Guide to Being an Executor
You may have been appointed as the executor by someone who wishes you to collect in their property after they die, and distribute it in accordance with their will. You may be appointed alone, or there may be other executors also appointed. This role is also known as being a personal representative (PR).
When someone dies, what happens about their finances?
When someone dies, their estate must be administered by the executor(s). This means that:
- the assets of the deceased are collected in
- any gifts set out in the deceased’s will are paid
- any debts, tax, funeral expenses and costs to do with the administration are paid
- what is left over is distributed to the beneficiaries entitled to it
What are the duties and responsibilities of PRs?
PRs have a number of duties and responsibilities imposed on them by law and there are sanctions available to beneficiaries and to the tax authorities if these are not carried out correctly. It is extremely important that
- the estate is distributed strictly in accordance with the terms of the will or the law which governs the distribution of an estate on intestacy
- the information supplied to HM Revenue & Customs in relation to inheritance tax, income tax and capital gains tax is completely accurate
How do PRs set about administering an estate?
- In all but the most straightforward cases, the PRs will need a grant of probate to enable you to cash in assets or transfer them to beneficiaries
- PRs can instruct a firm of solicitors to administer the estate for them
- Alternatively, it is possible for PRs to make a personal application for a grant to one of the probate registries. There is a fee payable for this and full details of all the assets and liabilities of the estate and their values have to be supplied. After the grant has been obtained the PRs have to administer the estate
Why use solicitors when I can do it myself?
To ensure that:
- the grant is obtained and the estate administered as quickly and efficiently as possible by a professional with the appropriate expertise and experience
- you do not have to deal with what may be complex and unfamiliar laws and procedures at a time when you may also be coming to terms with the loss of a close relative or friend
- you comply with your duties and responsibilities and do not incur sanctions for breaches of those responsibilities
- the estate is correctly distributed between the beneficiaries
- the information given to the HM Revenue & Customs is correct
- the correct amount of tax is paid and any overpaid tax is claimed back. Without the benefit of specialist knowledge, too much tax may be paid without the PRs or beneficiaries ever realising. If too little is paid, penalties and interest may be unnecessarily incurred
What are some of the things that a solicitor administering an estate will usually do for me?
- locate and read through the will
- get details of the assets and liabilities of the estate
- get date of death valuations for each of the assets and liabilities
value the estate
- complete the inheritance tax (“IHT”) Account form (required even where no IHT is payable)
- prepare the application for the grant and get it sworn by the PRs
- pay any IHT due and arrange the early release of funds needed to pay it
- apply for the grant
- cash in or transfer the assets
- complete any tax returns and other forms relating to pre and post death income tax and capital gains tax (“CGT”), send them to HMRC, pay any outstanding tax and finalise the income tax / CGT position
- pay any liabilities and administration expenses
- make any gifts provided for in the will
- make payments to the residuary beneficiaries on account of the amounts due to them
- make any final adjustments to the IHT calculations and pay any additional IHT
- obtain an IHT clearance certificate
- keep the PRs and beneficiaries regularly informed of progress and send them interim estate accounts as and when required
- prepare final estate accounts and send copies to the PRs and the residuary beneficiaries for approval
- pay the final balances due to the residuary beneficiaries
- maintain proper records of all financial information and transactions in relation to the estate
- liaise with accountants, stockbrokers, financial advisers, insurance brokers, valuers, auctioneers and other professionals
Why choose Hand Morgan & Owen
- At Hand Morgan & Owen we have a dedicated private client department comprising two partners, an associate and an assistant solicitor and dedicated support staff all of whom have considerable experience and expertise in dealing with wills, estate administration, personal tax and trusts
- We take pride in the service we offer to executors and beneficiaries in dealing with the administration of estates and making things easier at what is often a very difficult time for those left behind
For further information please contact Catherine Cammock or Amy Glover at our Stafford office or Rugeley office.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances. (50587)