risks. After the death of the testator, a solicitor can also assist the nominated executor to administer the estate and ensure compliance with their many duties and responsibilities.

Executor and Beneficiary: Managing Bank Accounts

The executor is responsible for securing the deceased’s bank accounts. This may involve closing the deceased’s bank accounts and transferring the proceeds into an account specifically opened to hold estate monies. This account may be used to pay funeral, testamentary or administration expenses. An executor is required to keep detailed records of all transactions and the beneficiaries have the right to inspect the accounts, among other rights.

Executor vs. Trustee: Understanding the Difference

It’s important to understand the difference between an executor and trustee, and their roles. 

The executor’s role is to administer the deceased’s estate in accordance with the terms of the Will. This involves collecting the estate assets, paying the estate’s liabilities, and distributing the estate in accordance with the named beneficiaries, or, in the case of a partial intestacy, in accordance with intestacy laws. Whilst sometimes difficult to determine the precise moment, an executor’s role ends once the administration has concluded. 

If the Will establishes trusts, the trustee will take control of the trust property and be responsible for managing the trust property in accordance with the terms of the trust from that point forward. Unlike an executor, whose role typically lasts between six months and 24 months, a trustee may be required to manage certain assets for an extended period as dictated by the trust’s terms. The role of trustee involves the ongoing duty to manage the trust property for the benefit of the beneficiaries, which can continue on for many years, or decades, depending on the terms of the Will and any trust created by it.

Where a person dies intestate, a person may apply for administration, which if granted would give them the same powers as an executor. If a trustee is required (i.e., for beneficiaries who are minors) the court may appoint a trustee. 

How an Executor Named as a Beneficiary Can Distribute the Remainder of the Estate

All executors have a responsibility to administer the estate in the interest of the beneficiaries, without undue delay and without partiality. The process usually involves:

1. Funeral arrangements: Although the executor is responsible for making funeral arrangements having regard to any directions set out in the Will, in practice, funerals are usually arranged by the deceased’s immediate family.
2. Apply for a Grant of Probate: The executor has the right to apply to obtain a Grant of Probate. However, a Grant of Probate is not required in all cases and it will depend on the size of the estate and nature of the assets. An executor should seek advice on whether a Grant is required, at the relevant time. 
3. Asset Collection and Valuation: The executor identifies and obtains possession of, protects and preserves all assets of the estate, including superannuation. 
4. Settling Debts and Liabilities: The executor is required to pay all funeral, testamentary and administration expenses. This includes all genuine estate debts and taxes. This might require the executor to sell assets to meet the estate’s liabilities.
5. Distribution According to the Will: Once all the funeral, testamentary and administration expenses have been paid, the executor may distribute the estate to the named beneficiaries, or, in the case of partial intestacy, in accordance with intestacy laws. 
6. Establishing trusts: If the Will establishes a testamentary trust, if the executor is also the trustee, they must settle the trust property for the benefit of the beneficiaries of the trust and manage the trust, or if the trustee is a different person, the executor is required to transfer the trust property to the trustee for them to manage the trust in accordance with the terms of the Will or terms of the trust.
7. Final Accounting: The executor may provides a detailed account of the estate’s assets and distributions. If the executor does not provide this information voluntarily, or refuses to provide it when requested, the beneficiaries may seek the filing and verification of the accounts with the Court. 

The Legal and Ethical Considerations When an Executor Is Also a Beneficiary

When an executor is one of multiple beneficiaries, several legal and ethical considerations must be managed to avoid conflicts of interest:

• Impartiality: The executor must act impartially and in the interests of the estate and other beneficiaries. 
• Avoiding Conflicts: An executor who is also a beneficiary must avoid conflicts of interests.
• Legal Compliance: The executor must comply with their various duties and responsibilities in relation to the assets and liabilities of the estate and the beneficiaries. 

Seeking Professional Help: When Executors Need a Lawyer or Accountant

Administering an estate can be complex, particularly when the executor is also a beneficiary. If you find yourself in this position, seeking professional legal advice is crucial to navigate potential challenges effectively. Empower Wills and Estate Lawyers is here to assist you with every aspect of estate administration. Whether it’s understanding your duties, managing potential conflicts, or ensuring legal compliance, our experienced solicitors can provide the guidance you need. 

If you are preparing an estate plan and are considering appointing a solicitor to act as an independent person, and would like us to act as executor to administer your estate, call us to discuss. 

Call us at 1300 414 844. We offer a range of flexible fee structures, including “no win, no fee” options, to suit your specific needs and circumstances.

Liability limited by a scheme approved under Professional Standards Legislation. 

Disclaimer: the information in this article relates to NSW law as at the date it was written and is general information only. It does not constitute legal advice and should not be relied upon as legal advice. It may contain information or links to sources which are no longer current. If you have a question or legal issue, we recommend you contact a lawyer and obtain legal advice that takes into account your specific facts, circumstances, needs and objectives.