January 11, 2016

The Pitfalls of Being an Executor

This post was written by: Jenna Dunstall

blog banner the pitfalls of being an executor

Acting as someone’s Executor is not a job to be taken lightly.  The first duty that falls on an Executor is to arrange the deceased’s funeral.  When someone dies, the institutions where the deceased held assets must be notified as soon as reasonably possible and all accounts will be frozen, it can therefore at times be difficult to obtain the deceased’s money to pay for things such as ongoing mortgage payments, house insurance etc.  Sometimes the Executor must pay the funeral costs personally when there is not money readily available in the estate, which can put financial pressure on the Executor.  Other liabilities may also arise that must be paid right away which may again fall on the Executor to settle.

Once the Executor has ascertained all the assets and liabilities in the estate, an Inheritance Tax form must be completed.  If the estate is not subject to Inheritance Tax, a shorter form is completed and probate can be obtained in a relatively short time.  However, if the estate is subject to Inheritance Tax then a much more in depth, detailed form must be completed.  This form is submitted to HMRC to scrutinise to ensure that enough tax is being paid.  It is not always straightforward filling in such a detailed financial form and if an Executor gets it wrong and HMRC picks up on any errors, it could result in interest falling due on any sums owing to HMRC and if there is a serious error then HMRC has the power to issue substantial penalties.  It is therefore imperative that you obtain all the correct figures for assets and liabilities as at the date of death in order to complete the form fully.  Again, if there is not enough readily available funds in the estate to settle any Inheritance Tax owing, then there is no option but for the Executor to obtain a loan to settle the tax.

It is also important that any Income Tax owing to HMRC is settled before monies are distributed to the beneficiaries of the estate.  If you have distributed the estate monies to the beneficiaries and it later transpires that there is further Inheritance Tax, Income Tax or welfare benefits owing, then you may be pursued personally for the monies.

Claims can also arise under the Inheritance (Provision for Family and Dependants) Act 1975 when a close family member or financial dependent claims against the estate due to the fact that the Will has made insufficient provision for them. Such claims can be brought at any time until six months from the date the grant of probate is issued.  If it is a possibility that such a claim could be made, the estate should not be distributed until this time has passed, or the Executor could be liable.

Being an Executor if they misinterpret the will and overpay any of the beneficiaries they may need to make up the difference to the other beneficiaries personally.  If one of the beneficiaries is bankrupt then his creditors must be paid by the Executor before any distribution to the beneficiary.  Even if the Executor is not aware of the bankruptcy, they can still be personally liable if they get this wrong. A bankruptcy search should therefore be carried out before distributing to any beneficiary.

If the Executor carries out his duties too slowly and his actions result in loss to the estate, then the Executor can be pursued for the loss personally.

Executors should really consider whether they have the time and ability to take on the role.  If they cannot carry out their duties effectively then they risk being held personally liable at substantial cost.  If you have been appointed as an Executor and are concerned about what you should do, then you should contact a Solicitor. If you are worried that your close family or friends would not be capable of acting as Executor, then you may consider appointing a professional Executor, such as a firm of solicitors.


Solicitor Jenna Louise Dunstall