Inheritance and Executors

Have you been made an executor by the deceased? 

The executors named in a will act as the deceased’s personal representatives. They are responsible for collecting up all the deceased’s money and other assets, calculating the value of the estate, paying debts and taxes, distributing the estate between the people entitled to it in the will, and carrying out any other requests mentioned in the will.  The grant of probate gives the executors the legal authority to carry out their duties. Executors can apply for the grant of probate in person or through a solicitor.

Executors are not personally liable for the deceased’s debts. But if they breach their legal duties, resulting in losses for beneficiaries or creditors, they will be personally liable for those losses. Examples of such breaches include paying legacies before debts are paid to creditors; failing to collect all debts due to the estate; selling assets for less than their real value; or acting carelessly so that assets are lost.

Because of the risk, many executors prefer to engage a solicitor to act for them. Unlike trustees, who can retire, executors remain responsible for carrying out their duties for life. In extreme cases, when they die their executor duties can pass down to their own executors.

When a person dies an executor needs to do the following

  • The first thing to do is to register the death. The district probate registry, and banks and building societies where accounts are held, will each need to see an original death certificate (not a photocopy). You can avoid delays by getting several certificates.

  • The second thing is to find the will. If there appears to be no will, apply to the district probate registry for letters of administration. If there is a will, check it for requests about funeral arrangements and the names of other executors. Establish how the funeral expenses will be paid. 

  • Third important thing to do is to collect information about assets. You have to write for valuations of a house or other property to bank, building societies, insurance companies, National Savings stockbrokers and investment houses. Also collect details of any liabilities such as a mortgage and other debts.  

  • Next, draw up a rough balance sheet to assess the value of the estate. This determines whether you need probate and whether inheritance tax (IHT) is likely to be payable. Complete an IHT return and arrange for a payment of any IHT dues. It can be paid directly from the deceased’s bank account if the bank belongs to the Inheritance Tax direct Payments Scheme. IHT has to be paid within six months of death, or interest will be charged. But payment can be delayed for certain assets that are not to be sold, such as land, private businesses and unquoted shares. It can be paid after probate in ten annual installments with interest.

After the grant of probate

  • Collect the estate’s assets, open a bank account for the estate, and where required put the deceased’s home and any other property that is to be sold on the market. Complete the tax returns for the deceased and pay any tax due. Pay the estate’s debts, including household debts, professional fees and any outstanding mortgage. It is advisable to advertise for the creditors of the deceased in newspapers, giving at least two months for creditors to make claims.  

  • Prepare the final estate accounts. For this you will need a tally of assets valued at the date of death and another on the date they were paid out or realised. If the second count is lower you may be entitled to claim a refund from the Inland Revenue; if it is higher you may have to arrange for more IHT to be paid.  

  • Pay legacies and distribute the residue to beneficiaries. Ask for receipts. If ownership of a property is to be transferred you should contact the Land Registry and ask for form AS1.

Gathering a small estate’s assets

If you need to gather funds from a small estate that did not qualify for probate, institutions such as banks, building societies and insurance companies will require you to complete their own release forms and have them signed by all the executors in front of a solicitor or magistrate. Insurance companies will ask to see an original copy of the death certificate.

An executor’s right to resign

Your former father-in-law, who died recently, named you as one of the executors of his will. You are about to move to Australia and wish to resign as executor. As long as you have not yet performed any of an executor’s duties you can resign.  If you have already performed any of the duties you will be deemed to have accepted the office.

In case you have not performed any of the executor’s duties, you can write a letter ‘renouncing’ the role of executor for your mother-in-law’s will. Attach the probate application to it and send it to your district probate registry. Renunciation is not effective until it is filed, so you can change your mind up to that point. The district probate registry will send you a resignation form to sign. Finally, you will have to write to the other executors informing them that you have resigned as executor.  

Examples

  • Bank charges a high fee

Your brother’s will names you and his bank as his executor. You are appalled to hear how much the bank will charge for handling the estate. You are thinking of getting rid of them as executors. You cannot do this as executors are chosen by the deceased person and have the right to act; only the courts can remove them, and only if they are found guilty of maladministration. However, executors can renounce their appointment (as explained above), so you could ask the bank whether it will give up its role.  

  • Beneficiary’s immediate demand

You are the executor of your late sister’s will, which names her ex-husband as a beneficiary. He is demanding that you pay him immediately, or he will take you to court. Please rest assured as he cannot do so. An executor cannot be compelled to pay a legacy before the end of twelve months after the deceased person’s death.  

Unless you are the executor of a small estate, it is prudent not to distribute the assets until six months after probate is granted. This is because anyone not mentioned in the will who wishes to make a claim has six months from the grant of probate to do so. Such a claimant who found that the estate had already been distributed could sue the executors.