When writing a Will, you will be expected to appoint someone as an executor; a person who you trust to manage your estate and see through your wishes in the event of your death.
But what exactly are the responsibilities of an executor? How do you choose the right person? And what if they don’t, or are unable to, carry out their legal duties? Here’s what you need to know:
Appointing an executor
The role of an executor is rather complex and challenging and carries a lot of responsibility as they will be accountable for winding up your affairs and administering your estate after you’ve died.
Not everyone will feel comfortable being an executor, nor will they have the time, so it is a decision that should be fully considered and discussed thoroughly with the potential candidates.
Executors have a legal duty to act in the best interests of the estate, rather than any personal interest, so they should be people who you can rely upon to deal with your affairs responsibly.
It could be a friend, family member or a professional (such as a solicitor). You are allowed up to four executors, and these individuals can also be named as a beneficiary in your Will. But in England and Wales at least, executors must be aged over 18 at the time of your death and have the mental capacity to undertake the job properly.
In the event that your chosen executor is no longer able to carry out the role due to illness, the loss of mental capacity, or even their death (and there is no one to replace them), another of the Will’s beneficiaries will be asked to step in. This might not be someone with whom you felt comfortable leaving your affairs, so it is always advisable to select more than one executor and to update your Will accordingly, as and when the circumstances of your chosen representatives change.
Another factor to consider is whether there is an ongoing trust contained in the Will and whether the Executor is also to be appointed as a Trustee. Typically, an estate ought to be administered within a year but once this process is complete, it may not be the case that the entire estate is distributed to beneficiaries. For example, if on first death a husband leaves his estate on trust for his wife for life, the trust could run for many years. Likewise, a beneficiary may be too young to receive their inheritance and so the Trustees need to invest funds. Finally, based upon family circumstances, professional advice may be to leave the entire estate on Discretionary Trust. In this case, it would be up to the Trustees to decide how the estate is distributed, with reference to a Letter of Wishes. In each of these cases, it is important that the Trustee is capable and willing to carry out the role.
What are the duties of an executor of a will ?
The role of the executor covers many duties, which, dependent upon the complexities of the case, and whether or not probate is needed, can take between nine to twelve months to complete.
Basic tasks will include registering the death, arranging and paying for the funeral, informing any relevant business, organisations or asset holders of the death, and maintaining any related property until its eventual distribution or sale. Parties which will need contacting may include the Department for Work and Pensions, the local council, utility companies and HMRC. Other more complex undertakings could be:
Applying for probate: A Grant of Probate is an official document from the Court that put simply, confirms an executor’s legal right to deal with someone’s estate. If you aim to become an Administrator of an intestate estate (where there is no Will), you will need to apply for a Grant of Letters of Administration, which serves the same purpose. Whilst this may not be necessary for smaller estates, it is crucial to check first.
When applying for probate, an application to the Probate Registry must be made either online or by post. It can also be necessary to file an IHT205 tax return with the Probate Registry (for deaths before 1st January 2022) or and IHT400 for more complex and/or taxable estates. It is recommended that you take legal advice on whether a tax return is required.
All important data about a person’s estate must be collated, including details of any properties, bank accounts, assets, credit cards or loans.
If any of this information is missed at this point, it is more likely that complications will occur later on.
Calculating Inheritance Tax: It will be important to determine what the overall value of the estate is in order to gauge if Inheritance Tax will be payable.
Calculating Inheritance Tax is an intricate task more commonly undertaken by a professional simply because of the number of elements that need to be considered, such as whether there are tax-exempt gifts involved or unused nil rate bands that need to be transferred.
Once it’s been determined whether any Inheritance Tax will be due, the appropriate forms will need to be completed and submitted to HMRC. Evidence that any Inheritance Tax has been paid will be required when applying for a Grant of Probate. In addition, the executor is ultimately responsible for filing Income Tax returns for the estate during the period of administration.
Paying debts and expenses: If the deceased had any outstanding debts or payments owing (including funeral and testamentary expenses), then the executor will be responsible for settling these sums out of the proceeds of the estate before the estate is distributed elsewhere. If the Executor is unaware of debts and so these are not settled before the estate is distributed, the Executor can be held to account for the debt. Legal advice should be taken regarding advertising for creditors in order to provider personal protection.
Distributing the estate: The estate will be distributed according to the contents of the Will (or the rules of intestacy where applicable). Executors will be responsible for locating any missing or unclaimed property so that it can be distributed amongst the appropriate beneficiaries. The Executors also need to consider the prospect of any claim against the estate before distributing. Meanwhile, if any assets are to be retained on trust under the terms of the Will, the Executor will need to arrange the transfer of the assets to the Trustees (usually these are the same people).
As an executor, you will be held responsible if your actions (or inactions) result in a loss to the estate. As such, appointing a qualified solicitor to support with the process is advisable. This would not only reduce the burden but also offer peace of mind, as you can then be confident that all processes are carried out as per the letter of the law and according to the deceased’s wishes.
Whilst the time you spend on the matter cannot be reimbursed, the proceeds of the estate should compensate for any time that a solicitor spends assisting you with your role as executor. Telephone bills, postage costs and travel expenses incurred undertaking the aforementioned duties should also come out of the estate.
Case Study: Failure to carry out estate administration duties
Should the executors or administrators of an estate fail to carry out their legal duties with due diligence and in a timely fashion, or concerns are raised over their conduct, any beneficiary or interested party can make a Court application to seek their removal. If the application is granted, the Court will then appoint new executors or administrators.
Any Court order of this nature will usually require the outgoing executors or administrators to hand over all the relevant documents and funds to their successors to complete the process. However, in the recent case of Frejek V Frejek [2020], the former executors failed to comply with such an order.
Brenda Frejek died in April 2009, leaving two sons and a daughter. Stephen Frejek, the defendant, was appointed as executor of his late mother’s estate. However, concerned at the extremely slow progress made in administering the estate, his brother, Andrew, applied to the Court for Stephen’s removal as executor. Furthermore, as a provision of the order, Andrew sought to replace his brother as executor, and this application was granted in June 2017.
In accordance with the standard practice outlined earlier, the order instructed Stephen to transfer all relevant documents and funds to Andrew. Stephen was also required to make an affidavit declaring the estate accounts and issuing an inventory of the assets. When Stephen failed to comply with any of these requirements, Andrew sought a mandatory order seeking Stephen’s compliance and this was granted in December 2018.
The mandatory order reiterated Stephen’s obligations and, due to its mandatory nature, it included a penal notice which compelled Stephen to comply within 28 days or be held in contempt of Court and face the risk of criminal sanctions, such as a fine and/or imprisonment.
Again, Stephen failed to comply with the order within the given time period and so Andrew issued a committal application which eventually came before the Court in May 2020. Stephen had still not taken any steps in accordance with the order and had failed to engage with the Court proceedings at any point.
The Judge duly held Stephen in contempt of Court for failure to comply with the mandatory order, and ordered a bench warrant for Stephen’s arrest ahead of sentencing. The outcome of the sentencing hearing is yet to be published but, in view of Stephen’s persistent refusal to comply with the Court’s orders, a custodial sentence or hefty fine will likely follow.
Although an extreme example, Frejek V Frejek [2020] underlines the importance of executors and administrators complying with their legal obligations in full. If you need advice on your obligations or have problems with executors or administrators, please contact our wills team for further advice.
