The burden of being an Executor

An Executor is the person you choose to carry out your wishes as stated in your Will. Executors can be beneficiaries under your Will and often people choose their spouse, partner and or children as Executors. Please check with your proposed Executors that they are willing to take on this role before naming them. as it can involve considerable responsibility.

  • Being an Executor is a difficult and time consuming job.
  • The role carries personal legal liability.
  • Relatives may be too distressed to perform the role.
  • Decisions could make them unpopular with beneficiaries.

Consider naming more than one Executor in case one dies before you. Also, it will be an easier task if there is more than one person so they may share the task and responsibility.

If the Estate is large or complicated there may be advantages in appointing a Professional Executor such as Solicitors, Accountants etc, but be warned they can charge between 3% and 5% of the value of the estate, and sometimes an hourly rate in addition to this.

For our clients when making a Will if they choose to appoint ourselves as Executors we only charge 1.5% of the estate and VAT, and disbursements.

You should take into account the following:

  • Availability & suitability
  • Willingness to act
  • Any possibility of conflict or dispute
  • The possibility of them predeceasing you
  • The size, nature and location of the estate, the assets and the beneficiaries
  • The costs involved

Where professionals are chosen as Executors they may be appointed as individually named persons or as a firm. Executors like Trustees, are in a fiduciary relationship so they cannot make a profit out of their office. They may only claim out of pocket expenses. Therefore, a charging clause must be included authorising them to charge for all work done by the Executors of their firm in administering the estate.

There is no legal objection to a beneficiary being appointed as an Executor where he or she is the sole beneficiary.

Understanding the role of an Executor:

An Executor has to carry out certain tasks and duties in order to legally fulfil the obligations of the task. As an Executor, you should therefore:

  • Obtain a copy of the medical certificate indicating cause of death.
  • Register the death at the Local Registry of Births Deaths and Marriages. The death must be registered in order to obtain the Death Certificate. NB. it is advisable to get more than one copy as it will be needed when dealing with Insurance Companies, Pension Providers, Banks etc.
  • Ensure any last wishes such as organ donations are carried out. The job might also include planning for the Funeral or Cremation and arranging for payments for the services provided.
  • Make sure you have the last original will of the deceased, hopefully the Testator should have notified you as to the location of the Will.
  • Locate all the heirs, this might seem like an easy task and if there are just a couple of children and they are the only ones named in the Will, it maybe be easy. If there are numerous heirs and they are named in the Will either collectively or individually, the Executor must locate each everyone.
  • Make an exhaustive list of all the assets of the estate, from personal possessions, property, bank accounts, investments, Premium Bonds etc. all debts including credit cards, utility bills, loans etc, they must all be accounted for.
  • Open a separate estate bank account into which all money collected can be paid into. This will prevent estate monies being confused with personal finances.
  • Notify all businesses of the death e.g. Utility companies, Credit Card companies, Banks, Council Tax Offices, Social Security etc.
  • Make sure all the deceased’s debts are settled before the estate is distributed to the beneficiaries.
  • If there are minor or dependent children, the Executor could be responsible for arranging for their care and placement. The deceased might have their wishes stated in the Will. but if not, the Courts may need to be involved in the placement. If there are pets, the Executor will need to care for them and make arrangements for their continued care.
  • Pay any Inheritance Tax necessary.
  • Calculate and declare the value of the estate to HMRC on an Inheritance Tax return, within 12 months of the death.
  • Pay the deceased’s Tax. PLEASE NOTE, this is your personal responsibility. Failure to submit an accurate account to HMRC may leave you open to personal liability or penalties.
  • Complete the relevant forms and submit them to the Local Probate Registry to obtain the Grant of Probate.
  • Distribute the contents of the Will, making sure that if anything is to be left to minors a Trustee has been named.
  • After you have completed all of your tasks, you the administrator need to produce a full set of accounts for the beneficiaries showing the estate assets and liabilities, administration income and expenses and how the estate has been distributed.

