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Mistakes Executors and Administrators Must Avoid
26 June, 2024 4 minutes reading time
Losing a loved one is never easy. And when you’re named as the Executor in their Will (or the court appoints you as Administrator if there’s no Will), the burden of settling their estate can feel overwhelming. The responsibilities are significant, and the legal implications are real. Mistakes during this process can lead to personal liability, substantial financial loss for the estate, and even conflict among grieving family members. So, what are the common mistakes that Executors and Administrators make, and how can you avoid them?
1. Misunderstanding Fiduciary Duty
As an Executor or Administrator, you have a legal obligation to act in the estate’s and its beneficiaries’ best interests. This means making sound financial decisions, being transparent with beneficiaries, and avoiding any actions that could benefit you personally at the expense of the estate. Open communication is critical to maintaining trust and avoiding conflicts.
2. Incorrectly Handling Taxes
The tax implications of an estate can be complex, especially if the estate includes foreign assets or complex investments. Different types of assets may have different tax treatments, and failing to calculate and pay taxes correctly can result in penalties and interest charges for which you may be personally liable. Seek professional advice to navigate this tricky area.
3. Failing to Identify and Collect All Assets
This includes everything from bank accounts and investments to digital assets like cryptocurrency, online accounts, and intellectual property. Overlooking even a tiny asset can shortchange the beneficiaries and lead to legal problems later. Be thorough and consider professional help to ensure you uncover everything.
4. Improperly Distributing Assets
All debts, taxes, and estate expenses must be paid before distributing assets to beneficiaries. Rushing this process can lead to personal liability if you distribute assets prematurely, and more must be left to cover outstanding debts.
5. Conflicts of Interest (Even the Appearance of One)
If you are also a beneficiary, being extra cautious is crucial. Even the perception of a conflict of interest can damage trust and lead to legal challenges. Be transparent with all beneficiaries and consider seeking independent legal counsel to guide your decisions.
6. Wasting or Mismanaging Assets (“Devastavit”)
Legally known as ‘devastavit’, this occurs when a Personal Representative mismanages or wastes estate assets through negligence, reckless decisions, or personal use of estate funds. This can include selling assets below market value, making risky investments, or using estate funds for personal expenses. If you take these actions, you can be personally liable for any losses the estate suffers.
7. Neglecting to Keep Meticulous Records
Maintain detailed records of every transaction, decision, and communication related to the estate. This documentation is not just a formality but a crucial safeguard. It can protect you if any questions or disputes arise later on, providing a clear and transparent account of your actions.
Our Advice
While serving as an Executor or Administrator is an act of love and responsibility, it doesn’t mean you have to go it alone. We understand that dealing with a loved one’s estate can be stressful. Seeking professional help is not a sign of weakness but a wise decision that can provide invaluable guidance, alleviate stress, and ensure the process is efficient and compliant.
A qualified lawyer specialising in estate administration can provide invaluable guidance, ensuring the process is efficient and compliant and protects you from personal liability. They are regulated by the Solicitors Regulation Authority (SRA) and carry professional indemnity insurance, offering you further peace of mind.
Consider appointing a professional executor in your Will to relieve your loved ones of this burden. They have the expertise and impartiality to handle even the most complex estates, giving you peace of mind and confidence in the process. If you would like more information or advice about creating a Will, identifying suitable executors, or any other estate planning matter, please get in touch with us. We’re here to help.
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.