If you leave a will (which is highly recommended), then you can name up to four executors. As the name of the role suggests, the executors are the people with both the authority and the responsibility to ensure that a person’s estate is wound up in accordance with the will. Here are the key points you need to know.
An executor has to agree to take on the role
You can name anyone (over the age of 18) as your executor. They do not, however, need to accept the role. In short, anyone you name as executor will be assumed to have the relevant powers and obligations unless they divest themselves of them. They can, however, do this just by making a declaration to that effect.
If the named executor does not wish to take on the role, they have the option to nominate someone else in their place. If they do not, then there is a legal process to determine how the estate should be wound up.
Naming more than one executor can make it easier for people to divide work. That said, it can also turn into a classic example of too many cooks spoiling the broth. If you’re worried about people being overworked, then it may be better to appoint a law firm as your executor. There is, of course, a charge for this but it can be money well spent, especially if your estate is complex.
An executor has to complete the administration for the death
In simple terms, an executor has to make sure that all relevant people are informed and all debts settled before the estate can be divided. The executor’s first job is to register the death formally and to make arrangements for a suitable funeral. Their next job is to take all possible steps to inform anyone who might have a legal (i.e. financial) interest in the deceased’s estate.
Anyone who pays the deceased any form of lifetime income (e.g. benefits or a pension) should be informed immediately. HMRC, financial-service providers and utility providers should generally be next on the executor’s list. After that executors should check the deceased’s paperwork and try to contact anyone who might have a financial claim on the estate.
Executors should be aware that they can be held personally liable if the estate is not wound up correctly. One way to mitigate against this is to announce the death in a government-approved publication. In England, this The Gazette and also in the deceased’s local newspaper. In both cases online announcements are fine.
The other major piece of administration the executor may have to complete is applying for probate. This is only necessary if the deceased’s estate is above a certain threshold and/or contains property that is being transferred to someone other than a spouse/civil partner.
An executor has to settle the estate
As a rule of thumb, the executor can settle certain out-of-pocket expenses, out of the deceased’s estate immediately. These include reasonable funeral expenses. After that, typically HMRC has the first claim on an estate.
Settling Inheritance Tax may involve valuing non-cash assets. If so, the executor should seek out a professional assessment of their current, fair market value. They should also check if the deceased was a whole or part owner and if they latter only include their share in the estate valuation.
After this, other creditors can be paid and the remains of the estate divided amongst the beneficiaries in accordance with the will. If the deceased has kept their financial affairs in good order, then this is generally fairly straightforward.
If they haven’t, then it can get very complex and acrimonious, especially if a lot of money is involved. For this reason, potential executors might want to check what they’re being asked to take on before they decide whether or not to agree to it.
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