You are named as executor in a Will and unfortunately the time has now come for you to carry out your duties – but what are they and how do you get started?
At first glance, the process seems relatively clear-cut; to identify the deceased’s assets, pay the appropriate inheritance tax (IHT), gather in the assets, pay any liabilities and distribute the remainder in accordance with the instructions in the Will.
Rarely, however, is it quite that straightforward.
Identifying the Assets and Estate Property
Not only does an executor have to make an inventory of all of the deceased’s assets and liabilities but these values must be quantified at the date of death itself and valuations will need to be obtained.
As well as bank accounts, it is likely that the deceased had other assets such as life policies, antique furniture, stocks and shares and property. It may be necessary to instruct specialist valuers and if the deceased had either foreign and / or business assets, professional assistance will be required.
The executor will also need to investigate whether the deceased gifted any money before their death, or set up any trusts e.g. for family members.
If IHT is payable, consideration will need to be given as to how that IHT is funded. The IHT needs to be paid to HMRC before the Grant of Probate is obtained. Often banks will release funds directly to HMRC from the deceased’s bank account for this purpose. If there are insufficient funds the executors may need to take out a loan to pay the balance.
Grant of Probate
Only once any IHT has been paid, or exemption demonstrated, can the Grant of Probate be obtained. This is what entitles the executor to collect in the assets and administer the estate. To obtain this Grant, the executor must submit a sworn oath and account of the deceased’s assets and liabilities to the Probate Registry. For small estates, a Grant of Probate may not be required, but it will generally be necessary if the deceased owned property or had more than £15,000 in any one account.
Before the executor can distribute the estate to the beneficiaries, they must first make sure that all debts are paid. This will include funeral expenses.
Distributing the Assets in accordance with the Will
The final part of the administration process is the distribution. All legacies will have to be paid. The remaining funds will need to be paid out and in certain cases this can mean searching for missing beneficiaries and may involve professional search agencies.
Personal Liability of Executors
Executors are legally bound to carry out their duties correctly and are personally liable for any incorrect distributions. An example of this personal liability is where an Executor incorrectly interprets the Will and makes an overpayment to a beneficiary. Also, delay in the payment of inheritance tax can lead to penalties which may not be recoverable from the assets of the estate.
What if the deceased did not leave a Will?
If the deceased did not have a Will, they are said to have died intestate. Instead of a Grant of Probate, a Grant of Letters of Administration will be needed. The deceased’s assets will still need to be calculated and IHT and liabilities paid, but the beneficiaries will be identified in accordance with the intestacy rules. This may lead to unexpected results, for example, if the deceased had an unmarried partner, they will not be provided for. Overall the administration process for an intestate estate can be much more complex and lengthy. Seeking legal advice at the outset is recommended.
The law takes the Executor’s role very seriously and it is important that the Executor understands that they must carry out their duties comprehensively.
For further information, contact Alice Clewes, Partner at Hay & Kilner on 0191 232 8345 or email: firstname.lastname@example.org