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Wednesday, December 4, 2019

Can the executor control when and how much money a beneficiary gets?

A reader has asked a question about how much control an executor may exert over the amount of money a beneficiary receives, and how often he or she receives it. This isn't an unusual question, since most people, including executors themselves, don't always realize or respect the boundaries of an executor's authority. The question and my response are below:

"Can the executor control when and how much money a beneficiary gets? The executor is currently only releasing a little per month to my wife and is threatening to 'cut her off' if she doesn't do what he wants."

The executor has to follow the will, so to answer this question, you have to look at the wording of the will. In order for the executor (who in this case is also acting as the trustee) to release only a bit of money each month, the will has to say that your wife's share is held in trust. The trust could be for a certain amount of time, or for her entire lifetime, as determined by the will. If it is not held in trust, then the executor has to release the share to her as soon as the money is available. By available, I mean that assets have been sold or converted, and debts have been paid.

If there is no trust, the executor does not have the option of holding onto your wife's share and doling it out to her a bit at a time.

Keep in mind that an executor may choose to hold back some part of the estate until a tax clearance certificate is obtained. The situation you've described doesn't sound like a hold-back; it sounds like a trust.

If the will does say that your wife's share is to be held in a trust, read the will to see what it says about the timing and amounts that your wife should be receiving. It's not unusual for an executor/trustee to be told simply to hold the money until a certain time and to use his or her discretion in when the beneficiary gets the money in the meantime.

The key to what you're looking for in the wording is the executor's discretion. This term refers to the executor's power to withhold or pay money as he sees fit. If the will gives the executor full discretion, then yes, the executor can certainly control when and how much money your wife may receive. If the trust terms given under the will say that your wife is to receive a certain amount each month or each year, then the executor must give her that much and he doesn't have a choice in the matter (unless there are insufficient funds).

Obviously I haven't seen the will in question so I can't interpret the wording for you. Hopefully the will is clear on what the testator intended to do.

The executor may be completely ignoring the terms of the will that describe how your wife is to receive her inheritance. If this is the case and he will not handle the estate properly, your only recourse is to hire a lawyer who will help you to force the executor to handle the estate as he should be. I really hope it doesn't come to that.

We also need to look at the fact that the executor may be abusing his position to try to control your wife's actions in some way. He certainly wouldn't be the first executor to do so, unfortunately. Threatening to cut someone off is, at first glance, a completely wrong approach for an executor to take. However, there are at least two sides to every story. A struggle like this is rarely one-sided. The executor could be trying to say - for example - that it's his job to ensure that her inheritance lasts as long as possible and that her spending will deplete it too quickly. Perhaps he believes that the amount he is dispensing each month is perfectly reasonable and in accord with the terms and the intention of the will. He might think that your wife is asking for too much money.

Start by getting a copy of the will. If you can't find what you're looking for, take the will to an estate lawyer for an interpretation of the terms of the will and an opinion on your wife's rights as a beneficiary.

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