What is the role of an executor?
An executor is a person appointed in a Will to carry out the instructions of the deceased. The role of executor is a difficult and time consuming job, and once an executor starts to act, they become personally, legally and financially responsible for their actions.
Non-professional executors (relatives) tend to find this work time consuming and difficult, their decisions could also make them unpopular with other relatives. Often family members are too distressed to perform the role, so turn to banks or solicitors to do the work for them; statistics show that 88% of the time this is the case.
Appointing an executor
You should choose an executor to carry out your wishes as stated in the Will. Executors can be beneficiaries in the Will, and often people appoint their spouse, civil partner or children as executors. Check with your chosen executors that they are willing to take on this role before naming them in your Will, as it can involve considerable responsibility.
Consider naming more than one executor in case one dies before you; having more than one person can sometimes make the job easier if the responsibility is shared. The executors usually have to deal with the day to day administration of your estate in the period before probate is granted and the estate distributed according to your wishes.
Professional executors
There are many advantages in appointing a professional executor, particularly if the estate is large or complicated. Professional executors such as solicitors, banks or accountants will normally charge between 3% and 5% of the value of the estate for the work that they do and often an hourly rate in addition to this.
FutureSafe offer a range of fixed price probate packages starting from as little as 1% of the value of your estate with all fees and disbursements disclosed in advance of any work being undertaken.
Understanding the role of an executor
- An executor has to carry out certain tasks in order to legally fulfil the obligations of the task. As executor you must therefore:
- Obtain a copy of the medical certificate indicating cause of death and a formal notice from the doctor if family members do not wish to do so.
- Register the death at the local Registry of Births, Deaths and Marriages. The death must be registered in order to obtain the death certificate. It is advisable to get more than one copy as it will be needed when dealing with insurance companies, pension providers etc.
- The executor could be responsible for ensuring any last wishes such as organ or body donations are carried out. The job might also include planning for the funeral and arranging for payments for the services provided.
- Obtain the last original Will and confirm its validity.
- Locate all the heirs. This might seem like an easy task, and if there are just a couple of children, and they are the only beneficiaries named in the Will it is easy. However, if there are numerous heirs and they are named in the Will either collectively or individually, the executor must locate each and every one.
- Make an exhaustive list of all the assets of the estate, from personal, to real property, to bank accounts, investments etc; and also all the debts including credit cards, utility bills, loans etc.
A written picture must be prepared detailing all of the deceased’s financial affairs. This means that all of the following must be contacted:
• Bank, building society and post office accounts
• Internet accounts
• Investments/shares/premium bonds etc
• HMRC in respect of any tax returns due
• Mortgage or other loans
• Life assurance and pensions schemes
• Social Security
• The Pensions Agency, as well as any old pensions that the deceased may have been a member of
• The County Council in respect of Council Tax
• Utility suppliers i.e. gas, water, electricity, telephone, internet, mobile phone etc
• Subscriptions/clubs (Sky TV, book clubs, catalogues, sports clubs, savings clubs etc)
• DVLA in respect of vehicle and driving licences
• House and car insurances etc
It is advisable to open a separate account into which money paid into the estate can be credited. This will prevent estate monies being confused with personal finances.
The executor must make sure that all of the deceased’s debts are settled before the estate is distributed to the beneficiaries.
If there are minor or dependant children, the executor could be responsible for arranging their care and placement. The deceased might have their wishes stated in the Will, but if not the courts might have to be involved in the placement. If there are pets, the executor will need to care for them and make arrangements for their continued care.
The executor must pay any inheritance tax due. You must declare the value of the estate to HMRC on an Inheritance Tax Return within 12 months of death.
Payments of the deceased’s tax is your personal responsibility. Failure to submit an accurate account to HMRC may leave you open to personal liability or penalty.
Once all of the above has been completed, the executor must:
Make an application to the local Probate Registry to either obtain the Grant of Probate, or the Grant of Administration.
Distribute the contents of the Will making sure that if anything is to be left to minors, a trustee has been named.
After you have completed all of your tasks, you will need to produce a full set of accounts for the beneficiaries showing the estate assets and liabilities, administration income and expenses and how the estate has been distributed.
Selecting an executor to be named in your Will is an important matter. If you are considering asking a close family member to serve as the executor of your estate, be sure to understand the extent of the duties and responsibilities involved. Being the executor is not really an honour, it’s a difficult, time consuming job that carries some legal liability.
An executor will probably work long, hard hours for at least a year or two getting your estate settled, and they could quite possibly become a very unpopular person to your heirs.
Appointing a professional executor can save time, heartache and stress for your loved ones and result in far fewer disputes. FutureSafe can arrange for your estate to be administered professionally at a guaranteed fixed fee, with all costs fully disclosed in advance so that you know what to expect.
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Why should I use a professional trustee?
Should you die and your estate be placed in trust for your children, the trust needs to be looked after. Children’s trust funds tend to be substantial and the responsibilities of the trustees reflect this. Trusteeship can go on for many years and the trustees can be held personally liable for decisions they make. If they are careless with the management of the trust fund, they can be liable to make good any losses; but they can also be personally liable if they are too cautious and their investment strategy doesn’t do well enough. For example, it is not sufficient to put the money into a building society account and come back years later when, perhaps, an infant has attained majority.
Trustees are legally required to do a reasonable job and must be seen to do so, and are not excused their obligations or liabilities just because they don’t have the necessary skills to fulfil the role. This is too big a burden for the amateur.
The role of a trustee can be extremely daunting for an untrained person and often decisions will be made which may not be completely in the interest of the beneficiary(s.) This may be simply because the trustees do not have a clear understanding of the impact their decisions may have on the beneficiary’s inheritance.
FutureSafe recommends appointing two sets of trustees: a professional, such as a solicitor carrying indemnity insurance to administer the trust professionally; and also a family member(s) with a personal interest in caring for the children’s welfare, who would work jointly with the professionals.
FutureSafe panel solicitors give consideration to the tax status, financial status, and marital situation of the intended beneficiary (for example, if the beneficiary were undergoing financial difficulties or entering into divorce proceedings.) This ensures that the assets would not be lost to creditors or ex-spouses.
This advice can be crucial in preserving assets and ensuring as much as possible is received by the intended beneficiary(s) and is not lost to tax, divorce or in settlement to creditors.
Many people when creating Trusts appoint their children or other family members as trustees.
The trustees are often also the beneficiaries to the deceased’s estate, and this fact may pose some real problems after the death of the Settlor (the owner of the Trust.)
Once the deceased’s assets have entered the Trust, a trustees meeting must be held and any decisions regarding the distribution of these assets must have the agreement of ALL of the trustees. As we are all aware, this can often prove to be an issue within some families.
Appointing a professional trustee will ensure that a totally unbiased approach is taken when dealing with the deceased’s assets and that the Settlor’s wishes are completely upheld.
The trustee’s duties can be summarised as follows:
All trustees should familiarise themselves with the terms of the trust so that they can administer it in accordance with the trust deed.
All dealings with the trust fund by the trustees must be for the benefit of the beneficiaries.
The trustees must use their utmost diligence to avoid any loss. If they are negligent and a loss arises they may be responsible for that loss to the beneficiaries.
All trustees must act unanimously. Under English law, trustee’s decisions cannot be made by a majority of trustees unless the trust specifically allows this.
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