After an individual’s death, the responsibility of managing and distributing their estate often falls to a designated executor. An executor, also known as a personal representative or administrator, plays a pivotal role in ensuring that the deceased's wishes are carried out.
This role involves a wide range of tasks, from gathering information about the deceased's assets and liabilities to settling debts, paying taxes, and distributing the remaining estate to beneficiaries. Executors must act with diligence, integrity, and a deep understanding of estate administration procedures.
In this article, we'll cover the legal responsibilities of an executor in the UK. In particular, we'll deep dive into:
The key responsibilities of an executor
Legal obligation and liabilities of executors
When to seek professional help
Legal and regulatory considerations
Key legal responsibilities of an executor
The main responsibilities of an executor include:
Registering the death
Arranging the funeral
Valuing the estate
Applying for a probate
Paying debt or taxes
Distributing the estate
Making court appearances where required
Registering the death and arranging the funeral
An executor is a person named in a will and legally responsible for managing a deceased person’s estate. The role of an executor does not begin until after the testator has died. Afterwards, their burial is arranged, and Will is read.
An executor is responsible for registering the death of your testator. Note that this registration must be done in England and Wales within 5 days of the testator’s death. You may also be responsible for arranging their burial, although this may not be the case if they leave other instructions in their will.
The deceased may prefer to be buried by family members or even opt for a private funeral. However, you must bear in mind that whatever instructions the testator leaves in the will regarding how their burial should be done must be followed to the letter.
Valuing the estate
As an executor, you also have the legal duty of valuing the testator’s estate. Doing this requires three main steps. These are:
Identifying the testator’s assets and debts, such as savings, investments, mortgages, and loans
Estimating the estate’s value. This can help you determine the value and deadlines for reporting and paying any inheritance tax. Most estates are not taxed.
Documenting and reporting the value of the estate.
As an executor, you must first pay off any outstanding debt owed by the testator. The only exception is if the creditor agrees to write off the outstanding debt. Otherwise, they must first be paid off in full before any distribution can occur.
Applying for a probate
Probate is the legal process of administering a deceased person’s estate, which includes money, assets, and other tangible possessions.
To apply for probate, you must first gather the proper documentation. For a deceased who died testate (left a will behind), the correct document is Form PA1P. However, if the deceased died intestate(without leaving a will), the appropriate documentation is Form PA1A.
You can download either of these documents online via the Probate office website. This is the recommended option, as it saves you a lot of time and money. Alternatively, you can call the HMRC Probate and Inheritance Tax helpline. After completing the appropriate form, you could return it by Post to the HMCTS Probate, PO Box 12625, Harlow, CM20 9QE.
As an executor, you may be liable to paying a probate fee. The amount payable depends on the value of the deceased’s estate. If the estate’s value exceeds £5000, the probate fee is a flat rate of £300. Applying for Probate isn't required if the estate’s value is less than £5000.
Paying debt and taxes
As an executor, you must first pay off any outstanding debt and taxes owed by the deceased. Taxes to be paid may include income, capital gain, or inheritance, depending on how the deceased planned their estate prior to their demise. Raising money to pay off these debts and taxes may involve selling off the deceased’s assets or negotiating with creditors for debt restructuring.
Distributing the estate
Distributing the estate per the testator’s wishes is arguably your most important duty as an executor. You must ensure their wishes are followed to the letter. Doing otherwise may open you up to strong civil litigation suits. As executor, you owe both the testator and beneficiaries a duty of integrity and honesty, regardless of whatever outcome it may have.
Executing your duties properly as a testator entails transferring property ownership deeds, distributing funds, and ensuring all beneficiaries receive their inheritance as specified. All these must be done to the best of your abilities.
Common Challenges Faced By Executors
Complex wills: Some wills may become too complicated for the executor to comprehend fully. If you encounter this situation as an executor, you are expected to interpret the will to the best of your abilities without straying far. This is to avoid a blatant erosion of the testator’s real desire. Furthermore, the management and interpretation of certain Wills are so complicated and time-consuming that you may need to seek professional assistance. Assistance of this nature is often provided by lawyers vast in probate law or even professionals familiar with estate management.
Dispute among beneficiaries: Some beneficiaries may be dissatisfied with the content of the testator’s will, and this may lead to conflict. Some beneficiaries may feel they have been cheated or claim that the will has been unfair to them. As an executor, settling disputes of this nature may not be part of your skillset, hence why you may need to bring in a professional. You may refer the conflicting parties to mediation or arbitration. Alternatively, you may advise them to seek redress in court by disputing the will. However, this process may prove strenuous as it’s often time-consuming and expensive
Dealing with insolvent estates: In certain situations, the testator’s death may exceed his assets. If you encounter this, there are specific rules you must follow while distributing what is available to creditors. If this order is not followed, you, as the executor, may be personally liable to paying off such debt. Strict adherence to this hierarchy, as laid down by law, is recommended. Extreme care must be taken to identify all the testators’s debts and liabilities and also address them in the proper legal order. This sort of careful vigilance will save you from harsh personal liability suits in the long run.
Legal Obligations And Liabilities Of Personal Executors in the UK
Serving as a personal executor carries significant legal responsibilities and potential liabilities. Understanding these responsibilities will help you as an executor to navigate your role more effectively and avoid legal complications.
