Friday, January 1, 2010

Can my executor also be a beneficiary?

I am often asked by people planning their Wills whether it is possible for a beneficiary under their Will to also be named as the executor. This is particularly common in family situations when of course people want to name their own spouses and children as both beneficiary and executor.

In Alberta there is no law that excludes someone from being both beneficiary and executor. This is done all the time, for example where a married couple name each other as their executors and also leave their estates to each other. In cases like that, not only is there no prohibition against the arrangement, but it is clearly the best arrangement that could be made for that particular person's Will. When one person is inheriting the whole estate, having that person act as executor can simplify administrative matters.

There are some situations in which it does not always make sense for the beneficiary and the executor to be the same person. For example, if you are setting up a trust for your son that is intended to ensure that the son doesn't blow all of his money, it doesn't really make sense for the son to be the executor (which also makes him the trustee of his own trust). When the executor is also the trustee of a trust, he or she usually has the power to decide how much of the money in trust is paid to the beneficiary at any given time. It isn't much protection to put the son in charge of deciding how much money he is to receive.

Rather than naming the first person who comes to mind as your executor, put some thought into what an executor under your Will is going to have to do once you have passed away. Once you have an idea what the challenges will be, you can better decide who is equipped to handle those challenges. Remember that if you need a neutral third party to handle a trust, though not necessarily the whole executorship, you can always consider naming a trust company.

There is one restriction that can cause a problem. You cannot allow your beneficiaries to also act as witnesses. Should one of your beneficiaries also be a witness, your Will is still valid, but that beneficiary's gift is invalid. I have seen Wills in which the person had his children act as witnesses to his home-made Will, and tried to leave the estate to those same children. The gifts were invalid, which basically left the man with no Will at all. Fortunately the mistake was discovered on a Will review while the man was still alive and able to correct it.

22 comments:

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  2. My common-law husband and I have lived together for twenty years, in a house in Ontario which is solely in my name, as is the mortgage on it. I want to make sure that when I die, my husband will be the sole beneficiary as stated in my will. Is that sufficient to ensure that he inherits the house as he is still legally married to his "ex" wife and I have brothers and sisters, all of whom live in other countries. I am guessing that as my common-law spouse and I have no children together, my siblings would be my legal next-of-kin. Thank you for any response . . . !

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  3. Hi, I've answered your question as a new blog post, so please look for it there.

    Lynne

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  4. My mother has been named as the sole beneficary of a life insurnace policy. She is also named as the executor of the will which names her as the sole beni. of the insurance policy. Does she have to use the money in the life insurance policy (beneficery) to pay the debts of the deceased (executor)?

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    1. If someone is named as the beneficiary of a policy, the proceeds of that policy do not form part of the estate. The funds should therefore not be mingled with estate funds or used to pay estate debts. It sounds as if your mother was named personally as the beneficiary of the policy, which has nothing to do with being the executor. If you or your mother are not certain, it's a good idea to take the paperwork to an experienced lawyer who can read the exact wording and give you an opinion on it.

      Lynne

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  5. Hello. My father passed away and recently my mother passed away. She made her 3 sons the executors and beneficiaries. Two sons are living in the estate homes rent free. How do I remove them from the estate homes. Also on son recently bankrupt his company and the other son is under criminal investigation. Can they both be removed as executors. thank you

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    Replies
    1. This question wasn't answered at the time it was posted for one simple reason. There is just WAY too much there to answer in a brief blog post. This is the kind of thing that takes a couple of hours worth of discussion with a lawyer, and I'd be doing no favours to anyone by giving a quick response here.

      Lynne

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  6. if one of my sons is appointed as an executor who resides in the US does he have to post a bond . He is also named as one of the beneficiaries. Does that pose some legal problems?

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    1. Yes, assuming you live in Canada, he will be required to post a bond unless either a) you have a co-executor who is resident in your province, or b) after you die, he can persuade a judge to dispense with the bond. When you say does "that" pose legal problems, do you mean being a beneficiary in the US, or being a beneficiary as well as an executor?

      Lynne

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  7. Can I act as an Executor of a Will, and also be a beneficiary in British Columbia, Canada ??

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  8. In Ontario, can my 2 adult children be beneficiaries and also be executors of their parent's will?

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    1. I'm not sure why everyone keeps asking the same question that I answered in the original blog post, but yes, beneficiaries can also be executors.

      Lynne

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  9. This comment has been removed by the author.

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  10. Sorry for not seeing that, thank you. We used a will kit for our will and would like to know can we remove the executor because he passed away without doing a codicil? if not can we do a codicil on our own or we need lawyer for this.

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    1. I get the feeling that what you'd like to do is just cross out his name, since you mention not doing a codicil. I don't ever recommend crossing out stuff from a signed, witnessed document if it can possibly be avoided. You can certainly change executors by making a codicil or a new will.

      Yes, you can make your own codicil. Be careful to reference your earlier will, and to follow all the proper signing and witnessing requirements.

      I have to say that making a home-made codicil to a home-made will seems a bit risky, simply because if there is anything wrong with the will, neither document is going to be any use to you. Using the will kit is fine as long as you followed all of the instructions to the letter, and as long as your estate and family are straightforward (that is, no blended family, no business assets, no tax issues, no trusts, etc).

      Lynne

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  11. Great stuff, Lynne. You were an immense help to me.

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  12. Hi Lynne,

    Merry Christmas and happy holidays to you and your family ! I hate to ask sort of the same question you've already answered but i live in Ontario and would like to re assure myself of two things.

    I was appointed Executor and also am a Beneficiary on my best friend's will. He has left two life insurance policies one to be paid to his mother as a beneficiary and the other to myself as a beneficiary. The one he is leaving me is worth 3 times as much as the one for his mother and he is afraid she will give me problems if she finds out he did leave me more money..

    Is there any way for me to conceal them from seeing how much he has left me in any way ? Do i have the right to keep that part secret since ? My friend is still alive but in palliative care at the moment.

    Also since we are two beneficiaries of two seperate life insurance policies will these be paid out directly to us both and then i can give his money to his mother or do we have to withhold any money's to cover his debts ( i know you sort of answered i apologize).

    Thank you so much

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  13. Hi Lynne,

    If the beneficiaries (such as siblings) aren't on speaking terms, and one of the beneficiaries is also the executor of the will, is there any way to ensure that all beneficiaries will be dealt with fairly?

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    1. There's no easy way, that's for sure. When parties won't talk to each other voluntarily, your only recourse is either mediation (which is a long shot between estranged siblings) or speaking through lawyers via the court system. The lack of communication is going to cost money.

      Lynne

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  14. Lynne
    I just happened to come across Anonymous March 3,2016. I am in a somewhat similar as Executor/Beneficiary. My sibling will not communicate with me.There are violations. I am having a difficult time getting this case to Trial. I am being stonewalled not only by my sibling but also by lawyers, lawyers who have misbehaved. Unbelievable but true. As beneficiary I am now seeking legal representation. TBC.

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