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Executor of Will Duties

Beware, being an executor is not for the faint hearted!

The executor is the person/s named in a will whose duty is to sort out the money and assets (the estate) of someone who has died and then to pay out the estate to the right beneficiary or beneficiaries according to the terms of the will.

Sometimes this can be straightforward and take very little time but sometimes this can take a long time. For example, if the will is unclear or challenged, if the executor lacks mental capacity or doesn’t want to be an executor or due to other unforeseen circumstances.

What Legal powers does an executor have?

Estate handling

An executor has the powers to handle the estate from the moment of death but, without a death certificate and often without a Grant of Probate, which confirms the executor’s authority, an executor may not be able to get assets collected in and distributed without getting the Grant. The reason for this is that asset holders such as banks require evidence both of the death and that the Probate Registry has confirmed the authority of the executor.

Therefore, the executor might have to wait until the Grant has been obtained before starting to wind up the estate. If Inheritance Tax (IHT) is due, then this must be paid before the Grant can be applied for. An executor may have a limited power to direct funds from a bank account to HMRC to pay IHT. They may also instruct a bank to pay the funeral bill directly before the Grant is applied for.

Can an Executor withhold money from a beneficiary in the UK?

An executor is personally responsible for sorting out the money and assets of the person who has died as stated in the will. They need to make sure they do everything necessary to complete what needs to be done legally before paying out to a beneficiary.

This means, not only paying all the debts the deceased person may have left, but also checking the status of the beneficiary. It involves formally checking they are not bankrupt as well as paying to the correct “John Smith” named in the will. If there is any possible ambiguity over the identity of the beneficiary this can cause delays. It may even lead to a legal challenge that needs sorting out through mediation or the courts to determine the correct identity. This can take a lot of time and prove costly to the estate.

Any debts must be paid off in full first

Any debts must be paid off in full, unless the creditor agrees to write them off, before any distributions can be made and beneficiaries paid. If there isn’t enough money to fully pay off all the creditors, there is a set order in which they must be met. If this order is not followed to the letter the executor is personally liable for paying any debts in the hierarchy laid down in law see section on insolvent estates. Care is needed to correctly identify all debts outstanding at death to protect the executor from personal liability for these debts.

If there is money left over after paying off all the debts, but there isn’t enough to pay all the legacies in full, again a strict order is applied as to which ones are paid in which order. If there is still not enough then beneficiaries may need to be paid pro rata. Failure to follow this order leads to personal liability for the executor.

 

If a beneficiary is bankrupt

If a beneficiary is bankrupt, the executor cannot pay out to that individual. Any money receivable will be needed to pay off that beneficiary’s debts and has to be paid to the trustee in bankruptcy.

An executor therefore needs to be extremely careful not to distribute any of the estate to beneficiaries before making the appropriate checks, however much pressure they may be under from the beneficiaries. They need to take care that they do not become personally liable for such a mistake. They must act correctly and protect themselves. They don’t wish to expose themselves to legal challenges and personal financial loss.

It is up to the executor

It is for the executor to determine when they have done what is necessary so that they are fully protected and can make the distribution. No beneficiary can insist on receiving their payment at any time. It is possible to purchase executor’s insurance but it is usually expensive and beneficiaries may challenge whether it is a legitimate expense that can be claimed from the estate. If an executor is concerned enough to consider this, it is probably time to use a professional legal service rather than deal with the estate oneself.

Within a year

‘The Executor’s Year’ suggests that an executor should try and sort out the estate within a year of the death. There isn’t any defined time limit to complete the estate administration. Any person receiving a monetary legacy will be entitled to interest on their legacy from the anniversary date of the death at an interest rate set by the courts and reviewed from time to time. However, there are many different reasons why it may not be possible to complete anything other than a straightforward and simple estate within that year.

What is an executor of a will entitled to?

An executor is only entitled to receive out of pocket expenses unless it is stated otherwise in the will. It is can be an onerous responsibility, sometimes carrying with it huge personal risk and is certainly not to be undertaken lightly, particularly where the estate is not straightforward, burdened with debt or there is a possibility of disagreement between the beneficiaries. Legal advice should be sought as early as possible should an executor have any hint that these issues may exist.

What happens if an executor does not follow the will?

If an executor does not follow the terms of the will, then they (and even their estate if they happen to have since died) can be sued for any loss to the estate they were responsible for. This is  where legal advice should be taken as it is a complex, costly and fraught avenue to go down (

Complaining about executor misconduct

An executor can be removed from office, but this involves a complex, costly and time-consuming process and legal advice should be sought if a beneficiary or creditor believes that  an executor is not acting properly