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Monday, May 15, 2017

Must beneficiaries all present a united front to challenge an executor?

Recently a reader asked me a question about whether ALL beneficiaries of an estate had to band together to tackle an executor, or whether one or two could act alone. Even though I answered his question on the post where it was asked, I wanted also to post it here and give a more detailed answer. I believe it's a question that will interest many beneficiaries. Here is the question followed by my comments:

"Can an executor's conduct be challenged by some but not all of the beneficiaries of a will? My brother and I have strong reason to suspect the executor of our father's estate of malfeasance. He having proved impossible to reason with and stiff-necked, we two have consequently decided to approach a lawyer. A third beneficiary remains very close to the Executor and won't hear of taking any action against him. In the absence of unanimity, are we two entitled nevertheless to challenge his behaviour? Must beneficiaries present a united front to take action?"

The short answer is that yes, some beneficiaries can challenge the executor even if not all of the other beneficiaries are on board with that.

It is true that some rights apply to the beneficiaries as a class or group of people. For example, all residuary beneficiaries are entitled to a full accounting of the executor's accounts. That does not mean that they may only receive those rights as a group. Each of them as an individual has those rights himself or herself.

This means that one or more members of the group could waive a particular right while one or two others did not. Using the example of the accounting, one beneficiary could decide he or she didn't want an accounting, but that does not mean that the remaining individuals who are in the group must waive the right as well.

It is sometimes the case that an executor treats one beneficiary more preferentially than the others based on their relationship or other factors, so naturally that beneficiary is not going to object to what's going on. In fact, sometimes that's the reason for the lawsuit!

Keep in mind that if two of the three beneficiaries end up asking the court for assistance with the estate, the third beneficiary is affected by the result as well. For that reason, the court will want to know that the third beneficiary is aware of what's going on and that the third beneficiary has the chance to participate in the proceedings if he or she wants to. While the third beneficiary will not be forced by the court to take sides, the court will allow him or her the opportunity to be heard.

There are great reasons for all beneficiaries to stick together when it comes to estate litigation, not the least of which is that they can pool their resources to pay legal fees. And it's a huge relief not to have fights splitting the family. However, it's not always workable in real families in real life.

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