Executors – Choosing Correctly Is More Important than You Might Think

What Does an Executor Do?

Executors are responsible for administering your estate after you die. This involves:

• identifying and gathering in all the assets
• paying off any outstanding debts such as credit cards and mortgages
• reporting to HMRC and calculating any inheritance tax, as well as any capital gains and income taxes if applicable
• obtaining the Grant of Probate
• advertising for any creditors
• producing detailed estate accounts and making distributions according to your Will

These tasks can quickly become onerous, time-consuming and complicated - particularly if other issues arise, such as a claim being brought against the estate.  

Beware Wearing Two Hats

Executors also have to be careful not to fall into the trap of unwittingly or otherwise promoting their own interests if they are also beneficiaries under the Will. Take this common example:

The son of the deceased is the executor and entitled under the Will to a half share of his parent's house. He wants to purchase the house. His brother, who is not an executor, inherits the other half under the Will. The executor brother needs to ensure that he purchases his brother's half at the highest price that he could otherwise sell it for on the open market. If he does not, or deliberately tries to purchase at an undervalue, he is breaching his duties as executor and could ultimately be removed and held personally liable for the financial losses to the estate.

Traps like these are easy for innocent executors to fall into sometimes without realising. But the role of executor can also offer opportunities for executors with less integrity to potentially exploit. It is therefore vital to choose the right person(s) who have the required expertise and judgement.   

How Should You Choose?

People often think that choosing friends or family members will be less expensive than a professional. Lay executors do not charge for their time but many will instruct solicitors to administer the estate on their behalf anyway, which often results in similar levels of costs to appointing a professional in the first place.

If you particularly want a certain friend or family member to be executor but also want the expertise of a professional, it does not have to be a binary choice and in some cases it can be advantageous to choose a combination of both. In deciding, some key factors to consider are:

• Bereavement – Lay executors are often mourning the loss of a relative or friend at the same time as managing administrative executor's duties. By choosing a professional, this emotional complication is removed.

• Technicalities – Professionals are well equipped to deal with complicated trusts and tax-related matters. The more complex an estate, the more the chance that a lay executor may find themselves instructing experienced advisors in any event.

• Disputes - If there is a prospect of a dispute arising on your death between family members then a professional executor will be equipped to deal with this, whereas a lay executor may be a party to the dispute themselves and struggle to stay neutral or to deal with the added complexities of resolving a family dispute.

For help deciding or advice on preparing your Will, contact Michael Knowles in our Private Client team on 020 7665 0903, or complete the form below.