Can a person named as executor still be the executor if he owes the estate money?

Can a person named as executor still be the executor if he owes the estate money? Does it matter if it's a really large sum of money? A reader recently asked me about this. The question and my response are as follows:

"All four of us siblings are named as co-executors, however there is a provision in the will that a fairly large amount of money, borrowed from our parents while they were alive by one sibling and not paid back, be accounted for in the sharing of the estate. My question is whether the sibling who owes the money (in excess of $100,000.00) can act as a co-executor. We would really appreciate your reply in this regard prior to this becoming a divisive issue amongst all of us."

My reading of these facts tells me that this will was prepared by a parent who was doing everything that he or she could to treat all of the kids equally. Personally, I don't agree with the idea of naming all four kids as co-executors, and have never advised a client to do this. I can see that naming all of them as beneficiaries treats them equally, but naming them all as executors is another matter.

It's really hard for four siblings to work together on the number and variety of issues that crop up during an estate, particularly when nobody actually has the final say. In my view, if everyone is in charge, then nobody is in charge. Let's hope everyone in this case can rise to the challenge. Let's hope that the budding argument about the eligibility of the fourth sibling to be an executor is not setting the tone for the whole estate.

The simple fact that a named executor owes money to the estate is not enough to disqualify him or her from being an executor. It's really not that unusual for an executor to owe the estate money when you consider how many parents have helped their kids financially. That aforementioned intention to treat everyone equally did result in the parent specifically addressing the repayment of the loan, which is a saving grace in this specific case. Assuming that all of the executors do what they are supposed to do, which is follow the instructions in the will, there is no legal problem.

If for some reason the sibling who owes the money decided to try to contest the will's instruction that he repay the funds, I believe it would be better for that person to renounce as executor. It's a direct conflict of interest for that person to be both the person attacking the will and the person defending it. This has been done before, but it's difficult and frustrating. Think about it - all four executors have to agree on everything, including how to fight the lawsuit brought by one of them. That's not going to run smoothly and I can't see why anyone would even want to be in that position.

In this case, because there are other executors named, the estate would not be left without representation if one sibling stepped down. The estate would not suffer harm by being administered by three instead of four. In fact, the estate would probably be better off because it would not be held up by endless delays and arguments.