It’s flattering to be asked to become an executor, but how can you stop the experience turning into a nightmare? 12% of executors found the experience a complete nightmare.
Here’s what to consider when you’ve been asked to become the executor of a will
If you’ve been asked to become an executor, it’s likely that the person asking you is a friend or family member. They trust you and see you as a safe pair of hands to deal with their affairs when they’re no longer around. Of course, if you’re like most executors, you probably don’t have legal qualifications or any prior experience of this role at all.
Unlimited Personal Liability
Being inexperienced makes the whole prospect much more daunting, especially since taking on the role of executor means taking on unlimited personal liability for the decisions you make in that role. Even if you appoint a legal professional to administer the estate for you, you’re still liable.
And although you’ll only be actively engaged in managing the estate for a matter of months, disputes and claims can arise at any time. So, given the potential pitfalls, should you even consider accepting the task in the first place? We say yes, but do proceed with caution and protect yourself from liability. Here are some points to consider.
If the estate you’re managing doesn’t seem to be large or complex, it’s tempting to think you can do it all without a safety net. But at the very least you should look at the option of insurance for executor of a will. These policies cover you in case you do face unexpected complications, and it’s a cost you can legitimately claim from the estate.
How Complex Are The Testator’s Affairs?
A recent survey discovered that while 47% of former executors had found their duties straightforward, 12% looked back on the experience as a ‘complete nightmare’. A further 17% thought the role had been more difficult than expected.
These differences probably reflect the fact that some testators (i.e. the person whose estate the executor is managing) have far more complex affairs than others. This kind of complexity can get you into hot water with HMRC, since it’s up to you to work out how much tax to pay on behalf of the estate.
It’s always a good idea to get professional help with tax matters. Before speaking to an accountant, you can call the HMRC probate and inheritance tax advice line to help you work out exactly what needs to be done.
Are The Assets Well Documented?
Before you even get started, you need to locate the testator’s assets, a tricky task unless they’ve been especially organised while alive. The best way forward with this is often to talk with the testator’s close friends and family. But often there’s no better alternative than painstakingly reading through bank or building society statements to track down scattered sources of income.
Are There Conflicts Within The Family Or Business?
Ongoing family strife is probably the biggest complicating factor an executor can face. Where there are unresolved business or personal conflicts, the likelihood of disputes and legal action increases. If you’re thinking of acting as executor for a testator with a tricky relationship history, you’ll need a lot of professional backup.
When the estate is a bit more complicated, it pays to engage a lawyer and an accountant to support you. However, don’t forget that you’re still the person who’s legally liable, even if all you do is accept the advice of professionals. Executor insurance is a must-have for every executor, whether you’re managing a large, high-value estate or just winding up the simple affairs of a close friend. It’s undeniably the best way to protect yourself from liability.
Peter Collins is a director at LFC Risk and Insurance, who provide individuals and businesses with insurance and risk management advice.