Executors – some question answered
You may have been asked by a friend or family member if you will act as his or her Executor. Sometimes individuals are just told they have been appointed. Perhaps worst of all, you may find out about your appointment only after the person appointing you has died. Often those being asked, or appointed as Executors have little understanding of their role.
What are Executors?
Executors are selected by the maker of a Will (the testator). Their job is make sure that an estate is administered in accordance with the law and that the wishes of the deceased are carried out, that the estate is distributed in the way that the testator wished. It is an important role and one should not be taken on lightly. The Executors are effectively the representatives of the Will maker after he or she has died.
It is worth mentioning that one of the most recurring problems that arise after death is that the Executors appointed by a Will have died themselves, are unwilling or unable to take up their role, or simply cannot be found. If you have a Will it is important that you review the Executorship on a regular basis. Might there be any difficulty in those that you have chosen actually doing their job.
How many Executors can there be?
When making a Will a testator can appoint up to 4 Executors. During the administration of the estate those Executors who have obtained a Grant of Probate (more of which later) must act jointly. That is to say that they must all agree on a course of action and each sign any documents, etc. Clearly there may be problems if those appointed do not get on. There may also be difficulties and additional expense if there is a considerable geographical separation of Executors as documents may need to be sent around the world. Again we will return to this point a little later.
How do Executors exercise their authority?
Executors must act jointly
Except in the case of very small estates Executors will need to obtain a Grant of Probate to be able to do their job. Technically this is a Court document, although in cases where there is no dispute matters are dealt with in the Probate Registry. The Executors need to make an application for the Grant in the prescribed form and, depending upon the size of the estate and the circumstances of its distribution, will either need to have made a return to HM Revenue and Customs and paid any Inheritance Tax that may be due, or (where no tax is payable) make an abbreviated return through the Probate Registry. When the proper application has been made and the necessary fee paid the Probate Registry will issue the Grant of Probate. It is also possible to obtain from the Probate Registry copies of this document, bearing a formal seal. These may be necessary where one is dealing with more than one Financial Institution for example. It is this Grant of Probate that authorises the Executors to deal with the accounts and property of the deceased.
Do all of the Executors need to act?
There may be circumstances where one or more of the Executors named in a Will cannot or does not wish to act. In these circumstances the other Executors can proceed. They must serve formal notice of the making of an application for a Grant of Probate upon the Executor who is not acting. The Grant of Probate will record that power is reserved to the Executor who has not joined in the application, which means that the Executor can become involved at a later date if necessary.
How do the Executors pay Inheritance Tax?
The provisions relating to the payment of Inheritance Tax do give rise to something of a difficult situation. Until the Executors have been able to obtain a Grant of Probate they cannot access the accounts and property of the deceased. However they cannot obtain a Grant of Probate until they have paid the necessary Inheritance Tax. As the tax can run into many thousands of pounds this can obviously present a real problem. Fortunately it is usually possible to arrange for the tax to be paid from the deceased’s accounts directly to HMRC. If this is not possible for any reason then it may be necessary for the Executors to obtain a loan to enable the tax to be paid. It should always be remembered that the Executors have a duty to make a full disclosure to HMRC and the Revenue has the power to impose heavy penalties if any non-disclosure is discovered.
Are the Executors liable for any debts of the deceased?
The Executors do not have a personal liability to pay the debts of the deceased. They are only required to pay these from the money or other assets held by the deceased at the date of his or her death. It is however very important that the Executors ascertain the amount of any debts or claims that may be made against the estate before they distribute to beneficiaries. However it is important that Executors ensure that any debts are paid. If they distribute the estate prematurely they may be personally liable for any outstanding debts. Protection against unknown debts can be obtained by advertising for claims under the Trustee Act 1925.
Once the Grant of Probate is obtained the Executors collecting the assets of the deceased, discharge any debts and distribute the estate in accordance with the testator’s wishes.
The role of the Executors is important. They must abide both by the general law and the wishes of the deceased and that there are occasions when it is necessary for them to bring issues of difficulty before the Court for a decision. As always Executors would do well to obtain professional advice, if only for their own peace of mind.