Estate Administrators: The Executor
N.B These guidance notes apply only to England and Wales
INTRODUCTION
The role of an executor is not to be underestimated. The duties and responsibilities of such offices are serious and as such should be undertaken with care.
A Will is one of the most important documents that we as individuals will sign. It deals literally with a lifetime’s accumulation of wealth and personal possessions. What happens to these assets will be determined by the Will, or in the disastrous situation where a person dies without a one, by the law of the land.
It is the responsibility of the executor to ensure the terms of a Will are adhered to. As such it may be seen as quite a compliment to be asked to be an executor.
An executor’s roles is fiscal in nature. However, unlike a trustee, an executor will also embrace non-monetary duties.
The choice of who to appoint as an executor is not always an easy one to make. The notes below can help guide your decision.
EXECUTORS
The choice of executors can be between appointing a personal executor, usually a family member or a friend, or a professional executor, usually a bank, solicitor or an accountant.
The advantage of appointing a personal executor is that they are likely to be people you speak with regularly and are therefore more likely to understand your wishes. However, they may not have acted as an executor before. This may result in delays and can incur penalties. Often a personal executor may seek advice from a professional and depending on who they approach this could be expensive.
The advantages of appointing a professional are include:
they are used to performing the role and thus more likely to complete matters quickly (some families will consider it beneficial to have the affairs of the deceased tidied up promptly);
they are liable for any mistakes they make, whereas a personal executor is protected from innocent mistakes made by a layperson. The latter are not expected to possess professional competency.
The drawback with appointing a professional executor is that this is of course a chargeable service. There is not normally a charge to be appointed (that is named within the will), although we have heard of cases where a retainer has been demanded. In all but exceptional circumstances, fees will only be incurred when work is carried out i.e. after the death of the testator.
The fees charged by professionals vary enormously. Banks have been known to charge 4-7% of an estate. Typically solicitors will charge an hourly rate, whilst some firms charge an hourly rate and also a value element which results in an hourly rate and a percentage! N.B. The Will Bureau (TWB) charges an hourly rate but caps its fees at 2%.
The minimum number of executors to be appointed is one, with a maximum of four. From our experience it is usual and advisable to appoint at least two along with a substitute in the event that one of the original executors is unable or unwilling to act.
If the client is in a long term relationship, it is usual for the spouse or partner to be appointed with another (either a personal or professional). If a professional is appointed as the second executor, it would be usual for another partner or director of the professional firm to be named as a substitute.
RESPONSIBILITIES OF AN EXECUTOR
Once the testator has passed away, executors are advised to immediately identify the following:
full name and last address;
date and place of birth;
date of marriage or civil partnership (if appropriate and they were married/in a civil partnership at the time of death);
if applicable, the full name and date of birth of their spouse/civil partner
whether the person was receiving a pension or other social security benefits;
National Insurance number;
NHS number;
tax reference number;
their job or profession
First Steps – Initial Registration and Funeral arrangements
Notify the testator’s GP and dentist;
Within five days, register the death at a register office and obtain death certificates: When someone dies at home, the death should be registered at the register office for the district where they lived. If the death took place in hospital or in a nursing home, it must be registered at the register office for the district in which the hospital or home is situated. If necessary, you can go to a different office to register the death and the details will be passed on to the correct office.
N.B. Registration can be delayed for another nine days if the registrar is told that a medical certificate has been issued. If the death has been reported to the coroner you cannot register it until their investigations have been finalised;
Find the Will – most TWB clients will have the original Will stored with us. We always ask for a certified copy of the death certificate in order to release the Will;
Begin funeral arrangements, ensuring to check the Will/Memorandum of Wishes for any special requests.
Second Steps – Property and Probate
secure the property of the deceased. If a property is unoccupied, ensure the insurance company is notified, to ensure insurance cover remains valid;
secure the personal belongings of the deceased;
contact the Probate Registry for an information pack which will include:
the Probate Application form (PA1);
the Principal Probate Registry is based in London:
Probate Department Principal Registry of the Family Division, First Avenue House, 7th Floor 42-49 High Holborn, London WC1V 6NP
Third Steps - Parties to be notified (as appropriate)
all financial institutions in which the deceased had assets of the date of death. Ask for confirmation of the value of the assets at the date of death (including any accrued interest);
relatives and friends;
employer;
school;
solicitor/accountant;
financial adviser;
the relevant tax office;
National Insurance contributions office if they were self-employed (to cancel payments);
Child Benefit office (at latest within eight weeks);
Tax Credit office;
Local authority regarding council tax, parking permits, blue badges, social services, day care etc;
UK Identity and Passport Service, to return and cancel a passport;
DVLA, to return any driving licence, cancel car tax or return;
car registration documents/change ownership;
general insurance companies - contents, car, travel, medical etc
any other company with which the testator may have had rental, hire purchase or loan agreements;
life insurance provider. If the testator was the first named on a joint insurance policy, make contact as early as possible to check the survivor remains insured;
pension providers/life insurance companies;
banks and building societies;
mortgage provider;
hire purchase or loan companies;
credit card providers/store cards;
creditors - anyone to whom the deceased owed money;
debtors - anyone who owed the deceased money;
landlord or local authority if they rented a property;
any private organisation/agency providing home help;
utility companies if accounts were in the deceased's name;
royal Mail, if mail needs re-directing;
TV/internet companies with which the testator had subscriptions
Bereavement Register and Deceased Preference Service to remove the testator’s name from mailing lists and databases;
clubs, trade unions, associations with seasonal membership for cancellation and refunds;
regular place of worship and communion;
social groups to which the deceased belonged
Fourth Steps – Applying for Probate
complete the PA1 form;
complete Inheritance Tax Forms - IHT 400 and schedules;
complete for, IHT 402 and submit with appropriate documents to HMRC if claiming the unused nil rate band from a spouse who died before the testator;
open a bank account as executors for the testator;
attend interview at the Probate Registry – an appointment is sent to the executor after submitting the above forms;
place Statutory Advertisements. Placing Statutory Advertisements for Creditors is not a legal requirement. However, by doing so, the estate’s administrators protect themselves against being held personally liable for claims from creditors and/or beneficiaries.
Fifth Steps – After receipt of the Grant of Probate
provide the Grant or a certified copy to each financial institution that requires this. This will enable the account to be closed and the proceeds sent to the executors;
bank monies received;
pay any debts or liabilities of the deceased, including funeral costs;
obtain IHT clearance certificate from HMRC;
pay legacies to be paid under the terms of the Will;
transfer the residuary estate to the trustees;
prepare Estate Accounts detailing the financial affairs of the deceased at the date of death and the transactions during the period of administration. This will provide a reconciliation of monies to confirm the value of assets being transferred to the trustees;
close the estate bank account
CONTACT TWB
It is always important to review your circumstances as family life evolves and when cultural, political and tax legislation changes occur. Keep up to date with developments and seek expert advice from firms like TWB, but know that TWB is at the forefront of its profession.
Estate Planning is an integral part of our service. As well as minimising the effects of IHT, many families wish to ensure the preservation of their wealth through several generations by making provision for children, whilst also considering events such as divorce, bankruptcy and accounting for later-life care. We have written thousands of Wills and helped countless clients with IHT planning, Lasting Powers of Attorney (LPA) and much more.
Contact Jules Jack for more information: julesj@twb.org.uk - 020 8920 3360