- Financial planning
- 7 minute read
5 things you should know, to help the process
An Executor is a person or persons named in a will, or appointed by the court, who is given the legal responsibility to take care of a deceased person's (known as Testator) estate. This means taking care of everything from disposing of property to paying bills and taxes.
Being an Executor is more common than you might think. 16% of adults have either executed a will or are in the process of doing so, and a further 11% were executors but paid a solicitor, bank or other probate professional to advise and manage the probate. Meanwhile 12% of adults are named as executors, but have yet to be called on to fulfil the role [1].
Being an Executor can be challenging and it’s important to understand the role and responsibilities an Executor has. Here are five tips to help;
1. You may or may not be aware that you are a named Executor
Around two in five people in England have a will. Of those that do, not all notify their Executor in advance of the duty. One in five people appointed as Executor in a will only discovered they held this responsibility after a friend or loved one had died [2], and a further fifth of executors were warned before someone's death, but only after a will was already written.
There is no legal requirement to inform a named Executor that they have been appointed into this role.
A key area to consider for both the Testator and Executor is communication. If you are appointed as an Executor or believe you may be; getting a good understanding of what the Testator wishes to happen with their estate can make the process much easier when that time comes. As a Testator, it’s important to make your wishes clear.
2. The amount of work involved can vary significantly depending on the complexities of the estate
While about half of adults who executed a will found it straightforward (47%), about 12% by contrast described their experience as “a complete nightmare” and 17% found it far harder than they ever expected [3]. This is largely due to complex estates, especially those of high net worth individuals. For example, estates with property, multiple bank accounts, stock portfolios, and high value possessions will generally require more time and effort to distribute and resolve.
Keeping all documentation in the one place and destroying out of date paperwork will make the job for the Executor much easier.
Even after everything is resolved, it’s important for the Executor to stay organised and keep a good record of all important documents and details. HMRC can ask to see documents within 20 years of any inheritance tax payment, so it’s crucial that all correspondence and information is retained for years to come.
3. Executing your duties can take more time than you think
Being an Executor can be a time consuming process. There are many steps in the process and interacting with numerous third parties as well as beneficiaries can be challenging.
It is not uncommon for the process to take well over a year to complete. A survey carried out by the Office of Tax Simplification (OTS) indicated that 38% of respondents spent more than 50 hours administering an estate, 12% of those spent over 100 hours [4].
Preparation and an understanding of what’s involved will make the role easier and hopefully speed up the completion of the process.
4. Financial implications of being an Executor
Executors tend to carry out their duties without payment, however the process can have significant costs associated. Only 4% of those who have been executors realise they are exposed to unlimited and personal financial liability if deemed not to have carried out their duties correctly [5], and more than 1 in 20 executors found the process personally expensive [6].
Inheritance tax has to be settled prior to receiving Grant of Probate (Confirmation in Scotland) – in short HMRC expects their share before third parties will release funds to pay it.
Executors can find themselves either having to get a short term bank loan to cover this, or else pay it from their own funds. Whilst the money can be reclaimed once the estate is settled it can leave Executors in a difficult position [7].
5. Where to get more information
Whether you are an Executor or have appointed someone as an Executor, there is help and support on hand from Close Brothers ranging from educational seminars, guides and checklists to planning advice to help simplify estates. Our Executor education programme combines the expertise of Close Brothers and carefully selected law firms across the UK, and aims to help address many of the challenges executors face.
For more information, email us at executor.education@closebrothers.com or give us a call on 0800 916 0558.
[1] Executors Insurance, 2015
[2] Co-op Legal Services 2017
[3] Executors Insurance 2015
[4] OTS Inheritance Tax Review 2018
[5] Executors Insurance, 2015
[6] Co-op Legal Services, 2017
[7] Royal London, 2017