Does the executor of a will or estate that you're involved with have a conflict of interest? Heirs and other estate stakeholders have to rely on the services and judgment of executors, but in some cases, a conflict of interest between the executor and their role may cause them to not do the right things.
How can you identify such a conflict of interest? And what can or should you do about it? Here are answers to some important questions.
What Is a Conflict of Interest?
Conflicts of interest occur when a person is in a position to benefit from actions they may take in their official duties or role. A common example of an executor's conflict of interest is when they are also a beneficiary. If the executor is tasked with dividing up their grandmother's jewelry collection among siblings, they may, for instance, select the more expensive or most sentimental pieces for themselves.
Another common situation is when an executor wants to purchase a piece of property they must sell for the estate. As an executor, their first responsibility is to get the best price for the estate. However, as a buyer, they may be tempted to sell it to themselves for a below-market rate.
Is a Conflict of Interest Always Bad?
Because many executors are family members or friends, they often face these and other conflicts of interest. However, this doesn't automatically disqualify them from the role. A conflict of interest can be recognized and managed instead. The executor above, for example, may disclose that they want to buy the property and then demonstrate to the heirs what methods they will use to ensure a fair price.
What If the Executor Doesn't Manage Conflicts of Interest?
What can you do if the executor of your loved one's estate doesn't disclose and minimize their conflicts of interest? The good news is that heirs don't have to stand back and accept it.
One or more stakeholders can petition the court to remove the executor from that role. They would need to provide clear evidence that the executor is acting against the interests of the estate and that these actions are causing harm. The greater the harm (or potential harm), the more likely the judge is to appoint a new executor. This new executor, now called a personal representative, can be another person in the deceased person's circle or it can be an independent third party.
What Should You Do First?
If you have reason to believe an executor is not fulfilling their fiduciary duty to the estate and its heirs or stakeholders, start by consulting with an experienced probate attorney in your state. They will work with you to identify the problem, alternative actions to solve it, or the best route to resolve it in probate court. For more information, contact a probate law firm near you to learn more.