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A guide to Estate management – what are the duties of an executor?

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Being named as an Executor is an important task that carries a lot of responsibility. If you’ve been appointed as an Executor, you may feel overwhelmed and need some guidance as to where to start with Estate management. If you’re making or updating your Will, hopefully knowing a little more about what the job entails will assist you in choosing the right people to name as your Executors. No matter what your circumstances may be, the following guide to Estate management has information that is useful for anyone to know.

What is an Executor?

The Executor (or the Administrator of the Estate, if there is no Will) is the person responsible for dealing with the deceased person’s Estate upon their death.

Who can be an Executor?

Anyone can act as an Executor so long as they are over the age of 18, even if they are going to inherit from the Estate. An Executor should be someone trustworthy who has the appropriate skills to make financial decisions – someone who ideally won’t be intimidated by Estate management and the amount of administration and paperwork that comes with it.

Up to four Executors can be appointed, so the responsibility can be shared.

If there is no will, or the Executors named in the will are unable to act, the intestacy rules deal with who is entitled to take on the role of the Administrator of the Estate.

What are the key aspects of Estate management?

The Executor’s main responsibility is to ensure that all of the assets of the Estate pass to the appropriate people in accordance with the wishes within the Will, or the intestacy rules if there is no Will.

Locate the Will

Executors need to be able to locate the most up-to-date version of the Will to ensure that they are dealing with the Estate correctly. If the original Will is held by a solicitor, they will need to produce the death certificate together with their own identification in order to collect the original Will. The Executors will need the original Will in order to deal with the Estate in all cases where an application for probate is required.

Register the death

It isn’t strictly an Executor’s duty to register the death of the deceased – however, this may be necessary if there is no one else able to do so. The Executor, when registering the death, should be sure to purchase enough copies of the death certificate to have one copy for each financial institution holding assets for the deceased. These certificates are more expensive to purchase later on if enough are not purchased at the time of registering the death with the registrar.

Arrange the funeral

It may be necessary for the Executor to arrange the funeral. The Executor should check the Will of the deceased, and possibly check with those people closest to the deceased, to see if they had any specific funeral wishes. The Executor should check whether there is already a pre-paid funeral plan in place before making any of the arrangements.

For those of you reading this considering who you wish to appoint as your Executors, you may want to consider putting your own funeral plan in place now to make the process of making the funeral arrangements more straightforward for your Executors and other loved ones upon your death.

Notify people of the death

Estate management may also involve letting people know of the death and the funeral arrangements, including placing any notices required in the local newspaper.

Protect assets

The Executor must ensure that the assets of the deceased are protected and secure at all times. This may mean accessing the home of the deceased to ensure it is secure, and in some cases installing additional security measures particularly if the home is now unoccupied. The Executor must ensure that any property owned by the deceased is adequately insured. If something happens to the property, which would otherwise have been covered by the insurance, and the Executor has failed to maintain the insurance, they may find themselves personally liable for any loss or damage.

If the property is already insured, the insurer must be notified of the death and informed if the property is unoccupied. Additional conditions may be imposed upon the Executor by the insurer to allow the cover to continue; for example, someone may have to visit the property regularly, or the heating system may have to be left on or drained down. Estate management duties include ensuring the new conditions are complied with so that cover can remain in place.

Banks and financial institutions must also be notified to ensure accounts are frozen so that they are more secure. Notifying financial institutions will also assist the Executors in valuing the Estate of the deceased, as discussed below.

Collect and distribute assets

The Executor must ensure they locate all of the assets of the Estate, including money which may be owed to the deceased, so that they can collect in all of the assets and distribute them to those entitled to receive them.

Assets held jointly with another person, for example joint bank accounts or property owned as joint tenants, will not need to be collected in. Instead, the appropriate procedures should be followed so that the bank or Land Registry can update their records to show the asset as held in the sole name of the surviving owner.

Manage debts and expenses

Estate management responsibilities include ensuring that the debts and expenses of the deceased are paid. This will include ensuring payment of the funeral invoice, and also other loans, credit cards and utility bills etc. This will also include ensuring that any overpayments of State Pension, Attendance Allowance or other private pensions or other State benefits are repaid accordingly.

A thorough search of the deceased’s financial records should be undertaken to ensure that nothing is missed. Banks should be able to provide lists of current and historic direct debits to assist executors with this.

