An executor can be a beneficiary in a Will.
The same person fulfilling both roles is both perfectly legal in the UK. Its also common - about 70% of Wills appoint a beneficiary as an executor.
This short article looks at the duties of executors, possible conflicts of interest with being a beneficiary, and best practices as to how to avoid them.
Relationship between executors and beneficiaries
First, we need to explain some jargon, as there are no easier ways to describe these things precisely and concisely.
A 'testator' is the person whose Will it is. 'Testatrix' is the female noun.
The 'estate' is everything the testator owns, including cash, personal possessions and any share in their home.
An executor manages a person's estate after their death, handling their affairs, calculating whether tax is due and distributing assets according to the Will's instructions. Executors are appointed through clear statements in the Will. Children can take up the role of executor (if they are nominated) if they are over 18.
A beneficiary is someone who receives assets or property from the estate. They might be explicitly named (such as in 'To Fred Roberts...'), or they might be part of a group (such as in 'To each of my grandchildren...') or they might inherit as a result of someone else not inheriting (such as being the child of a named beneficiary whose parent has died before receiving their inheritance).
Testators often select executors from close family members or friends because they can be trusted to carry out their wishes. They also are likely to have intimate knowledge of the estate (such as where the testator kept investments or what references to possessions mean such as 'Aunt Wilma's engagement ring').
This level of trust also means that these individuals are likely to be left gifts, and as such, are beneficiaries. It is very common for a surviving spouse to be both the executor and the main beneficiary of the estate.
What are an executor's responsibilities?
An executor's responsibilities include:
- collecting and safeguarding estate assets: securing property (such as taking possession of valuables), collecting debts owed to the deceased, creating an inventory of possessions, and dealing with financial institutions;
- paying debts and taxes: settling outstanding bills, including funeral expenses and taxes;
- completing the tax forms and paying any inheritance tax due;
- distributing assets to beneficiaries: transferring money and possessions to the named recipients as per the Will's instructions;
- maintaining accurate records: carefully documenting all financial transactions.
Together, this is referred to as the 'probate process' or just 'probate'. To 'administer' the estate, the executor needs legal rights to handle the deceased's assets. They obtain these by applying for (and obtaining) special permission, known as a grant of probate, from the court.
Because there can be so much work involved, the probate process can be complex and time-consuming.
As an executor, you must behave impartially and in the best interests of the estate and all beneficiaries. You must act in a fiduciary capacity.
Executors often have to make complex legal and financial decisions, such as when to sell property or how to invest estate funds. These choices can significantly affect the final estate value, in other words, beneficiaries' inheritances.
What rights do beneficiaries have?
Beneficiaries have certain legal entitlements regarding the estate:
- to receive their inheritance within an appropriate period;
- to be given updates on the probate proceedings;
- to be given accounting records that show they have received their gift in full; and
- to challenge the executor if mismanagement is suspected, to petition the court to review or remove them.
Beneficiaries may also wonder if they should receive a copy of the Will.
What conflicts of interest might arise?
Conflicts of interest occur when a beneficiary's personal interests clash with their executor duties.
They might include:
- undervaluing assets when reporting to HMRC, which could reduce inheritance tax but is illegal and unethical;
- making decisions on property sales that benefit the executor-beneficiary over other beneficiaries;
- prioritising their own gifts in asset distribution; and
- interpreting ambiguous Will clauses in their favour.
How can potential conflicts be managed?
Potential conflicts can be reduced with good record keeping and regular communication. For example, an executor might offer monthly updates on their progress, with an estimation of the estate's value. They might tell beneficiaries what actions they will take or have taken, and why.
Using professional advisors
Conflicts can also be avoided by using professional advisors, such as solicitors, accountants and surveyors for complex legal or financial matters. Professional advice protects executor-beneficiaries from personal liability and ensures all beneficiaries receive fair treatment.
This isn't always necessary though. The majority of executors act without support. However, it might be wise to seek legal advice in complex situations, such as:
- estates with diverse assets or international elements;
- where there are potential tax complications;
- in family disputes or legal challenges; and
- where there is uncertainty about statutory obligations.
Frequently asked questions
Can executors be paid, even if they also are given a gift?
Executors may be compensated for their services if stated in the Will or agreed upon by all beneficiaries.
This payment is for the work done as an executor, separate from any inheritance, and does not negate the duty of impartiality.
Can a beneficiary be a witness to the Will being signed?
To be legally valid in England, a Will requires two witnesses to print their name and address on it (the attestation statement being a key element in the structure of your Will).
By law, a witness cannot be a beneficiary of the Will because of the conflict of interest that exists that might lead others to question the Will's validity. If a beneficiary acts as a witness, they lose their right to their inheritance.
However, an executor can be a witness. But it is best that they are not if they receive any sort of compensation for their work.