How to be a good executor

Executorship can be an honour, or fraught with difficulty but whatever the circumstances, there are rules and good practice which need to be followed. If you agree to be an Executor, there is no substitute for proper legal advice where required, especially as Executors can be personally liable if the estate suffers loss.

So, if taking up the role of Executor, what can you do to avoid common pitfalls?

Make full enquiries

With few exceptions, Executors must make a full disclosure of all the assets and liabilities of the estate to HM Revenue & Customs (HMRC). They must ensure that the correct inheritance tax is paid, otherwise the Grant of Probate cannot be issued.

There can be severe penalties for any failure to fulfil these duties, so Executors must make detailed enquiries. These should include checking about gifts made before the date of death, which may need to be brought back into account. Executors will also need to arrange professional valuations of property and personal possessions. Executors must put together any claim for the transferable nil rate band for inheritance tax. There may be special factors to consider, such as business property relief, or foreign assets subject to UK inheritance tax rules because the deceased died whilst living in the UK.

Should any further information come to light as the probate administration progresses, Executors must submit to HMRC a corrective account to the original inheritance tax account.

Know your time limits

Time limits can be a trap for Executors. Establishing the assets and liabilities may take considerable effort, with aspects outside the Executor’s control, such as how long organisations take to reply.

Six months from the end of the month of death, inheritance tax will be due on the “non instalment option property” (for example, cash in bank accounts) together with the first payment of “instalment option property” (usually meaning the deceased’s house). So if the death was during January 2015, the six month period ends on 31 July 2015.

Within 12 months of death, the Executor must deliver the inheritance tax account to HMRC.

One year after the date of death, interest will start to run on unpaid legacies.

Under current rules, within two years of the date of death, it is possible to enter into a deed of variation to alter the original dispositions made by the Will, although this is under consultation following the recent Budget. [Why would you want to do this?]

A claim by someone under the Inheritance (Provision for Family and Dependants) Act 1975 must be made within 6 months of the issue of the grant of representation. No distribution should be made until 4 months after the expiration of that 6 month period.

Executors may protect themselves from claims in connection with unpaid debts or liabilities of the deceased, even if unaware of them, by placing special advertisements. After two months from the date of the advert, the Executor will be protected, with no repercussions on them personally from any future claims.

Face up to complications

Problems may be obvious a mile away, or they may be difficult to spot and resolve. Commonly, the deceased’s paperwork may not be in good order and it is a complex task to work out what represents his/her estate.

Homemade Wills may be defective and can lead to queries at the Probate Registry. Disagreements between beneficiaries may arise at any point and claims against estates are significantly on the increase.

There may be confusion or disputes about the ownership of the deceased’s property, which can also involve cross-border issues with foreign property.

It might not be straightforward to fund payment of inheritance tax, or there might not be enough to settle legacies in full.

The job of an Executor is a serious responsibility. Taking legal advice as necessary really can make it a more rewarding experience, reducing the worry and any potential for personal liability.