Executors may wish to consider placing ‘statutory notices’ for creditors, which allows 2 months for creditors to make a claim. If these notices are not placed, then the Executor will be personally liable for any claims which are made after the estate has been distributed. If these notices are placed, then any future claims are made against the beneficiaries of the estate instead.

If the debts and expenses of the estate add up to be more than the assets, the estate might be insolvent. We would recommend that any executor who thinks an estate may be insolvent seek professional legal advice before taking any further action.

Value the assets

Once the Executors have located all of the assets of the Estate, they must be valued. This includes any assets held jointly with anyone else as mentioned above. Even if a Grant of Probate is not required to deal with such joint assets, the value of the joint asset will still need to be disclosed if an application for a Grant of Probate is required – and is still relevant in calculating any Inheritance Tax payable by the Estate.

Banks and financial institutions should be able to provide date of death balances of accounts once notified of the death. Professional valuations of property, shares or personal belongings may also be required. HMRC recommends a professional valuation of any asset worth more than £500. These valuations will be required to complete the application for the Grant of Probate, if a Grant of Probate is required.

Pension companies and life insurance companies must also be notified. The Executors will need to check if any funds paid by the pension or life insurance are to be made directly to a beneficiary, and therefore, whether they need to be considered as part of the Estate when completing the application for the Grant of Probate. This is also important to considering any Inheritance Tax which may be payable by the estate.

Enquire about lifetime gifts

Executors must also make enquiries to ascertain whether the deceased made any gifts from their Estate in their life as such lifetime gifts may have an impact upon the amount of Inheritance Tax payable by the Estate, particularly if they were given in the last 7 years or if the deceased still retained some benefit from the gift.

Apply for Probate

A Grant of Probate is often required to deal with certain assets. The Executor will need to check whether a Grant is required. If the Estate is worth less than £5,000, it is unlikely that a Grant of Probate will be necessary. If the deceased owns property in their sole name, a Grant of Probate will be required before the property can be sold or transferred to the intended beneficiary.

Each bank and financial institution has different requirements, depending upon the type and value of the investment, as to whether they will require sight of the Grant of Probate before the asset can be cashed in or transferred. Executors will be required to contact each financial institution to establish their individual requirements. When the application for the Grant of Probate is made, the Executors must ensure that enough copies are purchased for each institution that requires one. Like the death certificates, further copies are more expensive to order later on.

Finalise Tax

The Executors must also ensure that any necessary or outstanding taxes are paid, including Inheritance Tax and Income Tax. Any Inheritance Tax due may have to be paid before the Grant of Probate can be issued.

The Income Tax position of the deceased may need to be finalised for the year prior to death, as well as the tax year of death. The Estate itself may also be required to pay income tax on any income received during the estate administration period; this could include, for example, income credited to bank accounts, or any dividend payments made on shares, to the deceased after the date of death.

The Capital Gains Tax position of the deceased and the Estate will also need to be finalised if appropriate.

If Inheritance Tax is paid by the Estate, a Clearance Certificate should be obtained from HMRC as confirmation that all tax is paid and their case is closed.

Distribute the Estate

Distributing the Estate includes payment of money to beneficiaries, ensuring distribution of specific gifts i.e. items of jewellery or other personal belongings, and transferring assets such as properties and shares in accordance with the terms of the Will and the recipient’s wishes.

Estate Accounts should be prepared for all beneficiaries, accounting for all of the assets collected and transferred, income received, and all bills, expenses and taxes paid.

Estate management includes determining whether bankruptcy searches against beneficiaries are necessary. Beneficiaries who are bankrupt may not be entitled to their inheritance, and an Executor of will may be at risk of personal liability if they pay funds to a bankrupt beneficiary. Bankruptcy searches against beneficiaries residing in England and Wales are very straightforward and the cost is relatively small. Searches against beneficiaries overseas can be more complex to obtain and the fee payable is generally much higher.

Executor of will would generally be advised to wait at least 6 months after a Grant of Probate has been issued before distributing an Estate, in case any claims are made against the estate.

Funds may have to be invested in the names of at least two trustees for any beneficiaries who are not yet old enough to receive their inheritance.

Contact the experts in Estate management

If you have further queries about the many aspects of Estate management, including how we can support and assist you throughout the process, please do not hesitate to get in touch. Call us now to instruct one of our experienced and specialist lawyers to represent, advise, guide and support you.

A fixed fee initial interview

Astle Paterson’s Wills & Probate team offers an Executor Support Service which is specifically tailored for lay Executors and an initial fixed fee interview of £150 plus VAT.