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What are the duties and responsibilities of an Executor?

The executor named on a Will is the person as instructed by the testator (the person writing the Will) with the legal authority to manage the assets and undertake the administration of the estate upon their death. An executor can be a relative, friend, trusted neighbour, or a legal professional and is chosen and named when the Will is written. The person chosen by the testator is tasked with the responsibilities of an Executor.

The job of Executor is an essential role in the administration and management of an estate. When choosing an executor the testator should choose a person that they trust and believe capable of executing the role. If you have been named as the executor of an estate the testator has trusted in your ability to manage their affairs after their death with the best interests of the estate, their beneficiaries and in accordance to the Law. The deceased may or may not have understood at the time of naming you, the level of responsibility time and effort involved in administrating an estate.

When there is no Will no executor will have been named, therefore an Administrator is the term used, (to replace the Executor) and the rules of intestacy will apply.

The duties and responsibilities of an Executor and an Administrator are predominantly the same and they share the same authority, responsibility and liability. However the difference being the presence of a Will. Being an Executor is an extremely important role as whomever is chosen is responsible for dealing with everything the deceased owned, this includes property, cash, financial investments as well as personal effects and pets.

It is the responsibility of the executor to ensure that the estate has been administered and distributed according to the wishes in the Will and according to the law. This means the executor must take the necessary actions to protect the estate, its beneficiaries and themselves. It is the executor’s duty to manage all aspects of the estate administration, for some estates this can be a significant amount of work.

The executor is responsible for;

  • Identifying and contacting all relevant institutions involved and gathering information of the estates assets, establishing their value and ensuring they have been handled correctly.
  • Identifying the estates assets and settling any debts or liabilities against the estate.
  • Collecting all of the deceased’s assets and ensuring that they are protected until they can be distributed to the beneficiaries. This should also include securing and insuring an empty property, making sure any financial investments the estate has are monitored and continue to deliver the returns they did when the testator was alive. This may include share portfolios and other invested funds.
  • Identify and locating all of the estates beneficiaries.
  • Calculating the estates value and any tax owed to HMRC and insuring any outstanding amounts are settled. As an executor of a Will, you will be responsible for paying any outstanding taxes owed by the estate. Failure to follow the rules around taxation could lead to fines being levied by the HMRC. The executor will not be able to claim fines back from the estate and if imposed, for example for late payment, they will become your personal responsibility.
  • Applying to the probate registry and HMRC for a grant of probate or letters of administration
  • Selling or transferring any property in the estate.
  • Distributing the estate according to the wishes in the Will or through the laws of intestacy. This will include; paying the legacies, transferring specific items of property to the beneficiaries, paying out the residue of the estate to one or more specified beneficiaries or holding the property in Trust on the terms specified in the Testators Will. As well as distributing assets in accordance with the Will, you will also need to distribute assets in accordance with the law. If one of the beneficiaries has been declared bankrupt, you will need to be aware of the bankruptcy order and pay the creditors prior to distributing any assets to that beneficiary. Bankruptcy searches should always be completed prior to distribution. If there is no Will you have to be sure that the family tree you have put together is accurate, as the appearance of an unknown beneficiary will cause problems at a later date. It is highly advisable that a lay Executor seeks to protect themselves with executor liability insurance to help guard against any potential financial loss and liabilities.

Completing the administration of the estate in a timely manner and as such ensuring that all the correct legal procedures have been taken and actioned correctly is often time consuming and complicated by legal jargon, however ensuring all of the possible precautions have been taken will reduce the risk to the Executor if something were to go wrong. You can read more comprehensive information about an Executors liability when administering an estate below.

For further information on how we can help you with our Professional Probate Assistance service, Instruct Us now so we can organise a free no obligation initial consultation.

If I am named as an executor in a Will do I have to act?

You are not legally obliged to take on the responsibility if you do not want to. If you do not wish to act or to take on the responsibility you have three options (as detailed below). The majority of our clients instruct us help with our Professional Probate Assistance service due to the very fact that the duties and responsibilities of an Executor are time consuming, complex and stressful and of course pile personal liability on to the Executor in regards to HMRC tax liabilities.

