Executor of your Will – Your Most Critical Appointment

What is an executor? What do they do? What is probate? Here are questions, answers, and information about executor responsiblities.

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Executor of your Will – Your Most Critical Appointment

Dying without a Will is never a good plan. You are leaving the distribution of your estate to a formula set out by the courts. But just as importantly, you are dying without naming an Executor. This means that nobody has been put in charge of your estate.

The immediate consequence of dying without an Executor is that nobody knows who is in charge. Somebody may step forward and take responsibility for certain tasks, but without authorisation from the courts, they have no legal authority to do anything.

If you die without a Will, your family and loved ones will have to wait for the courts to appoint a personal representative. Once appointed, this person will have to secure your assets and then distribute them according to the intestate distribution laws.

By writing a Will, you can appoint an Executor. This person is probably the most important appointment you will ever make in your life.
Executor Responsibilities

What is the Executor of a Will?

The Executor of a Will is the person named in the Last Will and Testament to take responsibility for carrying out the instructions. You appoint the Executor who must secure all of your assets, gather them up, and then distribute the assets to the beneficiaries according to the instructions in the Will.

The Executor also has responsibility for arranging your funeral.

What are the powers of the Executor?

The powers of the Executor are written into the Will, but they can be quite significant. Your Executor's powers are broadly defined by the Trustee Act 1925, but your Will can extend these powers. For example, if you have written into your Will that you wish to divide your estate equally between your children, then your Executor must gather your estate and then distribute it equally. This could include having to buy or sell property on your behalf, and certainly to transfer the ownership of assets.

When your Executor is gathering up your assets, they will have to set up a bank account for your estate. The Will should give them the authority to place those assets into a secure investment.

At LegalWills.co.uk, we include the following powers for the Trustee, that are granted in addition to their powers under the general law:

Power to invest as if they were beneficially entitled and this power includes the right:
  • to invest in unsecured loans
  • to invest in other non-income producing assets including policies of life assurance
  • to purchase land anywhere in the world
  • to purchase an undivided share in land
  • to invest in land for the occupation or enjoyment of any beneficiary
These powers sound significant, but in practice this simply allows the Executor to perform their responsibilities without having unnecessary restrictions placed on them. They are still legally required to act in the best interests of you, the Testator (the person who wrote the Will).

Does the Executor have the final say?

Yes. The Wills at LegalWills.co.uk include the following clause:

The Trustee has the following powers:
To appropriate to any beneficiary in satisfaction or partial satisfaction of the gift to him any asset forming part of my residuary estate and not subject to a specific gift.
To appropriate as the assets or part of the assets of any trust created by this Will any asset forming part of my residuary estate and not subject to a specific gift.
This means that your Executor has the power to sell an item if it helps them to distribute the assets according to your wishes. For example, if everything is being divided equally between your two children, and both children agree that one can receive your grandfather's painting. It is up to your Executor to decide how to fairly compensate the other child.

If two children cannot decide how to divide your possessions, then the Executor has to make that decision. You can of course leave a letter of instruction as guidance to the Executor, and this can help with some difficult decisions.

How do I choose an Executor?

At a high level there are two options:

Appoint a Professional Executor

We advise against this for one simple reason: it is expensive, and they are compensated out of proportion to the work involved. Professional Executors typically charge both a percentage of the estate, and also an hourly rate.

Solicitors try to write themselves into Wills as the Executor because it is an extremely lucrative part of their business. We have heard of cases where accounts are simply transferred from one partner to the other, and the solicitor charges 5% of the value of the account for doing this. It can amount to several thousands of pounds for less than an hour's work.

Some Will writers offer free Will writing services on the condition that they are written into the Will as the Executor. This is dishonest, and you should run away from service providers like this.

Name a friend or family member as Executor

This is the most cost-effective approach, but it requires that you have somebody close to you with the qualities needed of an Executor.

Your Executor must be proficient with paperwork and submitting the right forms to the right departments. They must also have the soft skills to work with beneficiaries and family members who may be anxious to receive their inheritance. Finally, they must be trustworthy. They will likely be dealing with large sums of money and will be working with banks and investment companies to release your funds.

However, if your Executor does start to struggle, most Wills allow them to pay for professional help out of the estate.

Can an Executor also be a beneficiary in a Will?

Yes, this is very common. Many people name their spouse as the main beneficiary of their estate and also the Executor. It keeps everything in the family and can simplify the transfer of assets.

Does the named Executor have to serve?

No, the appointment in your Will is your preference, but there is absolutely no legal obligation for the person to serve. Circumstances change, they may have become ill, moved overseas or simply have had a change of heart.

The Executor is entitled to refuse the appointment.

