It is a huge mark of respect that your friend is willing to entrust you with such an important role but it is not something to be taken on lightly. It is a significant commitment involving a raft of legal and practical responsibilities.
What is the role of an executor?
Briefly, the role of an executor is to value the assets and liabilities in the estate, return the values to HMRC and pay any tax due, obtain a Grant of Probate in the estate and then collect in and distribute the assets in accordance with the will.
This deceptively short list contains a number of potentially complicated areas. Depending on the assets and people involved, even ostensibly simple cases can turn out to be quite complex.
What are the risks?
One of the most important considerations is that executors owe personal fiduciary duties to the beneficiaries of the estate. Accordingly, executors are personally liable for financial losses arising from errors in the course of the administration. This can often happen where:
- Assets are distributed too early before debts and taxes are properly discharged.
- Tax is incorrectly calculated or otherwise paid late. For example, some or all the inheritance tax due (depending on the nature of the assets) must be paid within 6 months from the end of the month in which the death occurred to avoid charges to interest.
- Legitimate creditors come forward after the estate has been distributed.
Separately, you may also need to consider:
- Difficult family dynamics: The administration is naturally an emotionally charged time for the family. As executor, you will have a duty to act impartially toward all the potential beneficiaries and creditors regardless of any personal feelings.
- Challenges to the will:
- Increasingly, the validity of wills is being challenged, particularly where the person had mental capacity issues at the time they made it.
- A statutory class of dependants may have a right to apply to court for greater provision if they feel they have not been provided for sufficiently.
Do I have to do it?
There are lots of reasons why you might not wish to act as an executor. If you find you have been named as executor then it is important to remember you do not have to take up the role.
When it comes to it, there are three choices – you can:
- Renounce – i.e. you permanently give up the right to act as executor. You will not be able to step back in later.
- Reserve power – i.e. you step back temporarily but reserve the right to act later.
- Accept, by applying for probate, or otherwise taking actions that suggest you have accepted the role (called intermeddling – more on this later).
The important point to remember is that, once you have accepted the role, you cannot relinquish it without the court’s consent. Applying for your removal can be an expensive and uncertain process, especially if there are disputes within the estate.
Intermeddling
Before you have even come to a decision as to whether you would like to accept, renounce or reserve your powers, you could inadvertently accept simply by your actions. This is called “intermeddling”.
Critically, once you are deemed to have intermeddled, you are unable to renounce the role (just as though you had formally accepted the role).
Accordingly, you will therefore become personally liable for mistakes or losses in the administration of the estate. If you are later formally removed by the court then this will be limited to the moment you are removed, but if you are not, you could be liable for the mistakes of others for the duration of the administration.
Actions which might be considered intermeddling:
- Selling the deceased’s assets.
- Paying debts owed by the deceased.
- Carrying on the deceased’s business.
Actions which are not likely to be considered intermeddling:
- Arranging urgent repairs to the deceased’s property.
- Gathering and storing the deceased’s assets for safekeeping.
- Arranging the funeral.
However, there is no set list and each action would be considered in its own context. Whether an action or series of actions constitutes intermeddling can be a complicated question and if you are concerned, you should seek professional advice.
When to seek professional help
It is important to ask yourself whether you have the skills to navigate the legal and tax landscape and the time to dedicate yourself to the role.
If the estate is large, complicated or is likely to be subject to a dispute, you may wish to seek professional advice to ensure you receive the appropriate support to ensure you meet all the necessary obligations.
By Philip Sillars, Solicitor at Winckworth Sherwood