  • Renunciation - If you do not want any involvement in the estate administration you can choose to renounce your position as executor, this means you will no longer be responsible for carrying out any executor duties. To renounce your executorship, you must not have intermeddled in the estate, which means you must not have handled the deceased’s assets or taken any administrative action. You will need to sign a document confirming your renunciation (PA15), after which you will no longer have any authority or involvement in the estate administration. However do not take any action until you have spoken to us because in order to instruct us, you will need to complete a Power of Attorney (PA11) and this will not be able to be processed if you have renounced
  • Power Reserved - If there is more than one executor named in the Will, you may wish to reserve your power in favour of the other Executor(s). Power reserved means that you do not take an active role in the administration or executors duties, this allows the other executors to take the required actions without having to have everything counter signed by the executor with power reserved. However the executor with power reserved can choose to participate at any time if necessary.
  • Engaging a professional to act on your behalf - Instructing a Professional Executor does not mean that your executorship is transferred to them, it simply means they will act on your behalf and be responsible for the practical aspects of the estate administration. (This will include the executors duties that are listed above.) A Professional Executor must also act according to a set of professional standards, which means that they will ensure that the necessary legal precautions have been taken and therefore limit the liability to the executor. A Professional Executors knowledge and practical experience should also ensure an efficient and timely administration of the estate that follows the wishes in the Will and is in accordance with the law. To appoint a Professional Executor, a Power of Attorney (POA) (PA11) must be processed. It is worth noting that you as the Grantor of the POA, are still the executor of the estate and will still hold ultimate responsibility over the Professional Executor however you will not hold any liability.

For further information on how we can help you with our Professional Probate Assistance service, Instruct Us now so we can organise a free no obligation initial consultation.

An Executors Liability when Administering an Estate

Executors often do not realise how time consuming probate can be and underestimate its complexity. Executors often do not release the extent of their personal and financial liability when administering an estate when they start the process and this can be a shock later on when something goes wrong.

it is important to understand what the role of an Executor involves, along with the duties and responsibilities and how it will affect you personally. Once you have fully understood the work involved you can make an informed decision as to whether you are willing and capable to undertake the role.

The law states that executors must exercise reasonable care and skill in the administration of an estate. An executor can be held personally financially liable for loss to the estate due to the executor’s actions or lack of action (even if the loss was caused by a genuine mistake) which affects one or more beneficiaries, which could have been reasonably avoided. Unfortunately, any genuine mistake can sometimes snowball into a much bigger and often expensive problem that can be very complicated (and expensive) to resolve.

Sometimes multiple Executors are detailed on a Will and whilst having others to share the responsibility and workload with can be a blessing, unfortunately being a joint executor can also have its disadvantages. If your fellow executor is failing to perform their role or performing their role in a negligent manner and their actions or inaction causes’ loss or harm to the estate, you could be held jointly responsible if you did not make reasonable effort to monitor their conduct. If the joint executor is not taking reasonable care to perform their role due to an inability to do so or because they do not wish to, it may be in the estates and beneficiaries best interest to ask them to renounce their responsibilities as an executor. There is nothing legally forcing an executor to renounce if they do not want to. If you believe your joint executor’s actions are causing risk of loss to the estate and you are unable to come to an agreement about their conduct, work distribution and administration it may be beneficial to use an impartial third party and as such, a Professional Executor will ensure that the correct practices are being followed and reasonable care is taken to protect the executors from liability.

If you have concerns about the conduct of a co-executor it is recommended to Instruct Us now so we can organise a free no obligation initial consultation.

It is also the responsibility of the executor to ensure that the estates assets are properly protected and insured. If they fail to do this and a beneficiaries inheritance was to be affected the executor would be held personally and possibly financially liable. (this includes liquid assets as well as physical assets.) As such, you should take care to ensure that all of the deceased’s assets are properly secured and insured if they are able to be.

Something that is often neglected by executors, (most commonly by executors who themselves or another family member had power of attorney over the deceased’s financial assets), is informing financial institutions of the person’s death so that any accounts in their name can be frozen. Power of attorney becomes invalid when the person passes away meaning you no longer have authority over their financial affairs, to continue to access and remove money from the deceased’s accounts can result in serious consequences for both the person using the power of attorney and the executor. If the executor has not taken action to have the bank account frozen they have not taken reasonable care to protect the estate and its assets.

Handling a deceased’s debts is a task that a lot of executors get nervous about and when handling debts it is best to be overly cautious. An executor that incorrectly identifies the estates debts, liabilities and potential future claims can be held personally liable if a creditor were to come forward after the estate has been distributed. An executor should act with reasonable care when assessing the estates debts, identifying creditors and paying them off using the estates assets.

