Being an Executor Carries Responsibility & Risk
Acting as an Executor is not a job to be taken lightly. Whilst it’s very gratifying to be asked, the role does carry a great deal of responsibility and in certain circumstances, significant risk. As Executor, you will have overall responsibility for dealing with the administration of the deceased person’s estate, as stipulated by law. This involves sorting out the deceased person’s property, money, possessions, debts and so on.
Furthermore, you must get everything right. If you don’t, you risk personal financial liability for making a mistake, however innocent it may be. So, it’s very important to be aware of what’s involved and the potential risks you could be exposed to before you take on the role.
Depending on the complexity of the estate, being an Executor is likely to take a lot of your time. Your responsibilities will include:
- Registering the death
- Arranging the funeral
- Collecting all the information about the estate
- Valuing the estate for Probate and Inheritance Tax (IHT)
- Preparing the tax return (IHT/Income Tax/Capital Gains Tax (CGT)
- Applying to the Probate Registry for the Grant of Probate
- Selling the property and collect any other assets
- Paying expenses and settle any outstanding bills
- Making sure the heirs/beneficiaries receive what they’re entitled to
- Preparing detailed estate accounts
As you can see, whether the estate is complex or simple, there’ll be a lot of practical things to get through. So, if there’s more than one Executor, it will make sense to divide up responsibilities. Assign the tasks to those most suited and experienced. Also, consider geography. Those who live locally may be better placed to deal with estate agents and so on.
Also, make sure you talk to each other from the outset. It’ll help to avoid misunderstandings or points of tension down the line.
Demands from Beneficiaries
Once again, talking to those involved will be important. Make sure the beneficiaries aren’t kept in the dark. That said, getting the balance right is important. The Executor(s) aren’t there at the beck and call of the beneficiaries and shouldn’t act as a post-box or agony aunt.
However, it’s not unusual to find family members demanding to know what’s in the Will. Whilst this isn’t a legal requirement, in practice, it’s usual to let beneficiaries see a copy. You should also be aware that as soon as the formal Grant of Probate is received, the contents of the Will automatically become a matter of public record. At this point, individuals can request a copy by doing a Standing Search.
Beneficiaries are also entitled to see a copy of the estate accounts. So, it’s important to keep detailed (and accurate) estate records. As far as supporting documentation is concerned, it’s not unusual to receive additional requests from beneficiaries to see bank accounts and so on. They aren’t automatically entitled to see these. This is at the Executor’s discretion.
Don’t Delay or Conceal
Whatever the request, we’d advise you to act promptly. Consider the motives for asking for the information and whether it’s a reasonable request in the circumstances. Often, delaying matters or withholding information can inflame a difficult situation and, in some cases propel a beneficiary to make an application to the court for an inventory and account.
Ideally, this is something you should avoid but if it happens, it would be advisable to speak to a specialist lawyer.
Disputes Over the Will
Contesting a Will isn’t as rare as you might think. The most common reasons fall into one of the following:
- Making a promise that isn’t kept
- Incapacity of the deceased at the time of making the Will
- An invalid Will
- A forged Will
- Undue influence
- Second marriage or outdated Will
- Poorly prepared Wills so insufficient provision is made
- Estranged family being left out of the Will
Challenging the Will
In terms of challenging a Will, most fall into two categories. Claims brought under the Inheritance (Provision for Family and Dependants) Act 1975 or those that challenge the validity of the Will. If someone has told you that they intend to bring a claim against the estate, as Executor, you need to take advice immediately.
You must remain objective in this situation. Your principal job is to carry out the wishes of the person who has died. That said, stepping away isn’t always easy, especially if you are close to the family. But remember, if you don’t, you run the risk of a costs order being made against you.
Executor & Beneficiary
For those of us with more than one child, it’s not uncommon to name all children as Co-Executors to avoid showing favouritism. But this may not bode well for all families. If a claim is brought against the estate, then you will be effectively wearing two hats. However, it’s only in your capacity as a beneficiary that you are entitled to defend any claims that have been brought.
Conflicts of Interest
A conflict of interest can easily arise where the Executor is also a beneficiary. The high profile case of Heath v Heath is a good example. Ultimately, the court removed Timothy Heath as executor as it was judged that there was a clear conflict of interest when he challenged the allocation of his mother’s property in her Will, which he was responsible for distributing.
An Executor must, by law, pay all tax owed before distributing the inheritances to the beneficiaries named in the Will. It might be tempting to pay before your calculations are confirmed, but remember, if you end up with insufficient funds in the estate, you will be personally liable for any/all tax owed.
Department of Work & Pensions (DWP)
This is an area that can often be overlooked. And with serious consequences.
If the deceased was receiving means-tested benefits when they died, you MUST NOT distribute the estate until you have clear confirmation that the assets and or income were correctly declared in life and take account of the benefits that were claimed. If you distribute and there has been an incorrect claim, you will be personally liable.
In practice, we have seen cases where the DWP have demanded more than £15,000 from an Executor (over a year after they have distributed an estate). The Executor is left with no choice but to pay. They are then left with trying to recover a significant amount of cash from the beneficiaries, who may not to give it back or not be able to!
Accounts & Expenses
As we’ve already mentioned, depending on the nature of the estate, beneficiaries, insurance companies, banks, and other organisations may hit you with questions. So, it would save time if you set up a record-keeping system to help you administer the estate smoothly.
You must also keep certain documents after you value the estate, including any documents showing how you have distributed money, property or personal belongings from the estate. Finally, a copy of the accounts should be sent to the beneficiaries.
Out of Pocket Expenses & Payment for Professional Executor
An Executor is not entitled to receive payment for carrying out his or her duties. However, an Executor should expect to recover out of pocket expenses, if they relate to official estate business (and are accounted for).
When it comes to the costs involved in appointing a professional Executor, there’s usually a clause covering expenses to be included in the Will, although the family or beneficiaries do have the right to request the role be set aside.
Administering an estate involves a lot of paper, financial and tax work. It’s an important role that can often be challenging and time-consuming. So, if you’re considering taking on the role, make sure you’re aware of what’s expected, including any potential pitfalls, before you accept.
Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.