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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.

38 comments:

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

    Lynne

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  3. 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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  4. 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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    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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  5. 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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  6. Can I act as an Executor of a Will, and also be a beneficiary in British Columbia, Canada ??

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

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    Replies
    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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  8. This comment has been removed by the author.

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

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  11. 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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  12. 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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  13. 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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  14. Lynne we have problem. Prior to our mom's passing she reinstated our names( my sister's and I) as beneficiar ifs of her investment s outside the estate plan. Her estranged husband is the executor! He is contesting us as beneficiaries to the investments. Isn't this a conflict of interest? Is he allowed to submit his legal fees for this to the estate?

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  15. I have a wife and 4 childern ages over 25 , whats a sugesstion I should for them as executors , beneficiories and witness

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    1. There's no way I can answer this. I don't know them, their abilities, their attitudes, or even where they live. There are just too many unknowns for me to make guesses.

      Lynne

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  16. i live in egypt i love someone in canada i have been the one for him for 16 years in bad times during his illness he wants to make the will for me he has a house i will get but i live in egypt can he make me the excutor or can u be my excutor

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    1. It's legally possible to name an executor in another country, but let's face it, naming someone as far away as Egypt makes things harder.

      Your friend can name a family member or friend in Canada, or even a trust company. No, I wouldn't act as executor. I almost never agree to act as executor for anyone. And remember that he is the one who needs to find and name an executor, not you.

      Assuming that your friend is getting his will made by a lawyer in Canada, he should talk over the choice of executor. Maybe his lawyer would be willing to do it.

      Lynne

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  17. My aunts will is assigned to friend as executor. The lawyers spelled the executors last name wrong. What will happen and does anything change in alberta

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    1. I assume you mean it's spelled wrong in the will and not in probate documents. I also assume it's too late to fix the will.

      It's not a problem. Say the executor's name is John Doe but the will accidentally called him John Doh. The probate documents can be made naming him as "John Doe, in the will described as John Doh". There would be a statement in the probate documents that they are one and the same person. It happens.

      Lynne

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  18. may a trustee, or child, receive retirement investments even though the beneficiary was not named?

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    1. No, not directly. I assume that by "retirement investments", you're talking about RRSP or RRIF investments. They carry a named beneficiary so only the beneficiary named can receive those investments when the owner of them dies. If the child isn't named, he or she doesn't receive them, period.

      If the named beneficiary has already died, or if nobody was named as beneficiary, then the investments become part of the deceased owner's estate. At that point, the investments will be divided up according to the deceased's will. So, through that roundabout way, a child could receive the investments but as I've pointed out, it's not directly from the investment but through the estate.

      Lynne

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  19. Hi Lynne, maybe you could help me on a urgent matter. Back in 2015 my father died of cancer. Before he died, him and his wife (my step mother) were looking after my grandfather for several years. My father was the executor of my grandfathers will. When dad passed away my step mother became executor. She has told me that she was going to make me co executor but ive never seen it in writing. My grandfather has roughly half a million in RBC shares. Myself, my sister, my cousin , and my step mom are to equally receive 25% of these shares. I only recently found out she was listed as sole beneficiary of his life insurance policy. And my grandfather has complained of his bank accounts being abused but his shares can't be touched. Step mother told me that she has to pay over $100,000 in capital gains taxes for his shares which he invested in back in the 90s. I'm very confused by this and fear the worst. Where all dividends are reinvested (DRIP) and aren't taxed until sold, why is she saying this? I don't want my shares cashed out. And my grandfather is 89 now... Ive never seen his will either. Please help.

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    1. So this struggle is over grandfather's will, and he's still alive? I hear a lot about what you want and your step mother wants and very little about what your grandfather wants. Your family sounds like a flock of vultures.

      First of all, nobody can make you a co-executor of your grandfather's estate except for your grandfather.

      Secondly, while your poor grandfather is still alive, his greedy wife has ABSOLUTELY ZERO authority under his will. Being an executor is totally meaningless while the testator is still alive.

      I assume that the step-mother must be acting under an enduring power of attorney if she is dealing with his shares and bank accounts. If so, she needs to back off and stop acting as if she gets to keep them or distribute them.

