Who should I appoint as my Executor and what will they do?
“Who should I appoint as my Executor?”
This is a very common question that I am asked by clients making their Wills and also by people who are named as an Executor, who are then expected to deal with an estate. The simplest answer is that Executors ascertain exactly what the deceased person owned and owed at the date of death, consider the Inheritance Tax position, obtain a Grant of Probate (if required), gather in the assets, pay the debts and expenses and then distribute in accordance with the terms of the Will.
However, it is not quite as simple as this! Most people opt to appoint family members as Executors. But, it is important that if there are multiple Executors, they should be able to work together to administer the estate. You should therefore think carefully about who you wish to appoint and the personalities involved. Although you may wish to appoint all of your children, if they don’t get on or haven’t spoken to each other for many years over a family argument or perhaps live abroad, it may be better to appoint somebody else.
If you only appoint one Executor, you should ensure that you appoint substitute or reserve Executors to step in if the primary Executor has predeceased you or is for any other reason unwilling or unable to act. For example what if the Executor you have appointed is unwell or has lost the capacity to deal with their own affairs? For this reason, it is often preferable to appoint somebody of a younger generation as a substitute Executor.
When appointing Executors you may also want to consider individuals who are methodical and fiscally responsible. If you don’t think that there are any suitable family members or friends then it may be better to appoint a professional (for example a Solicitor) to act as your Executor. They would then liaise with the family and the beneficiaries of the Estate during the administration and can add an element of impartiality, if required.
It is a very common misconception that somebody who is an Executor cannot be a beneficiary of a Will. This is not the case. For example, there is absolutely no reason why your children cannot be appointed as your Executors and also the beneficiaries of your Will.
“What does an Executor actually do?”
An Executor may have to apply for a Grant of Probate (see Do I need a Grant of Probate?) as part of the administration of the estate. A Grant of Probate is a Court Order which confirms that the named Executor/Personal Representative has the authority to deal with the assets in the Estate. As part of this process the Executor must confirm the Inheritance Tax position in the estate for H M Revenue & Customs (HMRC). Depending on the circumstances, these forms can be quite daunting, especially at what can be a quite challenging time emotionally. It is extremely important that this paperwork is completed accurately and in a timely fashion. HMRC can apply penalties for late filing of the Inheritance Tax paperwork and, for example, if estate assets are not fully disclosed on the paperwork.
Most Executors are also appointed as “Trustees” of an Estate. This allows them to hold money for minor beneficiaries or on behalf of a beneficiary of a Trust. This may involve ensuring that Tax Returns are carried out and that assets are suitably invested and/or protected.
Of course, if the named Executors do not feel able to deal with the estate themselves, they can ask a Solicitor to assist them with the application for the Grant and the administration of the estate.
If a named Executor does not wish to act in an estate, they can renounce probate if they have not already been involved in the estate administration, known as “intermeddling”. In this situation either the remaining joint Executor(s) can continue to act or, if appropriate, a named substitute Executor. If there are no Executors willing or able to act then the residuary beneficiaries can take on the role and act as “Administrators” of the estate.
In a situation where several Executors are named, it may not be necessary for all of them to act in the role and in this case, if everybody agrees, one or two of the named Executors apply for the Grant reserving power to the others. This means that they do not actually sign documents but could take over the administration if required to do so at a later date.
One of the most important points to remember, especially if you are appointed as an Executor, is that an Executor is personally liable. An Executor should never hand over estate assets before all debts, expenses and Inheritance Tax have been paid. This point has been recently highlighted in the case of Harris v H M Revenue & Customs (2018) where the Executor, who was not a beneficiary of the estate, passed a substantial amount of the estate assets to a beneficiary on the assumption that the beneficiary would pay any outstanding Inheritance Tax. The beneficiary returned home to Barbados with the money and, of course, didn’t settle the Inheritance Tax. It was held in this case that the Executor was personally responsible to pay the Inheritance Tax in excess of £340,000 to HMRC.
The bottom line is that being appointed as an Executor is an honour but also a big responsibility. So if you are asked to be an Executor, think carefully about whether this is a role you are willing to undertake. If you are appointing Executors, please ensure that the named people are the most suitable candidates for the role and, perhaps, in advance discuss with them if they would be willing to act for you.
If you would like further advice on any of the above issues then please feel free to contact us on 01245 504904 to book an appointment to discuss these in more detail.