Executors beware – the subtle art of Estate of Administration
1 February 2021
Many estates are not difficult to administer. Not everyone has complex financial circumstances. Often as Probate solicitors, we have discussions at the start of an administration with Executors and point them in the right direction, knowing that if they need us, we are an email away and usually are not required for much more than that.
However, not every estate is like this. No two estates are the same. Although we do have clients who tell us that their cousin Dave managed to do a really difficult one in a few months (Reader: Dave did not have a difficult estate to administer), most people do appreciate that not everything is going to be sorted in a short timeframe or just by writing a few letters asking for money to be sent out. In addition, inheritance litigation is an area which is going through a huge amount of growth which can put Executors in a difficult position.
If you have been appointed as an Executor, there are a number of potentially problematic aspects to be aware of:
- Are you even an Executor?
You have a copy of the will and you are appointed. Or are you? Is it the last will that the deceased made? You will need to do a sufficient search to check. If you administer the estate based on a will and distribute the estate and a later will is later uncovered, then you could be personally liable for the beneficiaries who did not receive their inheritance.
- Inheritance Claims
There has been a sharp increase in disputes and claims against estates over the last few years and it is important to be aware of any potential issues that may arise when you are administering an estate.
- Claims can be made under the Inheritance (Provision for Family and Dependents) Act 1975 if someone believes that they should have been included in the will or if they have not received a sufficient share (only a certain category of person can make a claim in this way).
- Alternatively, someone may claim the will is not valid. They may halt your ability to take out a Grant (which is the document which confirms your authority to act as executor and deal with the assets).
If legal proceedings are brought against the estate, then you as Executor will be named as one of the defendants. If these situations arise, you should always seek legal advice as such cases can be complex and difficult to navigate without professional legal assistance.
- Locating the Assets
As an Executor, you will need to familiarise yourself with everything the Deceased owned. This takes time. This includes:
- Communicating with banks, building societies, investment companies, share registrars, estate agents and specialist valuers. If there are foreign assets then the process can be doubly complex and protracted.
- Being aware if the Deceased had any online assets with no paper trail. How can you access these – or even find them in the first place?
- If there are debts and liabilities, these will need to be dealt with before the estate is distributed. If you do not, and a liability is not discharged, then you as the Executor will be personally liable for its repayment.
- If an Executor fails to maximise the estate, then beneficiaries could pursue for them for their losses.
- Inheritance Tax
As an Executor when you apply for a Grant of Probate (the document required to confirm you are the correct person to deal with the assets), you need to complete HM Revenue & Customs ("HMRC") documentation to confirm the value of the estate and a calculation of any inheritance tax that may be liable. As the Executor, you will sign to confirm that these accounts are accurate. If they are found to be inaccurate, if you have not made sufficient checks about the financial circumstances of the deceased (which needs to go back a minimum of 7 years) or there is information missing, then HMRC will be able to raise penalties regarding unpaid tax and fine the Executor.
If an estate has already been distributed, then the executor will be prosecuted by HMRC to try and recoup the unpaid tax.
As an Executor, you are potentially in a precarious position. If there are mistakes made, the liability becomes a personal one. Additionally, you may not have an easy relationship with the beneficiaries and perhaps appointing an objective person may take the pressure from you.
Wilsons' Probate team has a wide range of experience in estate administration, from the simplest to the most complex estates. We would like the opportunity to talk you through what may be required for your situation and, at the very least, point you in the right direction so that you have the best advice in order that you can fulfil your role as an Executor.