Being an Executor Carries Responsibility & Risk
Acting as an Executor is not a job to be taken lightly. Being asked may be flattering, but the role carries a great deal of responsibility and significant risk in certain circumstances. By law, an Executor is responsible for dealing with the administration of the deceased person’s Estate. The job involves sorting out the property, money, possessions, debts, etc.
Furthermore, you must get everything right. If you don’t, you risk personal financial liability, however innocent it may be. So, before you agree, it’s best to be aware of what’s involved, including understanding what risks are involved.
Depending on the Estate’s complexity, being an Executor may take up a lot of your time. Your responsibilities 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
Allocation of Tasks
Whether or not the Estate is complicated, there are many practical things to get through. So, if there’s more than one Executor, it makes sense to divide the responsibilities. Assign the tasks to those most suited and experienced. Also, consider geography. For example, those who live locally are better dealing with estate agents.
Also, from the outset, make sure you talk to each other. It helps to avoid misunderstandings or points of tension down the line.
Demands from Beneficiaries
Once again, make sure all the beneficiaries are in the loop. That said, get the balance right. Executors 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. It’s not a legal requirement, but it’s usual to let beneficiaries see a copy in practice. 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 essential to keep detailed (and accurate) Estate records. As far as supporting documents are 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 at the Executor’s discretion.
Don’t Delay or Conceal
Whatever the request, we advise you not to delay. 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, you should avoid this, 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. Most commonly:
- Broken promises
- 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 with insufficient provision for dependents
- Estranged family members 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 question if the Will is valid. If someone has told you that they intend to bring a claim against the Estate, you need to take advice immediately as Executor.
You must remain objective in this situation. Your main 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 personally paying for costs.
Executor & Beneficiary
Many people with more than one child, name all their children as Co-Executors to avoid showing favouritism. But this may not bode well for all families. If someone claims the Estate, you will be effectively wearing two hats. You can only defend a claim as a beneficiary not in your capacity as Executor.
Conflicts of Interest
A conflict of interest can quickly 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. 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 may be tempting to pay before your calculations are confirmed, but remember that you will be personally liable for any/all tax owed if you end up with insufficient funds in the Estate.
Department of Work & Pensions (DWP)
Pension arrangements are often complicated. Suppose the deceased was receiving means-tested benefits when they died. In that case, you MUST NOT distribute the Estate until you have explicit confirmation that the assets and or income were correctly declared in life and take account of the claimed benefits. If you distribute and there has been an incorrect claim, you will be personally liable.
The DWP regularly demands large sums (+£15,000 from an Executor in a recent case we handled) after distributing an estate. The Executor has to pay. They must then try to recover the cash from the beneficiaries, who are not obliged to pay!
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 records showing how you have distributed money, property or personal belongings. Finally, the Executor must send a copy of the accounts 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 in the Will. However, the family or beneficiaries 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.