What is an Executor of a will?
An executor of a will, is someone appointed in a will to distribute the estate of the testator in accordance with the wishes set out in the Will. Quite often this will mean drawing in assets and paying any debts and liabilities owed before being able to make any of the gifts set out in the Will.
Is there a limit on how many executors can be appointed?
There is no limit as to how many executors can be appointed but it is important to add that the executors are required to act jointly meaning any decisions must be unanimous. Therefore, when appointing a significant number of executors, it is best to exercise common sense and perhaps appoint some chosen executors as substitute executors who can step in if other executors are not willing to, or are unable to take on the role.
Despite there being no limit as to how many executors can be appointed, only a maximum of four executors can act in respect of the same part of the estate.
It is possible to appoint business executors for example to deal with any business assets in the estate.
What age must an executor be?
The only requirements are that an executor must be at least 18 years of age, be of sound mind, not bankrupt and have no criminal convictions.
Choosing an executor
It is important to take care when choosing executors. Consideration should be made as to whether they are able to take on the role. We have received enquiries where a parent wants to appoint their currently 18-year-old daughter to be the executor of their estate. If the parent sadly died soon after, the question is would her daughter be able to carry out the role given the great deal of responsibility this involves?
The executors must be able to work well together where multiple executors are appointed due to the requirement to make unanimous decisions. If someone knowingly appoints 2 executors who do not see eye to eye, the reality is that distributing the estate and making any decision with regards to this could become very difficult.
The chosen executors must be trustworthy and not be residing in another country for practical reasons. The age of the executor should be considered i.e. if they are elderly when appointed in the will, they may not be able to act when required.
Executors can be trusted friends or family members. Others may prefer to appoint a professional executor i.e. accountants or a trust corporation if the estate is particularly complex. Alternatively, the executor can seek advice from a professional as and when required.
Can an executor charge for their services?
A trust corporation or a professional executor may charge a reasonable fee for their services. Lay executors who are not a trust corporation or professional executor may only charge if the will contains a paragraph which expressly authorises the payment. They can claim out of pocket expenses though.
What are the duties of an executor?
The duties and responsibilities of an executor include, but are not limited to:-
- Identifying and locating the assets and liabilities of the estate
- Applying for a grant of probate
- Advertising for claims and ensure all claims and debts are received, assessed and paid
- Dealing with tax returns and paying any inheritance tax due
- Arranging the funeral
- Determining the beneficiaries
- Distributing the estate in accordance with the terms of the will and transferring assets to trustees if necessary
- Defending the estate against litigation should any arise
What if there are no Executors?
If a Will doesn’t appoint an executor, the executors cannot be found, are deceased or do not wish to act, a beneficiary can apply to act as the executor to administer the estate.
There are a number of important considerations to make if you are appointed as an Executor. The size of the estate is one. If the estate is sizable and over the Nil Rate Band (NRB) threshold of £325,000 it is likely that the individual will have to pay inheritance tax (IHT). If the testator was predeceased by a spouse, then it might be possible to transfer the unused Nil Rate Band of up to £325,000 (£325k + £325k = £650k).
Since April 2017, main properties that are passed to direct descendants will also qualify for an additional nil-rate band known as the Resident Nil Rate Band.
Therefore, when drawing in assets and working out the overall value of the estate an Executor should be mindful what IHT will be payable on anything above the NRB.
What is Probate?
Probate is the application of the right to deal with the deceased person’s estate. In short, the application for the grant of probate. This will not normally take place on small or simple estates (less than £5,000 or if everything is owned jointly).
Winding up an estate
It is a common misconception that once someone dies their estate automatically passes from the deceased to the beneficiaries. However, probate can sometimes become contentious where there are challenges to the will on the grounds of capacity, undue influence or fraud as an example. There may also be instances where someone may bring a claim against the estate under the Inheritance (Provision for Family and Dependants) Act 1975 on the grounds they have not received reasonable financial provision. Therefore, it can sometimes take over a year or even longer in some cases to wind up the estate of a deceased person and for the estate itself to be distributed.
Choosing your executors is an important decision, one which your will writer should be able to support you with. If you have not yet made a Will, or think it’s time to update an existing will, then click below to book your free will consultation