One of the most crucial aspects of making a Will is deciding who will be entrusted to carry into effect its provisions. An executor is a person appointed by the testator or testatrix, the person making the Will, to deal with their property and carry out their instructions set out in the Will.
If you have been appointed as an executor, there are several considerations to bear in mind. First of all, because you will be taking on personal liability, make sure you know what you are doing if you proceed alone without the protection of legal advice (a lesson learnt by this executor, Mr Harris, who found himself personally liable to pay a £340,000 inheritance tax bill). Next, you should consider whether this is actually a role you are willing or able to take on (the powers of reserve and renunciation are explored in the next blog of this series). Acting as an executor can be complex and time-consuming as well as entailing significant responsibility.
Some of the key responsibilities of an executor include dealing with:
An executor will be responsible for dealing with HM Revenue & Customs and ensuring that any tax on the estate due is paid on time. This will include calculating the amount of tax (assessing for inheritance tax at a minimum but also closing off lifetime income tax and capital gains tax (CGT) and dealing with the same in the estate period). We generally recommend accountants handle the income tax and CGT reporting but they will still need you as executor to collate all the information and sign off their paperwork.
Assets and debts
All of the estate’s assets will need to be located and collected in. An executor will also need to identify any outstanding debts to be paid out of the estate or Will, and deal with the payment of these efficiently and effectively.
The executor will then pay the legacies in the Will from the net estate. Where the estate is comprised of more than just cash, decisions about how to satisfy the Will legacies will be needed, whether this be selling or transferring the net assets or dealing with them in some other way. Different tax consequences follow depending on which choices are made. Where the transfer of real estate property is concerned, the services of a real estate lawyer as well as a private client specialist may be required.
The responsibility of dealing with any claims made against the estate will also fall to the executor to handle. We would typically class these as an open-ended post-death estate liability, so the sooner these can be settled, the sooner a net estate figure can be reached an the estate can move on to paying the legacies under the Will.
All of the Beneficiaries of a Will need to be located and contacted regarding what has been left to them and this is another responsibility that the executor must deal with.
Remember that if you make any mistakes as an executor under a Will, you can be held personally liable for those mistakes, as Mr Harris found. The fact that Mr Harris did not understand the probate process was not a defence and did not prevent him from being held responsible. He could not avoid liability even though in this case there appeared to have been a genuine error on his part.
If you find yourself appointed an executor under a Will, it is crucial to consider whether this is a role you are able to perform effectively. Seeking advice from a solicitor specialising in probate work will be a key part of this decision. The reasonable legal costs which a competent solicitor charges will always be a proper post-death estate expense which will be deductible from the estate and not you personally.
For further information on the issues raised in this blog, please contact a member of our private client team.
Joseph Austin TEP
Lucy Bluck (she/her)