Personal risks in being an executor
The executor to an estate has the job of winding up someone’s affairs after their death. It is a role that involves both responsibility and personal financial risk.
Dealing with an estate administration
The executor or administrator will need to identify all the assets in the estate and value them. They will then need to calculate and pay any Inheritance Tax due, and apply to the Probate Registry for a Grant of Probate or, where the deceased did not leave a Will, a Grant of Letters of Administration.
Once the grant is received, assets can be sold, and debts should be cleared. Estate accounts should also be prepared and approved before the estate is distributed to the beneficiaries.
Risks in estate administration
The executor or administrator needs to ensure that all the deceased’s debts are identified and paid. This may involve advertising for creditors. Failure to clear debts may mean that a claim is made against the executor in the future. The executor may be liable, even if they were unaware of the existence of the debt.
Where debts are not paid on time, for example, if an outstanding tax liability is not cleared, and a penalty is imposed on the estate, the executor will be liable to pay this because it arose through their error. The executor will be liable for any losses to the estate, even if they occur because of a genuine mistake.
The executor or administrator must also ensure that all beneficiaries who are entitled to inherit are identified. This is not always straightforward. For example, where the deceased has left their estate to be shared between their children, it may not be clear how many there are. Or, where the deceased did not leave a Will, beneficiaries who are entitled to inherit under the Rules of Intestacy must be located.
Again, it may be advisable to place advertisements for beneficiaries to come forward. Failure to identify a beneficiary may mean that the executor faces a claim in the future for which they could be personally liable.
The estate may face a claim from someone who believes they are entitled to a share of the estate. It is recommended that the executor or administrator take legal advice in these circumstances to avoid becoming personally liable for unexpected costs.
Following a death, disputes could arise between those with an interest in the estate. It is important to deal carefully with these to avoid personal liability. Again legal advice is strongly recommended.
The role of executor or administrator is often more complex than initially anticipated, with a degree of risk to the individual carrying out the role.
If you have questions or need assistance regarding appointing or acting as an executor, please get in touch with Ann-Marie Aston at The Wilkes Partnership on 0121 733 8000.