In advance of the budget and any tax issues that may come our way, my husband and I have written our wills, a very simple task compared to naming an executor.
It sounds simple, but choosing one has been as complicated as choosing godparents for our two children, if only because Andrew and I have been executors and know the heavy burden we could be putting on the shoulders of another family member.
Choosing one seemed simple at first. If I die first, Andrew will be in charge of fixing things and vice versa.
Then our lawyer asked what would happen if we both died together. Who would we appoint as executors to organize our estate and ensure that our children were taken care of? A more complicated decision.
How do we choose the right person or people? Ruth Jackson-Kirby writes. They would be responsible for fulfilling our wishes after our death.
So what would happen if they killed us and the children? An extreme situation to consider and a gloomy scenario in which our executor must intervene. It has left us stagnant.
How do we choose the right person or people? They would be responsible for carrying out our wishes after our death, managing our estate, selling everything, and passing things on to our heirs.
On the one hand, you want someone who will do the job correctly and not cause further upset in an already emotional situation. On the other hand, just take a look at the busy lives of our families and we realize the weight of responsibility.
Add to that the fact that the number of executors sued by disgruntled beneficiaries increased 21 percent last year, and the role becomes even less attractive.
According to research by TWM Solicitors, angry families have dragged executors to court claiming they did not act in their best interests or that their negligence has damaged the value of the estate.
But let’s get back to what exactly an executor does.
The responsibilities should not be underestimated: it is the executor’s job to sell assets, calculate and pay inheritance tax, settle debts left by the deceased, and ensure that heirs receive their legacy.
If you get it wrong, you could be personally forced to pay the unpaid inheritance tax, in the middle of a bitter family dispute or, as is increasingly common, in court.
We have heard stories of executors discovering the deceased’s debts after the entire estate has been distributed, leaving them with the option of settling the debt themselves or recovering the money from family members. Or executors who have thrown in the towel and appointed lawyers to act on their behalf, due to pressure from the beneficiaries and discussions within the family.
Delays in probate proceedings in recent years have left some executors paying inheritance tax bills out of their own pockets, as the bill becomes due before probate is granted. They must then reimburse themselves from the estate. “Appointing an executor should be done after receiving professional advice,” says Caroline Foulger, Partner and Head of Private Clients at TWM Solicitors.
“Choose the wrong executor and costly disputes can easily arise.”
If you have been asked to be an executor or are considering who to choose, it is vital that you understand what is involved, as many do not realize what they are taking on.
“An executor is responsible for ensuring that the wishes set out in someone’s will are carried out after their death,” says Kieran Osborne, chief executive of estate planning firm Squiggle Consult. Executors may also have to manage the deceased’s property until it is sold. This could mean cleaning the contents, securing them and maintaining them.
“Sometimes even simple tasks like paying beneficiaries can be more complicated than anticipated: confirming a beneficiary’s identity, performing a bankruptcy check, or checking that banking details are correct,” says Jade Gani, CEO by Circe Law.
“Being an executor can be a thankless task,” says Foulger. “The greatest risk to beneficiaries and implementers themselves may be as simple as a lack of understanding of what is expected or a lack of time to address matters appropriately and efficiently.”
If heirs think that an executor has not done a good job, there can be disputes and family divisions.
Executors can also be harmed if they make mistakes. For example, errors in calculating inheritance tax could, in future years, lead to HMRC requiring the executor to pay unpaid bills.
‘Executors are personally responsible for all aspects of administration. One of the most technical is having to declare the inheritance tax situation; report the exact value of all assets and any relevant lifetime gifts to HMRC and claim all relevant reliefs, exemptions and allowances,” says Foulger.
However, it doesn’t have to be a nightmare, argues Osborne, who adds: “It can be a challenging responsibility, but it doesn’t have to be terrible.” For someone who is organized and communicates well, this is usually manageable, especially with the right support.”
Here, experts give their advice for taking on the role of executor without complications.
Make sure your executor has something to gain from doing the work, says Caroline Foulger of TWM Solicitors. ‘There are many cases where someone chooses an executor who will not inherit anything from their will. In such cases, they ask that person to go through what can be months of hard work, stress and even fights without compensation.”
An executor who is not diligent can cost thousands of dollars to beneficiaries, and potentially the executors themselves. If you are an executor, be careful when selling items. It is quite common to see disagreements between executors and family members over how and when they sell assets.
‘If the executor sells shares whose price then increases, this can trigger disputes. The same can happen if the executor sells a property during a crisis,” says Mrs Fougler.
“Coordinating the market is an impossible task, but some heirs sadly see it as part of an executor’s job.”
Gary Rycroft, partner at Joseph A Jones and Co Solicitors LLP, says it is foolish to take on the role without seeking legal advice.
“Whether an executor is only a minor beneficiary or not a beneficiary at all, if the executor makes a wrong move, they may still be personally liable for their mistake,” he says.
‘Receiving legal advice can also ease the burden of personal responsibility, plus legal fees are paid out of the estate. “If the executor seeks formal legal advice, they can be blamed for any errors and effectively rely on their insurance policy to cover any loss or claim.”
Estate planning companies can offer executors different levels of assistance, ranging from free advice to calculating figures and taxes and full estate administration, where the executor can relinquish much of their responsibility.
‘It also helps for the person who has made the will to think a little about the jobs they leave to the executor. Having clear instructions in your will and access to professional advice can make the process easier.
‘When choosing an executor, you will want to choose someone you trust, who is organized, trustworthy and capable of handling financial and legal matters. It’s not just about their relationship with you, but also their ability to manage what can be a time-consuming task. It is often advisable to appoint a backup.
‘Also, if you name more than one executor, consider whether they will get along. Disputes between them can create problems or delays.’
Make a clear and valid will, says Jade Gani of Circe Law. If you want to make life easier for your executors, start with a valid, up-to-date version and then move on to clear information about your accounts and assets.
“It will be helpful to retain details of account numbers and values, although be careful not to include passwords or PIN codes,” he says.
‘If you use an accountant, financial advisor or other professional, please keep their details along with your personal documents. The more organized you are, the easier it will be for your executors.
As for our decision? Andrew and I have chosen to put the professionals in charge if we all die. Our attorneys will act as our executors and donate everything to charity.
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