In an attempt to prevent future claims an executor should place notices under Section 27 of the Trustee Act 1925 in The Gazette and local newspaper. This allows creditors 2 months from the date of publication to register a claim against the estate, after which the executor can distribute the estate and only have to take into regard the creditors that come forward before the expiry date.

Insolvent Estates

If an Estate’s debts are more than the value of the assets then it is known as an insolvent estate. Insolvent estates should be handled with extreme caution and it is strongly advised to seek professional advice and take the necessary actions to protect yourself as an executor. There are some debts that should take priority over others if as executor you fail to correctly identify and pay debts in the correct order you risk making yourself financially liable. The estates Priority debts such as Inheritance tax should be paid first. The remaining money should be split between the remaining creditors. Remaining debt that cannot be paid because there is nothing left in the estate will be written off.
If an executor were to pay off non-priority debts first and not be left with enough or any money to pay a priority debt, (for example a mortgage) they could be held liable for incorrectly distributing the estate. However every estate is different and therefore so will the type of debts be different and this can make it hard to establish the correct priority if you do not have the relevant knowledge and experience.
That’s why it is recommended to speak to professional.

It is the duty of the executor to pay any outstanding tax that the deceased owed to HMRC. This includes any outstanding income tax from before their death. Failure to correctly identify, calculate and pay income tax that the deceased owed can result in a penalty or fine from HMRC. The executor of the estate can be held financially liable for this as they failed to properly fulfill their role.

*Warning - The following recent case involving a novice executor (Glynne Harris) should be noted:

Executor personally liable to pay £340,000 a inheritance tax bill

Executors are also responsible for ensuring that HMRC are provided with the correct information about the estate. This includes the correct valuations of assets which will contribute to your inheritance tax liability. Failing to provide the correct information which would have resulted in a loss to HMRC can result in costly penalties (plus interest) on top of paying the amount that was under paid to them.

For further information on how we can help you with our Professional Probate Assistance service, Instruct Us now so we can organise a free no obligation initial consultation.

If the deceased was receiving Pension credit or another form of means tested benefit payments, the DWP will often check to ensure that there have not been incorrect payments made to the deceased. It can take some time for the DWP to assess what is owed to them and make a claim. You should wait to distribute the estate to the beneficiaries until you know if they will claim and the amount they will claim so that you can prevent the money owed to the DWP from being distributed. If the executor distributes the estate and does not have enough left to pay a claim made by the DWP they can be held financially liable for the repayment.

As standard practice, a Professional Executor will conduct a bankruptcy search to establish if there is any risk of making a payment to a bankrupt beneficiary. Executors handling probate themselves are often unaware of the importance of a bankruptcy search or never knew in the first place that they should undertake one. If the executor was to make a payment to bankrupt beneficiary they can be held personally liable to the Trustees in bankruptcy for any money that the trustees are unable to recover.

Not being able to locate a beneficiary can cause major delays to the estate administration and become a bigger complication later on. As an executor if you do not show reasonable effort to locate a beneficiary you can be held personally liable for the inheritance they were entitled to if they were to later come forward. One way to reduce the risk of a beneficiary appearing after the distribution is to seek the help of a professional search agent with knowledge and experience in locating people who seem to have disappeared.

Executors can also obtain missing beneficiary indemnity insurance to protect themselves and the other beneficiaries if someone was to come forward after the distribution of the estate. If you believe the beneficiary may have passed away you should search for their obituary, this can be done online by searching their name with the word Obituary. An executor must keep clear and transparent accounts as it is their duty to be able to provide all known information about the estate and its assets. If there is incorrect distribution due to unorganised or incoherent accounting the executor is liable for the loss or penalty incurred. If unorganised accounting leads to incorrect information being provided to HMRC or incorrect tax calculations, the executor may be held financially liable for any penalty or fine incurred as a result. This is because they failed to correctly perform their role and keep clear and coherent accounts.

During the estate administration you may need to enter into a contract with a third party for example a clearance company or estate agent. You are held personally liable when you sign a contract with them agreeing to use their services, as it is you personally entering into a contract with them. If something were to go wrong you would need to show that you acted reasonably and entered into a reasonable contract for the expenses to be claimed from the estate. However if there are not sufficient funds in the estate to cover all or any of the costs as the person who entered into the contract you would be held personally liable for the outstanding costs.

For further information on how we can help you with our Professional Probate Assistance service, Instruct Us now so we can organise a free no obligation initial consultation.

 

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