Many people regard being chosen an executor as an honour or a duty owed. Through lack of communication in life, many others may suddenly discover they have been appointed as an executor only after their loved one has died.
It is possible to decline to take on the task (provided you state this at the start) but if you do accept, bear in mind that the role also comes with serious duties and legal obligations which the executor is personally responsible for carrying out.
Tara McInnes, a senior associate in our disputed wills and trusts team, was recently interviewed by the BBC Radio 4 flagship “You & Yours” consumer programme and her message was before accepting the role of executor, you should be sure you understand what you're getting into.
Listen to her interview below…
Executor is personally responsible and could be personally financially liable
An executor is legally and personally only responsible for sorting out the finances of the person who died, generally making sure debts and taxes are paid and what remains is properly distributed to the heirs. However, the executor is personally financially liable for any debts that fall on the estate in the event they have paid monies out to beneficiaries before the debts have been paid or they have acted inappropriately. They can also be liable to pay the inheritance tax personally in certain circumstances.
Where a person dies without a will they die intestate and the individual sorting out their affairs is called an administrator. The law dictates who can apply for a grant of letters of administration and also dictates who benefits from the deceased’s estate but in the main the duties of administrators on appointment are broadly the same as those of executors.
Inheritance tax payable within six months of death
It is the executor’s responsibility to complete inheritance tax (IHT) forms and submit these, along with payment, to HM Revenue & Customs (HMRC) within six months of the date of death. Thanks to increasing house prices over the decades, especially in the south east of England, it’s likely that many more estates where IHT would not previously have been a consideration will be over the IHT threshold.
Debts and taxes must be paid before beneficiaries
It’s important to note that outstanding debts left by the deceased and any IHT owed must paid BEFORE any money is paid to beneficiaries mentioned in the will to avoid a shortfall. An executor can be held personally liable if assets in an estate are distributed before all debts are paid. An executor can protect themselves from claims they are not aware of by placing a statutory notice pursuant to the Trustee Act 1925, giving a deadline for creditors and claimants to contact the executor to make a claim.
Challenges to a will
Ordinarily, if a valid will exists and all beneficiaries are happy with any provision, acting as executor can be a straightforward, if somewhat time-consuming process best done with some legal help. However, if there is any doubt over the validity of the will or the deceased did not make adequate provision in their will for close family members it is possible that the will may be challenged, or a claim brought against the estate.
A will can be challenged on various grounds including lack of testamentary capacity, undue influence, fraud or lack of knowledge and approval. Even if the will is valid there are certain categories of people who may bring a claim against the estate using the Inheritance (Provision for Family and Dependants) Act 1975. Claimants under the Inheritance Act will argue that they have not received reasonable financial provision in the will, given the nature of their financial dependency upon the testator (the person who made the will) and their own financial circumstances.
Both a challenge against the will and a claim under the Inheritance Act will delay the administration of the estate, sometimes for several years, meaning that payment of taxes and debts are delayed, resulting in the executor being put under a great deal of stress and worry, and the estate incurring even more cost.
A contested will is very demanding in terms of time and emotional effort on all sides especially at a time when people have lost a loved one and are grieving. That's why calm, objective, professional and effective legal advice is even more important if you are an executor faced with a claim or are a disgruntled beneficiary bringing a claim.