22 July 2020
The considerations and responsibilities of being an executor
By Robert Howliston, Director, Hayes + Storr.
Like many government organisations, Her Majesty’s Courts and Tribunal Services (HMCTS) has been increasing its digital services over the past few years as it aims to provide a more streamlined system for probate registries.
While the online service provides an option for executors and administrators to deal with an estate themselves, there are many reasons why instructing a professional remains sensible.
The role of executor/administrator (“PR”) can be an onerous one. If whilst acting as a PR you distribute an estate without properly taking into account the terms of the will, as well as the rules governing the different types of gifts and any Will trust provisions, you could find yourself subject to a claim for breach of trust or more broadly a duty of care.
Entrusting a legal expert with certain aspects of the estate administration means that you are in safe and experienced hands. Our probate team has been rigorously trained and are used to dealing with estate administration on a day-to-day basis.
An estate may seem simple enough to deal with, especially if you knew the deceased person well. However, only a small percentage of estates are truly ‘straightforward’ and there are many apparently ordinary circumstances which warrant detailed consideration and which may require the knowledge and expertise of a professional.
If there are any minors (those under the age of 18) who are due to benefit, you must consider the precise wording of any will to ensure that their entitlement(s) is held as per the deceased’s explicit instructions. For example, a small gift to a minor child might be the subject of a bare trust, whereas a larger gift might be part of a bereaved minor trust. These different types of trusts have different rules and restrictions and wills do not usually explicitly state the trust type or restrictions which apply.
Many estates today include some property and how property is owned (or co-owned) is important. If you are dealing with an estate which includes a property or land the deceased co-owned with someone who is still alive, that property or land may or may not pass under the terms of the will, as this will depend upon exactly how the property/land was legally held.
Large estates, unusual or foreign assets
The type and volume of assets involved and where they are held, may also be a good reason to enlist professional help. Overseas assets will need to be handled carefully.
Shareholdings (quoted or unquoted) can attract complicated valuation and tax rules. If dealing with a particularly large portfolio you will need to carefully consider all its individual holdings to ensure that the estate does not overpay or underpay tax, claim any reliefs which apply for tax purposes.
Inheritance, income and capital gains taxes
Tax is a complex legal area and a professional can help you to ensure that all tax is accounted for. When administering an estate, you need to consider not just inheritance tax, but income and capital gains as well. It is also necessary to assess whether the tax payable is the liability of the estate or the beneficiaries.
A professional can make sure that no tax is paid needlessly, ultimately saving you and the estate money.
Some assets will be subject to special tax exemptions or reliefs. For instance, an estate which includes business or agricultural property is likely to attract specific tax reliefs, and assets passing to certain people or organisations (such as a spouse or civil partner, or a charitable organisation) will be exempt from inheritance tax altogether.
There are also some other more nuanced rules concerning tax, such as a reduced tax rate where at least ten percent of the estate is left to charity. A solicitor can help you navigate all these rules meaning that you need not worry about misinterpreting, or missing out on, any available tax reliefs or reductions.
Estates with limited assets
Sadly, not all estates can pass as the deceased had wished. Sometimes there are insufficient assets available and an estate will be insolvent, or subject to abatement. The order of entitlement under an insolvent estate must follow a strict order which is set out in the law.
Abatement refers to the process for administering an estate which is solvent but in which there are insufficient assets to meet all of the gifts made under the will. Again, the order by which gifts must abate is predetermined and must be followed correctly.
Disputed Will and related claims, including those from family members
Family members do not always get along, and an extended or blended family may disagree over the distribution of an estate or as to the validity of a Will.
If you anticipate a dispute or are aware of contentious issues, it would be wise to instruct a legal professional at an early stage to assist in the administration and provide relevant advice. Not only can this introduce a neutral person to prevent the further deterioration of family relationships, it will also mean that they are familiar with the estate should a claim arise. PR’s must carefully consider their role in any contented proceedings relating to an estate and there may be adverse costs implications for the PR in the event that they fail to do so.
How we can help
If any of these potential complications seem familiar, or you are worried about any aspect of an estate for which you have been asked to act as executor or administrator, we can offer you peace of mind and expert assistance, whether you are yet to begin the administration or you are already well on your way.
For further information, please contact Robert Howliston or a member of the Wills and Probate Department on 01553 778900 or email firstname.lastname@example.org. Hayes + Storr has offices in King’s Lynn, Swaffham, Fakenham, Holt and Sheringham.
This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek our specific advice.