A key consideration for you will be the extent to which you wish to involve professionals to help and support you in this role.

If you are considering asking someone to serve as the Executor of your estate, be sure you understand the duties and responsibilities of being an Executor.

Remember being an Executor of an estate is not really an honour, it’s difficult, and time consuming and carries personal legal liability.

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Making Sense of Wills – The Jargon

When it comes to sorting out a Will, there’s an awful lot of jargon to try to make sense of. Here are some of the most common terms you’ll come across, and what they really mean.

  • Assets: These are the valuable items you own and cover your possessions, property, cash, etc.
  • Attestation: This is the signing and witnessing of a will.
  • Beneficiary: This is a person or organisation to whom you leave something in your Will.
  • Bequest: This is the term for a gift that you have left to someone in your Will. There are several different kinds, for example a specific bequest is a particular named item, such as a piece of furniture or jewellery.
  • Capital Gains Tax: Changing a solely owned property to Tenantsin Common is a transfer of equity from the sole owner. Technically they are gifting an asset which could give rise to Capital Gains Tax (CGT). However their is a releif against CGT if the property is the main residence. Additionally CGT is not applicable for transfers between spouses.
  • Codicil: This is a document that can be used to change a Will which has already been written.
  • Crown: This is essentially the Government and it is where your money will go if you die without writing a Will.
  • Estate: This is the total of your assets minus the value of any liabilities you owe.
  • Executor: When you write a Will, you need to name an executor. This is the person who is responsible for ensuring your wishes are carried out.
  • Family Interest in Possession Trust: This is for a married couple with an estate value in excess of two “Nil Rate Bands” and benefits from “Spousal Exemption”.
  • Family Probate Preservation Plus Trust: This is used where you wish to pass all or part of your main residence to be controlled and managed by Trustees whilst you are still alive. This requires a Conveyance transferring the asset to the Trustees.
  • Family Probate Trust: This is a discretionary trust with the main feature being that the Settlor can also be a potential beneficiary.
  • Family Trust: To protect the inheritance from various threats rather than the Will directing the assets absolutely to the beneficiaries it is best to direct these assets via a Family Trust. this is a Discretionary Trust where the Trustees decide who and by how much the beneficiaries benefit.
  • Guardian: A person who is responsible for children until they reach the age of 18.
  • Inheritance Tax: This is a tax which is paid on the portion of your estate which is above the nil-rate threshold. Currently, this stands at £325,000 for individuals, though you can now pass on a further £100,000 (rising to £175,000 by 2020) if you are leaving your primary residence to family.
  • Intestate: This is when someone dies without leaving a Will.
  • Legacy: This is another word for a gift or bequest left in your Will.
  • Mirror Will: As a couple it is very common that the content of each individual’s Will mirrors the other.
  • Probate: This proves the Will is valid and gives the executor the authority to administer the estate.
  • Residue: This is the word for what is left of your estate after debts, taxes and certain bequests have been handed out to beneficiaries.
  • Severance of Tenancy: Most couples own their property as “Joint Tenants” which means that on death of one of them, the property passes to the survivor automatically. It will not pass according to your Will. This is similar to how most joint bank accounts and other jointly owned assets are held. By severing the tenancy of a joint property, it is declared that the owners in fact each own a proportion of the property which their wills can direct accordingly on their death. The ownership of the property when this is done is called “Tenants in Common”.
  • Testator: This is the name for the person who has made a Will
  • Trust: You can set up a trust to administer some of your assets after you die.
  • Trustees: These are the people that manage a trust.
  • Witness: A Will must be signed in the presence of two witnesses, who also need to sign the Will.

If you need to speak to a qualified professional about writing a Will or if you have a Will already and not sure if it’s achieving what you need it to, please contact Finance North Estate Planning Services today, on 01782 963 303 or email help@FinanceNorthEPS.co.uk.

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