The Role of an Executor
In short the role of an Executor is to distribute the estate of the testator in accordance with the wishes dictated in the Will. Quite often this will mean drawing in assets and paying any liabilities owed before being able to make any of the gifts.
Choosing an Executor
The testator (person whose Will it is) will appoint between 1 and 4 executors, although 2 is common. The Executors must be at least 18 years of age and must be of sound mind. Where there is more than one Executor they share responsibility for the distribution of the estate. It is wise to consider the people you will be choosing as you Executors. They must be trustworthy and ought not to be residing in another country for practical reasons. You should consider the age of the person who you are appointing as if they are elderly when you are appointing them they may be unable to act when the time comes.
If, as an Executor, you are unsure as to your responsibilities you are able to seek legal advice from organisations like a Trust Corporation who deal with these matters routinely. Be aware that they will charge for their time.
Some people choose to appoint professional executors due to the complexity of their estate or the vulnerability of other family members who they don’t feel will be able to handle the legal responsibility at such a painful and difficult time.
It is worth careful thought and consideration and you might want to seek advice from your estate planner.
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 and 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).
From April 2017, main properties that are passed to direct descendants will also qualify for an additional nil-rate band. The allowance will be £100,000 in 2017/18, £125,000 in 2018/19, £150,000 in 2019/20 and £175,000 in 2020/21. This will mean an inheritance tax allowance of £1 million for married couples by 2020/2021.
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 and the recent case of Illot v Mitson has shown that probate can sometimes become contentious. Therefore the need has arisen for people to understand that it can sometimes take over a year to wind up the estate of a deceased person and for the estate to be distributed.
Costs of a professional
If you would like professional advice or assistance there will often be a charge. You can expect costs for Estate administration to start from £1000 but it is normal for a professional organisation to charge between 1.5% to 4% of the gross value of the estate. This would need to be negotiated with your estate planning consultant before appointing a professional executor.