Would you want to act as an Executor?
An executor is the person appointed in a Will to administer the person’s estate on their death. They have the authority and responsibility to ensure that everything is done in accordance with the law and that the deceased’s person’s wishes are carried out.
Often, when making their Will, a person will decide to appoint close friends or family members to be their executors but is this a role you would be happy to take on?
Taking on the role of an executor means taking on the legal responsibility of administering the person’s estate. An executor can be held personally liable if something is missed or if they make a mistake. There is no exoneration for an inexperienced executor or for an executor who might not even realise that they had made a wrong decision.
What the executor will need to do to administer the deceased’s persons estate will depend on the deceased person’s individual circumstances and what is written into their Will. The executor could need to sell a property, sell shares, pay debts and even sort out the deceased’s business. Every estate is different, and the executor will need to spend time looking into the deceased’s affairs to find out what will need to be done.
If you are making a Will it is important to consider carefully, who you would like to appoint as an executor. The person or persons you appoint will be in control of your estate. They will receive the funds, pay all the outstanding debts, calculate any taxes due and distribute the remaining funds to your chosen beneficiaries. Have a think about how your intended beneficiaries are with money and how they cope with responsibility. Will they be able to deal with this alongside their grief?
If you decide not to make a Will you cannot control who will take responsibility of your estate administration. This will be determined by the strict rules of intestacy. If you die intestate (without a Will) then administrators (not executors) will act for you. Administrators will be chosen from a strict list of priority, where the relatives considered closest to you by law are able to act for you, regardless of your personal relationships or their ability.
The duties of an executor are far reaching and include;
· Valuing the Estate – The executor will need to get accurate valuations of all the deceased’s assets and liabilities as at the date of their death. This could include, amongst other things, valuations of property, bank and building society accounts and share holdings as well as all the deceased’s outstanding debts like, mortgages, loans, credit cards and utility bills. The executor should spend time researching to ensure that nothing is missed, this could mean going through old paperwork and searching for any unclaimed and missing assets.
· Paying any Inheritance Tax (IHT) due – It is up to the executor to correctly value the estate and calculate whether any IHT is payable. If IHT is payable, the executor will need to arrange to settle this before they will be able to apply for a Grant of Probate. IHT should also be settled within 6 months of death to avoid having to pay additional interest. There may be some exemptions and additional free-tax amounts, which the executors can apply for, so it is important that these are investigated to ensure that the right amount of IHT is paid.
· Obtaining a Grant of Probate – A Grant of Probate is a court sealed document which is applied for to confirm the validity of the Will and verify the executor’s authorisation to act. Institutions will often ask to see a Grant of Probate before they release any money to an executor, so they can be sure that they are paying the deceased’s money to the right person. If the deceased owned a property or a specific share of a property, the executor will need to apply for a Grant of Probate in order to sell the property or transfer the property into the name(s) of the beneficiaries.
· Collecting in the assets – Once the estate has been valued, all the assets have been identified and a Grant of Probate has been obtained (when required). The executor will need to start collecting in all the assets, whether this is the physical collection of household objects or cars or the cash held in banks and savings and investments. The executor will also need to look at the Will and make sure that any items specifically gifted in the Will are available to be passed on to the named beneficiary.
· Paying the debts – The executors will need to make sure that all the deceased’s debts are settled, and this should be done before payments are made to beneficiaries. The deceased may have had loans, credit cards and store cards, which were outstanding when they died as well as other debts which could have arisen during the administration process. The executor will also need to make sure that all the deceased’s tax affairs are complete, and they should get final clearances from the Inland Revenue.
· Distributing and finalising the Estate – Once all the assets are collected and all the debts paid the executor should be able to start finalising the estate. This can mean transferring assets to beneficiaries and distributing all the cash collected to the beneficiaries named in the Will. Some beneficiaries may be entitled to specific sums and some made be entitled to a specific share. It will be up to the executor to calculate what each beneficiary is entitled to and make sure that the instructions in the Will are adhered to. The executor will need to prepare detailed estate accounts to show the beneficiaries (and potentially the Probate Court if ever requested) all the money that was received and paid out of the estate.
Administering an estate is a time-consuming job, it is not unusual for the process to take a year or more to complete. Complications like property sales and family conflicts can see estate administrations going on for years and years.
If you decide to appoint a loved one to be your executor, it is important that you discuss this appointment with them in advance and make sure that they are happy to undertake this role. Often people will choose to appoint a professional executor to deal with the burden of their estate administration instead. Trust Corporations like Sterling Trust Corporation can be appointed in Wills to act as executors and are able to take out a Grant of Probate in their name. Removing the responsibility of being an executor from loved ones, at a time when they could be struggling with their loss, can really bring peace of mind to those thinking about what will happen when they are gone. Professional executors, like Sterling Trust Corporation are experienced in estate administration and in the unlikely event that anything were to go wrong, they will be insured.
If you would like to discuss the benefits of appointing a professional executor in more detail, please feel free to contact us and we will be happy to talk this through with you.