Having a Will means it will be simpler for your chosen executors to administer your estate after your death and in line with your specific wishes.
If you die without a will, your estate will be distributed in line with the Rules of Intestacy, rather than how you may have wished to have it distributed.
A well-drafted Will by a Wills solicitor can reduce the amount of Inheritance Tax (IHT) your estate may incur, for example by taking advantage of the nil-rate band transfer, charitable, agricultural or business property relief. Some professions are exempt from paying IHT, such as firefighters, members of the Armed Forces and Police officers; a specialist solicitor will be able to advise you on this and draft your Will accordingly.
If you have children and need to appoint a guardian, or if you want to leave specific items or pecuniary gifts to particular people, then a Will is especially important to make clear your wishes.
Being asked to act as someone’s Executor may seem a simple request, and many people give it little thought before accepting. However, the role of Executor carries strict legal duties and can result in personal liability if the estate is not administered correctly.
Individuals rather than trust companies are often appointed as Executors in the deceased’s Will. Individuals can also be appointed to the role of Administrator in cases where no Will has been made by the deceased. It is essential that people understand the duties of being an executor before accepting the role so that they understand the potential pitfalls. The duty of an Executor/Administrator is to hold the estate of the deceased on trust for the beneficiaries. They have a responsibility to collect in the assets of the estate, pay any liabilities and then make distributions to the beneficiaries in accordance with the deceased’s Will or the Intestacy Rules.
Often lay Executors underestimate the amount of work that is required and the timescales involved in dealing with their responsibilities for administering the estate, which can be particularly onerous when they are also coping with the grief of losing a loved one.
Lay Executors need not employ the help of a professional, particularly for routine non-taxable estates, and they can do a lot of the initial information gathering themselves, which can help them minimise costs. They may then seek professional assistance in obtaining the Grant of Probate so that the professional can deal with the more technical aspects, including dealing with the Probate Registry and the necessary inheritance tax return for HM Revenue & Customs, leaving the lay Executors to deal with rest of the routine estate administration themselves, such as closing bank accounts; selling shares; paying liabilities, expenses and legacies; and distributing the rest of the estate.
Many Solicitors offer fixed fees for a “Grant only” service as well as fixed fees for a “full estate administration” service, and so those firms that look to charge on an hourly rate basis or unregulated firms that operate in this sector should be avoided. Oratto has teamed up with a number of firms that offer a low-cost fixed-fee probate service. Solicitors are regulated by the Solicitors Regulation Authority and are mandatorily required to have professional indemnity insurance in place so that if anything does go wrong, the Executors do have redress to ensure it is put right.
This week, the SRA has announced as part of its “Looking to the Future” programme that it will widen the areas of law where firms will have to publish their prices, as well as what those fees cover, online. The areas affected are probate, motoring offences, immigration, debt recovery of amounts up to £100,000, and employment tribunals. Firms will have just 6 months to comply with the new requirement. The SRA stated, “Our ‘Better Information, more Choice’ reforms are designed to improve public access to legal services by making information on price, protections and services more easily available.”
The Council for Licensed Conveyancers has also recently announced that it will instruct its members to publish their fees on their websites, along with whether they have any referral arrangements, as part of a drive to improve transparency and choice for consumers.
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
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.
Once you have agreed to be an executor you cannot back out, so make sure you understand your responsibilities in full.