It doesn't happen often, but beneficiaries who object to how an executor is handling an estate can ask the probate court to remove the executor and appoint someone else. An executor removed by the court for mishandling estate assets can also be required to repay any losses they caused the beneficiaries.
If you're named as executor in someone's will, or if there's no will and you're appointed to the role of "administrator" by a court, it'll be your job to settle the will-maker's financial affairs after death. (Both an administrator and executor serve the same function and are sometimes also referred to more generally as a "personal representative.") As executor or administrator, you must:
The law doesn't require you to be a financial or legal expert to act as executor of an estate. But you are required to act as a "fiduciary" of the estate. The exact standards vary by state, but generally, that means you must act in good faith, with care, diligence, and impartiality in your handling of the estate.
A court can always remove an executor who is dishonest or seriously incompetent. If you're a beneficiary (or estate creditor) and you believe the executor of the estate should be removed, you can petition the court. But it'll be up to you to prove that the executor needs to be replaced.
Each state has its own rules on valid reasons for removing an executor. (For example, some states will not allow someone who has committed a felony to remain as executor.) But, in general, courts will remove an executor who:
For example, an Illinois court removed an executor who'd failed to account for the loss of more than $33,000 of estate assets and had neglected estate business. Even though there was no evidence that the executor was personally dishonest, the executor had failed to protect the estate assets. (Matter of Abbott's Estate, 347 N.E.2d 215, Ill. App. 1976)
Similarly, a Texas court decided that an executor had breached the duty of good faith by renting out estate property for half as much rent as had been charged by the late owner and taking a separate fee for selling estate property. (In re Roy, 249 S.W.3d 592, Tex. App. 2008)
You probably won't convince the court to remove an executor who makes a good-faith effort to manage estate property—even if the results of their effort leave much to be desired. For example, an executor who makes what appears to be a reasonable investment decision or sells real estate for what seems like a good price won't be removed, even if the investment doesn't turn out well or the beneficiaries think the real estate could have fetched a better price if the sale had been handled differently.
A court may also remove an executor if the court concludes that the executor has a conflict of interest that would interfere with the administration of the estate. However, being the executor and also a beneficiary is not a conflict—it's very common. It's not considered a conflict because someone who inherits from an estate has a strong incentive to take good care of estate assets.
The conflict must make it nearly impossible for the executor to do the job impartially and in good faith. For example, a New York court removed an executor who had personally guaranteed a loan to the estate. Because the primary borrower was unlikely to repay the loan, the executor would be in the position of collecting from herself. (Matter of Palma, 40 A.D.3d 1157, NY App. Div. 2007)
A court that removes an executor must appoint someone else to take over the job. If the will names an alternate executor, generally, the court would appoint that person to serve unless there's some legal reason the person can't fill the post.
If the will doesn't name an alternate executor, then the court will turn to state law, which will provide a priority list of those who are entitled to serve as the estate's administrator. In most states, the surviving spouse is first on the list, followed by adult children and then more distant family members.
If you find yourself in the position of executor, learn the step-by-step process of winding up a loved one's estate with The Executor's Guide, by Mary Randolph (Nolo).