Being named as an executor in a will is an important responsibility, and means you’ll have earned the trust of the person making the will. It means you are legally responsible for carrying out instructions set out in a will after someone has died. But what do the responsibilities of an executor entail, who can be named as an executor, and can you renounce an executorship?
What is an Executor?
The executor is someone named in a will as taking legal responsibility for carrying out the instructions left by the deceased regarding their estate. In fact, the executor can even be a witness to the will, if they are not a beneficiary. If there’s no will, or those named are unwilling or unable to fulfill the executor role, a court may appoint an administrator in their place.
Duties of an Executor?
You should bear in mind that the role of executor can be a demanding one. It is not an easy job, practically or emotionally, and can take several months, if not longer. The executor needs to be responsible, rational, and fair-minded. It’s a bonus if they are also good at paperwork and managing legal issues. Executors are responsible for often complex financial transactions, including the payment of taxes and disposing of property. The main duties of an executor can include the following:
- Getting copies of the will
- Opening a bank account on behalf of the estate
- Paying any bills owed by the estate.
- Working out whether any Inheritance Tax is due and paying it.
- Applying for Probate.
- Paying any other taxes.
- Valuing and distributing the estate according to the will.
- Making any court appearances required.
- Setting up the power of lasting attorney to have someone trusted to make financial and welfare decisions on your behalf when you don’t have the mental capacity to do so.
- Executors may also be responsible for registering the death, informing any relatives, and making practical arrangements for the funeral.
How to be an executor?
Every will is different, and the tasks that can confront executors are unpredictable, with some far more challenging than others. But here are the steps that the executor must take with most, if not all, wills.
Check the latest Will.
You should first check that the will you’re using is the latest version and that you’re named as an executor. You should carry out a thorough search of the deceased’s paperwork, and, if they have a solicitor, contact them to make sure there isn’t a more up-to-date version of the will.
Check for any funeral plans
Check the will and paperwork to see whether the deceased had any insurance or a pre-paid plan that will help pay for their funeral.
Make funeral arrangements
Also check to see whether the deceased left any specific requests or instructions relating to their funeral. As the executor, you will be responsible for paying for the funeral, in the absence of any insurance, though you will be able to claim this cost back from the deceased’s estate. The deceased’s bank may also agree to release enough money from the estate’s accounts to cover these costs.
Value the estate
To do this you need to be clear about precisely what the deceased owned, and what they owed. You’ll need to check through all their paperwork to track down banks, insurance companies, employers, pension providers, and utility suppliers to notify them of the death, as well as HMRC, the Department for Work and Pensions, and the local council. You should also take this opportunity to find out how much the deceased owed or was due from them when they died. If there is not enough money in the estate to cover any outstanding liabilities such as bills or tax, then it is best to seek legal advice as dealing with an insolvent estate can be complicated.
Apply for probate
A grant of probate gives you permission to administer someone’s estate after they’ve died. You must apply for this by completing a form from the Probate Registry. Before you can apply for the grant of probate, you’ll need to have paid any Inheritance Tax due. Once this is done, you can apply to the Probate Registry to gain the legal authority granted by probate to deal with the deceased’s assets. When probate is granted, you should send copies of it to any organizations which hold some or all of the deceased’s money and ask them to release it to you.
Place a deceased estates notice
Once you’ve obtained the grant of probate, letter of administration, or death certificate, you can place a Deceased Estate Notice with The Gazette – the UK’s official public record. While this isn’t a legal obligation, the advantage of doing so is that it can alert creditors to make any claims on unpaid debts, which shows that you’ve taken reasonable steps to repay the money if any disputes occur. When the notice is placed, creditors have two months and one day to make a claim.
Open an executor bank account
This ensures you have a bank account where you can hold the financial assets of the deceased.
Pay off any outstanding bills
Once you have collected all the money, you must pay off the deceased’s debts before distributing any of it. This will include any Income Tax and other tax owed, so tax returns will have to be completed first.
Distribute the estate
You’ll need to make the distribution according to the will. This could include remaining money, property and possessions.
Complete the accounts
These would show all the deceased’s financial assets, what was paid out and how the remainder was distributed. They will need to be approved and signed by the beneficiaries of the will.
What are the executor’s responsibilities regarding Inheritance Tax?
Depending on how much the estate is worth, there may be Inheritance Tax to be paid. You’ll have to pay this and prove it’s been paid, or that there is none due before you can apply for a Grant of Probate.
If there is Inheritance Tax due you’ll need to complete the tax form IHT400. If there is no Inheritance Tax due, you’ll need to complete the form IHT205.
It may be difficult for you to pay an Inheritance Tax bill before being granted probate, as you won’t be able to access any money in the deceased’s estate until probate is granted. In a case like this, you should check to see whether the deceased had a life insurance policy in trust, as this would pay out even without probate. Alternatively, you could talk to the deceased’s bank, as sometimes they will agree to release an amount direct to HMRC for Inheritance Tax without probate.
Options for whom to appoint
It’s really up to you, but first and foremost they must be people you trust.
The role also requires them to be responsible, rational, and fair-minded. It’s a bonus if they are also good at paperwork and managing legal issues.
Professional executors: a solicitor, bank, or accountant will charge for their service.
Look closely at the fees: it could be an hourly charge or a percentage of the estate, often between 1% and 5%.
Think about whether you’re happy for a chunk of your money to be taken in this way, rather than going to your loved ones.
Make sure you, therefore, understand how you will be charged and how much before you commit.
On the other hand, if your financial affairs are complex having a professional executor will bring the benefit of independent, specialist knowledge.
Friends and family members: they will have to make the tough decisions demanded of the role, while also dealing with their grief.
Many people refuse to take on the role for these reasons.
However, loved ones will know you and how you would want your wishes to be carried out should disputes arise.
Make sure that you discuss this with the family members you choose, and give their full names and addresses in the will, so they can be located easily.
What if there is no one?
If there really is no one else then, as a last resort, a government official called the public trustee will be your executor.
This is mostly employed when everything in a will is left to one person who can’t act as executor themselves, for example, a child or someone who has a disability which means they are unable to deal with financial affairs.
What’s called letters of administration are granted by the probate registry to allow the deceased person’s estate to be divided up under intestacy rules if there is no will or no living executors.
If you have any questions on how to complete your duties as an executor; if you would like to write a will; or if you have any questions regarding Inheritance Tax, contact us here at Outsourced ACC on 0208 249 6007 or email us at firstname.lastname@example.org
written by Andrew Callister