Can an Executor Take Money From the Estate? Understanding Your Rights and Limitations

Many people who are beneficiaries of someone else’s estate wonder if their cousin who is the executor is taking more than they should. This question of whether an executor can take money from the estate comes up a lot in estate planning and probate. Let’s break it down in simple terms.

The Executor’s Role: More Responsibility Than Freedom

An executor is someone who was chosen by the person who died to handle their final affairs. But that doesn’t mean they’ve won the lottery and can now spend all of the money from the deceased’s estate.

You have a fiduciary duty as an executor, which is the highest level of care that the law recognizes. This means you have to be completely honest and loyal to help the estate and its beneficiaries, not yourself.

So Can an Executor Take Money From the Estate?

The short answer: Yes, but only for specific, legitimate purposes.

An executor can withdraw money from an estate account, but their power is limited by strict legal standards. They can’t simply help themselves to the deceased’s funds whenever they want.

When Can an Executor Legally Withdraw Money?

Executors are permitted to use estate funds for:

• Funeral and burial expenses – often among the first bills to be paid
• Paying legitimate debts of the deceased (credit cards, mortgages, loans, utility bills)
• Estate administration costs, including:
  • Legal and accounting fees
  • Court filing fees for probate
  • Property maintenance costs (homeowner’s insurance, repairs)
  • Asset valuation fees
  • Federal or state taxes owed by the deceased or the estate

Executor Compensation: Yes, It’s Legal

One thing that a lot of people don’t know is that executors usually deserve to be paid fairly for their work. They aren’t “taking” money without permission; it’s payment for work done.

The executor must

• Document their duties and hours spent
• Submit payment requests for court approval
• Keep all charges transparent to all parties involved

What an Executor CANNOT Do With Estate Money

Here’s where things get serious. Executors face strict limitations and can face legal consequences for mishandling funds. An executor cannot:

1. Use estate funds for personal benefit – This is a major no-no
2. Commingle funds – Estate money must be kept separate from personal accounts
3. Self-deal – Selling estate property to themselves at below-market prices is prohibited
4. Make unauthorized gifts to individuals not named as beneficiaries
5. Steal from the estate – This can result in criminal prosecution
6. Neglect estate assets – Allowing property to deteriorate in value
7. Favor one beneficiary over another – All beneficiaries must be treated equally
8. Fail to communicate with beneficiaries about financial matters
9. Refuse to distribute assets to rightful beneficiaries

Can an Executor Who’s Also a Beneficiary Take Their Share?

Yes! Many executors are also beneficiaries of the will, and this is completely normal. If you’re both an executor AND a beneficiary, you can:

1. Receive your entitled share of the assets
2. ALSO be compensated for your time as executor

However, you must still follow all legal procedures and cannot take your inheritance until the proper time in the probate process.

The Estate Account: Where All the Money Goes

When someone passes away, the executor must open a special bank account called an estate account. This is where all the deceased’s financial assets go during probate.

The assets stay in this account until the court process is complete, after which they’re distributed to the named beneficiaries. The executor can’t just transfer money from this account to their personal account whenever they want.

Red Flags: When Executors Cross the Line

While many executors perform their duties ethically, some unfortunately abuse their position. Watch for these warning signs:

• An executor who won’t share financial information with beneficiaries
• Unexplained withdrawals from estate accounts
• Selling estate assets without proper valuation or at suspiciously low prices
• Delaying distribution of assets without explanation
• Living in or using the deceased’s property without accounting for it

What Happens When Executors Break the Rules?

If an executor improperly takes money from an estate, they face serious consequences:

• Court-ordered reimbursement – They’ll have to pay back what they took
• Money taken from their inheritance to make up for losses
• Removal from executor position and replacement with someone else
• Payment of attorney fees incurred during the dispute
• Loss of executor commission they would have earned
• Criminal prosecution in cases of theft or fraud, potentially leading to fines and jail time

Protecting Yourself as a Beneficiary

If you’re a beneficiary concerned about an executor’s actions:

1. Request an accounting – Executors must keep detailed records of all transactions
2. Petition the court if you believe misconduct has occurred
3. Consider legal counsel if large sums are involved or the executor refuses to cooperate
4. Act promptly – Most states have a limited time frame (often 3 months) for contesting executor actions

Protecting Yourself as an Executor

If you’re serving as an executor:

1. Keep meticulous records of every transaction
2. Maintain open communication with beneficiaries
3. Use separate estate accounts – never mix with personal funds
4. Get court approval for major decisions when possible
5. Consider working with an estate attorney to ensure you’re following proper procedures

The Bottom Line

Being an executor is a serious responsibility, not a ticket to free money. While executors can and should be compensated for their time and effort, they must always act in the best interests of the estate and its beneficiaries.

The role comes with strict legal obligations and significant potential liability if those obligations aren’t met. For both executors and beneficiaries, understanding these rules is essential to ensure the estate administration process goes smoothly.

Have you dealt with challenges related to an executor’s handling of estate funds? Or are you an executor trying to navigate these complex waters? Share your experiences in the comments below!

FAQs About Executors and Estate Funds

Can an executor sell property to themselves?

Yes, but only at fair market value after proper appraisal. They cannot give themselves a discount!

Can an executor sell estate property without all beneficiaries approving?

Generally yes, if they get the property appraised and sell it for at least 90% of the appraised value.

What if an executor refuses to distribute assets to beneficiaries?

Beneficiaries can petition the court to have the executor removed and replaced.

Does an executor have to show accounting to beneficiaries?

Absolutely! Executors must maintain receipts and documentation and share this information with beneficiaries.

Can an executor override the terms of a will?

No. An executor cannot change the will without a deed of variation signed by EVERY heir.

Remember, the executor’s job isn’t to decide who gets what – it’s to carry out the wishes expressed in the will. Their power comes with strict limitations designed to protect the interests of all beneficiaries.