Choosing your executors wisely

The role of an executor

Executors are responsible for administering a deceased person’s estate which involves the following tasks:

• Identifying the assets and liabilities
• Obtaining the Grant of Probate
• Reporting to HMRC and calculating any inheritance tax, capital gains and income taxes (if applicable)
• Collecting the assets
• Paying the liabilities
• Advertising for creditors
• Producing estate accounts
• Distributing according to the Will

Beware of wearing two hats

Executors also have to be careful not to fall into the trap of unwittingly or otherwise promoting their own interests if they are also beneficiaries under the Will. Take this common example:

The daughter of the deceased is the sole executor of the Will and entitled to a half share of her parent’s house. She wants to purchase the house. Her brother, who is not an executor, inherits the other half of the house.

The executor needs to ensure that she purchases her half at the best price that she could otherwise sell it for on the open market. If she does not, or deliberately tries to purchase at an undervalued amount, she is breaching her duties as executor and could ultimately be removed and held personally liable for the financial losses to the estate.

Traps like these are easy for innocent executors to fall into without realising. But the role of an executor can also offer an unscrupulous executor the opportunity to exploit their position to their advantage. It is therefore vital to choose the right people who have the required expertise and judgement.

How to choose?

People often think that choosing friends or family members will be less expensive than a professional. Lay executors should not charge for their time but many will instruct solicitors to administer the estate on their behalf anyway, which often results in similar levels of costs to appointing a professional in the first place.

If a particular friend or family member is favoured to be executor but also wants the expertise of a professional, it can be advantageous and ultimately costs effective, to choose both.

In deciding on executors, some key factors to consider are:

• Bereavement – Lay executors are often mourning the loss of a relative or friend at the same time as managing administrative executor’s duties. By choosing a professional, this emotional complication is removed.
• Technicalities – Professionals are well equipped to deal with complicated trusts and tax-related matters. The more complex an estate, the higher the chance that a lay executor will find themselves instructing experienced advisors in any event.
• Disputes – If there is a prospect of a dispute arising on your death between family members then a professional executor will be equipped to deal with this, whereas a lay executor may be a party to the dispute themselves and struggle to stay neutral or to deal with the added complexities of resolving a family dispute.

If you have questions or need assistance regarding appointing or acting as an executor, please get in touch with The Wilkes Partnership on 0121 733 8000.