Dangers of Being an Executor

With the rise in the number of lay executors deciding to administer estates without the input of any solicitor, we take a look at the dangers of being an executor including things that can potentially be missed and the personal liability they then face. Will Searches There are a range of ways that a person may make a Will– from a solicitor, online, make your own, supermarkets, banks and building societies, the list seems to grow on a daily basis and yet the majority of people still do not have a Will. The first job of an executor is to establish whether the deceased had a Will and if so, is the Will that they have located the last one and the one that should be proved at the Probate Registry. A search needs to be made first in the deceased’s home or last residence as to whether there is a Will or a copy Will, and speak to family members as to whether the deceased ever spoke about making a Will at all. If unsuccessful then you need to contact any solicitors the deceased used or if you draw a blank then all the solicitors and will writers in the area as well as any banks they may have used. Commercial firms are now registering Wills and a search of these is both very quick and easily done but is another cost at a time when the executor has no money to use from the estate. The Will may have been lodged with the Principal Probate Registry in London as this offers a storage facility. Should an executor prove the wrong Will and distribute accordingly then they will be personally liable for the losses of those beneficiaries who did not receive their inheritance. Rise in Claims Against Estates With information, be it right or wrong, so easily available on the internet and on smartphones there is an ever-increasing rise in the number of claims and disputes against estates. To provide the executor with some protection upon distribution of the estate, then section 27 notices should be made in the London Gazette and a local newspaper. What to do about the claims that you then receive in from the advertisements well an executor must remain neutral at all times informing the beneficiaries of the claims and keeping them informed of any correspondences and court proceedings. If a Will leaves to a class of relatives such as all nieces and nephews, then it would be wise to do a family tree search to ensure all relatives are accounted for not just the ones people known about as very often there are unknown family members who are missing for whatever reason. Again should the executor distribute the estate and not have all the beneficiaries it is they that will have to pay the further beneficiaries their money. Inheritance Tax Another danger of being an executor is in signing the HM Revenue forms they are saying to HM Revenue that what they have put down is accurate without full knowledge of the facts. Should those facts be inaccurate and the deceased have made large gifts in their lifetime which are not included or because a beneficiary has deliberately not provided all the information or has lied then the penalty charged can be a lot larger than the tax that was due and the fine can be imposed on the executor. It is known for a lay executor to have on the insistence of a beneficiary, who resided offshore, paid over to them the entire estate without having settled the inheritance tax which HM Revenue then prosecuted the executor forcing them into bankruptcy. Bankruptcy Should an executor pay out to a beneficiary who is subject to bankruptcy and not to the trustee in bankruptcy and if the beneficiary disposes of those assets then the trustee can bring a claim against the executor. Location of Assets One of the hardest things for an executor to achieve is to realise all the assets a deceased owned at the date of their death. This has been made more difficult as the younger generation do most of their financial transactions through their smartphones and online leaving no physical trace and the executor will not be able to access the deceased’s phone unless the deceased has left them with the passcodes to the phone and relevant accounts. Should an executor fail to maximise the estate then the beneficiaries have the right to pursue the executor for their losses. Finalising the Estate It is a requirement that upon completion of the estate that the executor do produce for each beneficiary a set of the estate accounts which are both understandable but also allow the beneficiaries to check and ask any questions they wish to. Such are the issues that may confront an executor when administrating an estate and all carry the potential that they will have to personally recompense a beneficiary, HM Revenue, trustee in bankruptcy, litigant etc.