It is however a good idea when naming somebody in your Will, that you check with the individual. It is a significant responsibility and it is not fair to blindside somebody with the appointment. If your named Executor refuses, your Will should typically include a backup. But if your backup is also unwilling or unable to serve, then your estate will have to wait for a court appointed administrator.

What if the Executor is incapable?

The Wills at LegalWills.co.uk include the following powers:

Power to appoint any person (including one of their number or a beneficiary) to act as their nominee and to take such steps as are necessary to vest any property in such person on such terms including terms enabling the agent to charge remuneration, to appoint a substitute, to limit liability and to act in circumstances giving rise to a conflict of interest as my Trustees think fit.
This is actually a great strategy. You can appoint a friend or family member as the Executor, and give them the powers to employ professional help when they get out of their depth. The professional adviser is then paid at an hourly rate, and not as a percentage of the estate.

How much does an Executor get paid?

In the UK, a professional Executor is paid a percentage of the estate, and they can also charge hourly rates. This can make things very expensive for your estate.

If you appoint a friend, family member or another non-professional Executor, then they are generally not paid for the work.

What is the probate process?

Probate is the official process that accepts your Will as your official Last Will and Testament and appoints your Executor as the estate administrator.

After you have passed away, your Executor has to gather up your assets. They cannot just go to the bank with your Will and ask for the money out of the account. The bank has no way to ascertain whether the document is your official Will, whether another one was written after this one, or whether the document is being challenged.

The Will is officially accepted by the probate courts. Your Executor is then given a court issued document called the "letters of administration". This document can be presented to banks and other financial institutions by the Executor in order to obtain access to the contents of your accounts.

In practice, most Wills are probated in the UK.

Is there a step-by-step Executor guide?

Yes. This high-level overview may be of help.

Initial steps

  1. Locate the Will and review for specific instructions concerning the funeral.
  2. Register the death
  3. Assist with funeral arrangements, if required.
  4. Obtain multiple original copies of the proof-of-death certificate, as most organisations will require original documentation.
  5. Ensure that the family's immediate financial needs can be met.

Verify the Will

  1. Probate the Will (if necessary).
  2. Pay appropriate inheritance taxes as determined.

Communicate with beneficiaries

  1. Communicate directly with beneficiaries, gather information and set expectations.
  2. Provide regular updates to beneficiaries regarding status of the administration.
  3. Provide a copy of the estate summary document to those beneficiaries who are entitled to one.
  4. Communicate with the residual beneficiaries regarding the distribution process.

Secure the assets

  1. Verify that insurance is in place to protect assets.
  2. Notify banks and institutions where the deceased held accounts or had other dealings.
  3. Cancel all credit card accounts and return cards to issuers.
  4. Open an estate account to deposit income and pay expenses, transferring any balances.

Value the assets

  1. Locate all original investment certificates, stocks, bonds, property deeds, etc., in the deceased's personal files.
  2. Identify, value and record estate assets as they stood at the date of death.
  3. Investigate all debts owed by the deceased.
  4. Contact the deceased's employer or former employer regarding pension plans, retiree benefits and death benefits.
  5. Apply for and collect life insurance and other insurance benefits.

Administer the estate

  1. Review the suitability of investments held in the estate and recommend which assets are to be sold to meet cash requirements.
  2. Invest any surplus cash until the estate is finalised, selecting from allowable investments.
  3. Assist in establishing any trusts stipulated in the Will.
  4. Cancel ongoing payments and subscriptions.
  5. Apply for any spousal or child benefits.
  6. Advise the government and HM Revenue and Customs.
  7. Complete documentation and arrange to transfer employment, health, pension and retiree benefits.
  8. Return passport, driver's licence and other government issued documents.
  9. Pay all debts and settle all legitimate claims prior to final distribution of assets, obtaining receipts for any payments made.
  10. Complete and file all outstanding tax returns.

Distribution of the estate

  1. Initiate sale of assets and transfer of titles.
  2. Begin distributing assets to beneficiaries according to the terms of the Will.
  3. Distribute specific bequests (personal and household belongings), obtaining receipts from respective beneficiaries.
  4. Prepare an estimate of your expenses (and any compensation) as executor.
  5. Arrange for final distribution of remaining assets, obtaining receipts from each beneficiary.
  6. Prepare a final accounting of all assets, liabilities, expenses and distribution of assets for beneficiaries.
  7. Have each beneficiary approve the accounting and sign a release form.
  8. Advise the bank in writing to close the estate account once the estate is settled.
  9. Advise beneficiaries to consult with a financial advisor.

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The Money Whisperer
Emma Maslin, The Money Whisperer, PARENTING & MONEY, PERSONAL FINANCE

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