Ask the experts before signing up as an executor

Being asked to be the executor of a friend or family member’s estate is an honour but also a major responsibility, as you could face a charge for hundreds of thousands of pounds if you make a mistake.

By Harvey Jones

The danger has come into focus after executor Glyne Harris was ordered to pay £340,000 to HM Revenue & Customs from his own pocket, after the estate’s beneficiary ran off without paying the inheritance tax (IHT).

Mr Harris passed on proceeds from the £1.2million estate assuming the beneficiary would pay any IHT due, but instead they disappeared to Barbados with the money.

As executor he was responsible for the shortfall, even though he was not a beneficiary, and his appeal has just been rejected by a tax tribunal.

Once you have agreed to be an executor you cannot back out, so make sure you understand your responsibilities in full.

Executor threat

Nicola Waldman, private client solicitor at Hodge Jones & Allen, said do not panic if you have already been appointed an executor, as the process goes smoothly for most: “But you must understand what it involves.”

Never hand over the estate’s assets before all debts and tax obligations have been paid.

“Tax is usually payable from the estate so ensure everything is paid before transferring assets, otherwise you are personally liable,” she said.

“Relying on a promise to pay is dangerous and ignorance is no protection.”

Letter of the law

Jonathan Gist, will disputes expert at Irwin Mitchell Private Wealth, said being appointed the executor of someone’s estate means you have been entrusted to carry out their wishes to the letter, which can be onerous and time consuming even for relatively modest estates.

“If you make a mistake or fail to administer the estate in an efficient and timely manner, you could be sued by a disappointed beneficiary,” he said.

Gist recommended taking advice from a solicitor first to share the burden and ensure the estate is administered properly.

Complex estates

Manchester-based lawyer, contested probate specialist Nicola Marchant, said many people give it little thought before agreeing to take on a complex role with strict legal duties:

“It can also be tricky to locate and value assets, particularly where the deceased ran their own business or had complex joint investments.”

If the will is set up in trust it can run for many years, which means you have a long-term responsibility.

Trusts can also bring conflicts of interest between executors and trustees, particularly where step-parents and adult children who do not get on have both been appointed.

Marchant added: “The hope is working together will bring them closer, but this is rarely the case.”

Hire a professional

Sunil Kambli, a probate lawyer in Bedford, said make sure you are working from the latest will as unravelling what has been done is a costly and complex process, with personal liability on the executors to put things right.

He warned that disappointed beneficiaries who feel unfairly excluded from the estate could mount a legal challenge to the will, typically within six months from the date of the Grant of Probate: “If executors distribute the estate before this time they could be held personally responsible for errors.”

Before handing money to beneficiaries, consider getting a formal clearance certificate from HMRC confirming no further IHT is due, he added.

Kevin Aspinall Nessling at find-a-solicitor service, whose site has a free probate costs calculator, said: “Executors can deal with the straightforward aspects, but for moderately complex distributions, tax calculations or where there is any chance of a dispute arising later, matters are best dealt with by a qualified professional.”

Contact Oratto on 0845 3883765 to speak with an adviser or use our contact form to arrange a call-back.

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