Executor vs. Beneficiary Rights: Estate Planning Guide - SmartAsset

When someone dies, others may be called on to manage their estate. An executor is charged with overseeing the distribution of someone’s assets according to the will or state inheritance laws if they die without a will. The deceased person’s beneficiaries, meanwhile, get to receive assets from the estate. In terms of executor vs. beneficiary rights, there are several differences with regard to what type of authority each one has. A financial advisor with estate planning expertise can help you make a plan for distributing your assets to family, friends and other beneficiaries.

What Is an Estate Beneficiary?

An estate beneficiary is someone who is designated, usually through a will, to inherit assets from someone else. Beneficiaries and heirs may be the same individuals or different people.

A beneficiary is typically named in some type of legal document, such as a will or trust. It’s also possible to name beneficiaries for life insurance policies, retirement accounts or bank accounts. The person making beneficiary designations has the right to change them in most cases.

An heir is someone who is identified by state inheritance laws as having the right to receive assets from an individual’s estate. Heirs are typically spouses, children and other relatives.

What Is an Executor?

An executor is someone who is appointed either through a will or by the court to oversee the probate process. Probate is a legal process in which someone’s assets are inventoried, their outstanding debts are paid and any remaining assets are distributed to their heirs if they die intestate (without a will) or to the beneficiaries of their will.

When writing a will, it’s possible to name a beneficiary as the executor. However, there are pros and cons to doing so.

Having an executor who stands to benefit from your will could simplify things if you have a relatively straightforward estate. On the other hand, it could lead to legal trouble if you have a larger estate or other beneficiaries decide to challenge the will.

Executor vs. Beneficiary Rights

Executors and beneficiaries play different roles in the probate process and as such, they have different rights and responsibilities. If you’ve been named as someone’s executor, their beneficiary or both, it’s important to know what to expect.

Executors have the right to:

Consult with and appoint financial advisors, attorneys, accountants and other professionals whose services are necessary to conclude the probate process
Collect and inventory the estate assets of the deceased person
Give notice to creditors that the deceased person has passed away, so they have an opportunity to bring claims for outstanding debts
Receive reimbursement for expenses that he or she pays in order to manage the estate, which may include fees paid to financial professionals, postage and mailing costs or copying fees
Collect a fee for their time and the services they provide as the executor, which may be a flat fee or a percentage of the estate’s assets

Someone who’s named as an executor also has the right to decline the appointment.

In terms of what rights beneficiaries have, they include the right to:

Receive assets from the estate of the deceased person that they’re entitled to according to the terms of their will or state law in a timely manner
Request and receive information about the administration of the estate, including financial details
Request the removal of an executor

Beneficiaries also have the right to sue the executor of an estate if they believe that a breach of fiduciary duty has occurred. Fiduciary duty compels people who are fiduciaries, including executors, to act in the best interests of the beneficiaries or other persons they represent in financial matters.

When Can a Beneficiary Sue an Executor?

In order for a beneficiary to sue an executor, they have to have grounds for doing so. If you’re a beneficiary, you may have grounds to sue an executor if they:

Fail to provide you with financial statements regarding the estate when you request them
Delay the distribution of assets without any legal reasoning for doing so
Appear to favor one beneficiary over another when distributing assets
Mismanage or otherwise misuse estate assets for their own benefit
Use estate assets to make risky investments
Fail to meet financial obligations associated with the management of the estate, such as paying attorney’s fees or filing the deceased person’s final tax return
Have an obvious conflict of interest because they’re also a beneficiary of the estate

For example, say your father dies and names their younger brother as the executor. The younger brother is also a beneficiary of the will.

While you’re expecting your uncle to wrap up the estate and pass along your share of assets to you, you find out that he’s taken assets he wasn’t entitled to for himself. That would constitute a breach of fiduciary duty and you’d have the right to bring a claim against him in civil court.

Can Beneficiaries Contest a Will?

Contesting a will means that one or more beneficiaries bring a legal challenge against it in the probate court. Beneficiaries have the right to contest a will but again, there must be legal grounds to do so.

For example, a beneficiary might be able to contest a will if they:

Suspect the will was created under duress or through fraudulent means
Believe that the deceased person did not have the legal authority to dispose of certain assets that were included in the will
Find fault with the legal structure or form of the will document, which could render it invalid

This is another instance of where executor vs. beneficiary rights and responsibilities diverge.

If beneficiaries contest a will, the executor is notified by the probate court. They’ll need to respond to the complaint or filing, and may need an attorney to help with drafting the response.

The plaintiff in a civil case, including will contests, bears the burden of proof. But it’s still important for the executor to do their due diligence in finding evidence in favor of or against the beneficiary’s claim.

For example, the executor may need to contact the people listed as witnesses in the will or the attorney who helped to draft it. They may also need to collect information about the deceased person’s assets from their financial advisor.

Bottom Line

Understanding the difference between executor vs. beneficiary rights is important if you’ve been assigned either role by a family member or friend. Executor duties can be far-reaching but there are certain rights of beneficiaries that must be respected. And if you’re writing a will, it’s also helpful to consider these rights when deciding whom to name as executor and whom to include as a beneficiary.

Estate Planning Tips

Consider talking to a financial advisor about what to expect if you’re named as the executor for someone else or you anticipate being the beneficiary of another person’s estate. You may also want to discuss best practices for naming an executor and beneficiaries when creating your own estate plan. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you haven’t drafted a will yet, you could hire an estate planning attorney to help you, but it may be cheaper to go the DIY route. Online will-making software programs can guide you through the process of making a will step by step. In addition to writing a will, you might also consider creating a living trust or setting up an advance care directive to create a comprehensive estate plan.