Duty of care: Executors owe a statutory duty of care to the beneficiaries of a testator’s will. As an executor, you’re expected to execute your duties with absolute honesty and integrity. You must also display professionalism and skill while carrying out your duties. You must always act in the best interest of the beneficiaries, or there may be grounds to remove an executor from a will.
Record keeping: As executor, the importance of keeping all records of transactions and decisions cannot be stressed enough. Always ensure you leave a paper or a digital trail. This will serve as concrete evidence for any proceedings that may involve you in the future. Other than this, record-keeping may help you avoid future liabilities. There must also be a final set of estate accounts that beneficiaries can access and review anytime.
Personal liability: As earlier stated, executors may become personally liable if they fail to administer the estate properly. For example, As an executor, if you ignore the legal hierarchy for settling debts, you may be personally liable to pay off the rest of the debt out of pocket. Also, failing to remit taxes to the government may make you personally liable for the payment.
When to seek professional help
As executors, certain Wills (like international wills) may become so complex that you may need professional assistance to understand them. Especially Wills that involve assets, trusts, businesses, or foreign properties. You may require the services of a competent solicitor familiar with Wills, Trusts, and Estates.
You may also need to seek professional help if there are disputes with the Will. Beneficiaries who feel they have been cheated may contest the will and challenge its validity. When this happens, suggest consulting a solicitor to contest the will legally. Alternatively, beneficiaries may also employ the services of a solicitor to ensure that the executor’s decisions are legally sound.
Best Practices For Executors
Maintain open communication: As executor, you must keep a clear line of communication with all beneficiaries. This is so they’re appraised of any developments that pertain to the estate. This can also help them understand estate administration and avoid any misunderstandings that may likely occur. Furthermore, you must ensure that one beneficiary is not more informed than the other. This way, there's transparency, leaving no room for anyone to claim favourability.
Document all actions: It is often said that the faintest sword is better than the sharpest mind. Documentation will save you a lot of hassle in the future. Ensure every step you take while carrying out your duties as an executor is documented. Maintain a clear paper trail, and do not leave out anything. Put whatever steps you take in writing, including seemingly minor details. You never know when such documentation may be your saving grace. Other than this, Past documents may become crucial if there is a misunderstanding or dispute concerning the estate’s administration.
Seek guidance when needed: When acting as an executor, do not hesitate to consult with professionals for advice or direction. Whether you encounter uncertainties in the will or feel overwhelmed by the responsibilities, seeking expert guidance from legal or financial professionals can help you avoid potential mistakes and pitfalls. Relying on the expertise of those who are knowledgeable in their field is always a prudent decision.
Legal And Regulatory Considerations
UK probate laws serve as guidelines that executors must follow to ensure absolute compliance with the law. As an executor, it is recommended that you follow these rules and guidelines to the letter, as straying from them may make you personally liable.
Applying and securing a probate usually takes between 2 to 12 weeks, depending on how quickly the probate office can review and approve the application. It is only after a probate has been secured that you can fully serve as the deceased's executor. This includes closing the deceased's bank accounts, selling their shares, transferring their properties to the named beneficiaries, and closing investment accounts, among other duties.
To be safe, however, you should employ the services of a probate lawyer or firm. This can help you stay in tandem with probate laws and protect you from potential future liabilities.
When acting as an executor, it is crucial to have a thorough understanding of inheritance tax regulations. This knowledge will help you ensure that the estate is administered in compliance with the law and that any potential tax liabilities are minimised.
You must be conversant with inheritance tax rates, exemptions, and reliefs, potential taxable properties, asset valuation, filing requirements, and other estate planning strategies.
Due to the complexities of inheritance tax law, it is highly recommended that you consult with a tax advisor or attorney who specialises in estate planning. They can provide expert guidance and help you navigate the intricacies of inheritance tax regulations.
FAQs
Do I need to apply for probate if I am an executor?
Probate is only required if the deceased left behind an estate. It is only necessary for estates whose value exceeds £5000. A probate isn't needed if the estate's value is less than £5000.
Can I be held personally liable as an executor?
You can be held personally liable as executor if you stray from the laid down probate laws. Especially when dealing with insolvent estates. You must strictly comply with the UK probate regulations to avoid personal liability.
How do I distribute the estate to beneficiaries?
The deceased estate must only be distributed according to the dictates of the deceased. I.e, according to what he states in his will. Strict adherence to his desires is recommended. This can help you avoid personal liabilities as an executor.
What should I do if there are disputes among beneficiaries?
When conflicts arise among beneficiaries, the executor must act with integrity and fairness. You can advise them to seek alternative dispute resolution techniques such as mediation and arbitration, seek legal counsel, prioritise the deceased wishes, etc.
Remember, it's important to act promptly and decisively to address beneficiary disputes. Also, always maintain neutrality.
Conclusion
Executors play a crucial role in estate administration. These roles include registering the death, applying for Probate, identifying assets and debts, paying debts and taxes, and distributing the estate. It is imperative that you execute these duties to the best of your abilities, as any misstep could lead to a fatal miscarriage of justice.
The role of an executor can be complex and time-consuming. Consulting with a probate lawyer and expert from Lawhive can provide valuable guidance and support throughout the estate administration process. Our solicitors can help reduce the stress and burdens associated with estate administration and ensure that the deceased's wishes are carried out effectively.