      I honestly find this whole post upsetting and shocking. You are worried about your shares being cashed and your poor grandfather isn't even dead yet. I just don't know what to say.

      Lynne

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  20. Hi Lynne
    I am a benefeciary of my grandfathers will. My Mother, brother, and little sister are also beneficiaries. My brother was appointed an executor of the will and also resides in my grandads home as a tenant. He has not payed rent since my Grandfather died. His argument for that is because that money that he is paying in rent will eventually be going to the three of us and he doesn't think that's fair.
    My question to you is should he still have continued paying rent into the estate? The money that is owing on the mortgage of the home every month is coming out of my fathers pocket since my brother stopped paying his rent. That debt that my father has incured will be deducted from our portion when the house sells and money is to be despersed all because my brother stopped paying his rent.
    Please help!

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    1. He should be paying rent. He is breaching his duty to maximize the estate. His owed rent could be taken out of his share of the estate but with him being the executor I'm sure he'll refuse and you'll have a fight on your hands.

      Lynne

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    2. Thank you so much for replying to confirm that for me. This was not an issue previously because was told he would not be claiming the 5% executor fee on top of not paying his rent. Now he is wanting to claim that fee that he feels that he is entitled to. He has already banked over 6K by not oaying his rent. My dad has been covering his rent to make up the mortgage to carry the house until it sold. My dad is also not happy that he has had to do so but was also manioulated by my brother.

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  21. Hi Lynne:

    Recently, my wife was told her breast cancer is "terminal" and were told to get our Power of Attorneys and Health Care Directives in order. We did this within a matter of a few days with the help of a lawyer and it was quite expensive. When the lawyer reviewed our (30 year old) will, everything was in order except for the fact that our named executor is now deceased, and the lawyer recommended a codicil to our wills to rectify this matter (another high expense). We live in Manitoba and a little research indicates that it is legal to handwrite your own codicil, as it doesn't require any witnesses. I am thinking of having my wife & I do the codicils on our own, as our wills are quite straightforward (surviving spouse, then surviving children are the beneficiaries). In our codicils, we only intend to name a new executor for our wills, which would be our "spouse", with alternate executors being my son and then our daughter (we have 2 children). What are your thoughts on our situation and writing our own codicils?

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  22. Wow, a lot of great information, when you have no clue what to do. My mother passed away a little over a year ago. I am the youngest and legally adopted. When my mother passed my brother and sister chose not to notify me, my aunt actually read the obit in the paper a week later and told me. I was estranged from the family because my now deceased father was an alcoholic and I chose to stay away. However, I did keep in contact via email with my mother, until I suspected the answers were being written by my sister and executor of the will. When I asked for a copy of the will I am receiving a small amount of money, the house my mother owned is not mentioned and 9 days after she passed my brother and sister put the house in their names. How long does probate take and when will I be notified of Statement of Assets? My sister the "executor" also works for a law firm and I suspect she is dragging her heels and doing things last minute. My real worry is that it has already been probated and I will miss the 180 days to contest. With no information and updates from her I am completely left in the dark.

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    1. Because you were legally adopted, you are as much the child of your mother as are your siblings.

      You ask when you are to be notified of a statement of assets, but you should realize that there is no court officer going to send you anything. The only things you are going to get are coming from the executor. That is the one and only person with any obligation or role in this.

      I would suggest that you do a search of the probate court to see whether anything has been filed in your mother's name. Phone up the clerk of the court in the town nearest where your mother lived and explain what you want. The search may cost you about $20 or so but it isn't much. If you find out that something has been filed, asked for a copy of ALL the documents on the file. This should give you a copy of the will as well as an inventory (statement of assets) of the estate and other information.

      The time it takes for probate varies from place to place. Here in NL, I get my probates back in 10 days to 2 weeks. When I worked in AB, the turnaround time was more like 6 weeks.

      I expect you will find a court record, since property has already been transferred. If the time limit you mention has been exceeded, see a lawyer to advise you.

      You need to see the will first. You need to know whether you are in it, and if not, whether the will was made under undue influence by your siblings.

      Don't waste any time as assets can disappear if you wait.

      Best of luck.
      Lynne

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