Recent publicity has highlighted the need for care when appointing executors to one’s will. Banks have come in for bruising criticism of their charges for acting as executor and, on 17th March 2011, The Law Society issued a practice note to solicitors setting out their responsibilities to their clients in this regards. Nicholas Beetham discusses the issues you should consider when choosing your executors and sets out a useful checklist to help you make the right decision.
Generally speaking, none of us like to confront our mortality. One thing that makes us do so – unavoidably – is contemplating the distribution of our estate as we write our will. What will we leave, and to whom? Will the adult children of the first marriage fall out with the second (or subsequent…) spouse and infant children? Is there a chance of a claim against the estate?
Ideally, we will have addressed all these questions properly as we prepared our will – if we’re sensible, with professional assistance. Appointing executors, however, can seem less important and we might see it as almost an afterthought. Once we’re gone, our problems are over. But who is left with the task of administering our estate? We hope that everyone will get along and that the administration will proceed smoothly – and, if not, that disputes will be amicably resolved.
The answer, of course, is that the executors will deal with everything – so it’s crucial that we choose the right people- but the question is who? The will-writing arms of our banks have recently been criticised in the press for appointing themselves as executor and then charging substantial fees for administering the estates. Perhaps in response, The Law Society has issued its practice note of 17th March 2011, requiring solicitors to provide their clients with the information necessary to make an informed choice of executor and the costs of appointing them.
As consumers, we want flexibility and a good service at the right price: We are becoming increasingly cost-conscious and these days are much less inclined to defer to solicitors (or anyone else) in the way that people of our parents’ generation were likely to do. Similarly, we are much less likely to accept, say, a bank appointing itself as executor to our will simply as a default position – and if we’re not, we ought to be.
Who should be executor?
An executor should be willing to take on the role and competent to carry it out. In some cases, it will make sense to appoint lay executors – perhaps beneficiaries and / or family members. If the administration of the estate is going to be straightforward (only a small handful of beneficiaries and the estate is not liable to inheritance tax) there may be no need for professionals to be appointed, although they’re at the end of the phone if the lay executors need help, come the day.
However, if things are likely to be out of the ordinary, a professional executor will bring objectivity, cool-headedness and detailed knowledge of the law surrounding the administration of the estate and will be highly accustomed to dealing properly with the problems that can crop up.
Risks to the lay executor
For example, if the estate is liable to inheritance tax, the executors are personally liable to HMRC for the payment of the correct amount. If they get it wrong, or attempt to underpay it, it is they, and not the estate, that HMRC will look to. Similarly, the executors are personally liable to the beneficiaries to correctly administer and distribute the estate – put simply; they have to “get on with the job”. If they delay unduly, sell assets (say shares) disadvantageously and accidentally reduce the residuary estate accordingly, the beneficiaries can go after them personally for recompense. If they are otherwise negligent and perhaps allow a property to fall into disrepair, or become squatted, it is they, and not the estate, that will be called to account.
If any of the residuary beneficiaries is a charity, particular care will be needed when totting up the inheritance tax (if any) and where it falls, as well as to the costs of administering the estate and its conduct generally. Charities are, quite rightly, highly assiduous in determining their entitlement to legacies and will routinely ask detailed questions of executors on these, and other, points.
What sort of professional?
So, given the foregoing, who’d be a lay executor? A professional will be able to deal with all of these points routinely. It’s open to you to appoint a probate firm, a bank, or a solicitors’ firm to be your executor. However, look carefully at what’s on offer: what will they charge to administer the estate come the day? What if the professional’s services aren’t required after all – will they step aside? Solicitors are not obliged to do so. Is there a charge for taking on the role of executor? Or just for administering the estate? What about fees for acting as trustee of any trusts contained in the will?
Anyone offering themself as a professional executor should:
- Make no charge to be appointed as executor
- Be competent and have a demonstrable track record
- Step aside on request
- Be completely transparent as to their charges for administering the estate come the day
- Offer a fully inclusive fixed-fee price for performing every element of the estate administration
- Carry professional indemnity insurance
- Offer a suitable will storage facility
If you do decide to administer anything more than a straightforward estate as a lay executor yourself, do remember – we’re here to help if you run into difficulties.