People often hugely underestimate the work involved in administering an estate when considering who to appoint as executors in their Wills. Here are some key things to think about when appointing executors.
Sometimes a misunderstanding of the potential costs involved with the other options means that as a result, it is not uncommon for people to appoint lay executors such as a neighbour, family members or friends. This is based on the assumption that this will save costs without giving full and proper consideration to what the real financial and other consequences of appointing someone without the appropriate experience and expertise might be.
Ask yourselves this: would you instruct your neighbour or your best friend to fix your boiler if it broke down just because they would not charge to ‘fix it’ even if they had no training or qualifications and were unaware of the safety rules and regulations involved in the work? It’s unlikely.
What are executors responsible for?
Being an executor involves dealing with all of your estate and how that happens can have a huge impact on how your loved ones remember you.
When someone has made a Will appointing executors, those executors will be responsible for carrying out the deceased’s wishes. It sounds simple but the role carries with it a huge degree of responsibility and potential liability for the unwary or uninformed executor.
What does ‘estate’ actually mean?
The term ‘estate’ simply refers to all the property a person leaves behind, whether its value is small, or large. One person’s assets may include homes, yachts and a Swiss bank account, while another leaves a watch, some collectables and a shoe box full of costume jewelry (of little worth but of great sentimental value).
It is important to note that despite the significant difference in nature and value, the administration of both estates will carry with them the same responsibilities and pitfalls.
What does an executor need to do?
Regardless of the difference in wealth or assets, an executor will need to deal with:
• Taking an inventory of the deceased’s possessions and debts;
• Notifying and corresponding with all relevant organisations to gather together the assets – which may be overseas;
• Identifying details of lifetime gifts;
• Completing the inheritance tax (IHT) return and calculating any IHT that is due;
• Paying all bills, funeral expenses, debts and charges on the estate including IHT (if taxable estate);
• Searching for any unclaimed or missing assets;
• Searching for missing beneficiaries;
• Applying for a grant of probate (in England & Wales, and Northern Ireland) or confirmation (in Scotland) to prove that the executors have the authority to deal with the deceased’s assets to those institutions and authorities that hold assets in the deceased’s name;
• Identifying and dealing with any claims against the estate;
• Identifying beneficiaries and distributing the legacies (whether specific items, cash sums or residue – again, if beneficiaries are overseas, this can be a very time consuming, complicated and onerous task);
• Preparing and distributing estate accounts for the beneficiaries to approve;
• Distributing the residue of the estate to the beneficiaries; and
• Following the testator’s wishes as closely as possible.
Personal liability for executors
It is important to note (and often not properly considered), that when appointing an executor that they may incur personal liabilities for example for:
• the payment of IHT on lifetime gifts made by the deceased;
• the payment of debts and liabilities;
• any losses arising from their not claiming IHT reliefs and allowances that might be available to the estate; and
• claims from creditors and family or dependents in respect of which the executors have not taken the appropriate steps to protect themselves.
When preparing a Will or amending an existing Will, not appointing the appropriate people as your executors may prove to be costly not only for your estate and intended beneficiaries but also for the executor. You would not want your memory to be tarnished by a poor choice.
It is important that you get good advice on the options available and how to choose an appropriate executor. Cost is not the only factor to consider. The executor you choose must be “ready, willing and able“ to fulfil their duties.
If you would like clear and independent advice on preparing a Will, our Private Client team can help.
Heather Priddle who is Wills Advisor in our Private Client Team based in Exeter and her colleagues are able to provide clear and independent advice on the options to help you make the right decisions.