What is an Executor?
When a person dies, it is necessary to identify who has the authority to deal with the deceased's affairs which comprise all the deceased's property and their finances (the deceased's estate) and obtain a grant of representation to administer the estate. This person is referred to as the personal representative. Where the deceased left a will, it should appoint Executors to act as the personal representatives.
What is a Professional Executor?
The deceased’s will may indicate who the Executor is by an express appointment where a lay person is named in the will as an Executor, or by the appointment of partners in a trading firm (such as solicitors in a law firm) who will act as Professional Executors. Professional Executors can charge for the work they do, but often this is more than justified by the benefits they bring.
Personal liability of Executors
The role carries with it a high amount of responsibility and liability. If things go wrong, Executors may find themselves personally liable to beneficiaries, creditors and other third parties, possibly having to make good the loss from their own funds.
Where an Executor acts in some way that a loss is caused to the estate, this is known as a wasting of assets. For instance, where a legacy is paid where there are insufficient funds to pay a debt. In cases of maladministration and/or negligence, the Executor can find that they are personally liable and must repay any loss from their own funds. If there are penalties from HMRC regarding inheritance tax, these payments might not be recoverable from the estate.
What if the Executor cannot afford to pay?
Solicitors have professional indemnity insurance to cover these sorts of claims occurring. This can give beneficiaries, creditors and third parties peace of mind where a solicitor is appointed as a Professional Executor. Specialist executor insurance is available for lay executors to buy, however, it is unlikely to have the same level of cover. Few non-professionals understand the level of responsibility and challenges of being an executor and so the availability of such insurance is limited, and uptake is currently relatively low.
Why do I need a Professional Executor?
1. To prevent additional stress
A Professional Executor in a Will can help reduce the burden on family members at an already stressful time. It allows the family to grieve, rather than be burdened with the responsibility of administering the financial affairs of a deceased loved one. A Professional Executor has a duty to act independently without any personal interest.
2. Potential Conflict
If a testator knows that there is likely to be any friction between family members following their death, a Professional Executor can be appointed to act as an impartial or neutral party. This can allow decisions to be made objectively and without emotions getting in the way.
3. Trusts
There may be ongoing family trusts or trusts for minors or vulnerable beneficiaries (which can continue long after the remainder of the estate has been settled). Many trusts are simple and require little professional input, but where matters are more involved, a professional trustee in the form of a trust corporation can assist with longevity and continuity.
4. Continuity
Appointing a firm of solicitors to act as a Professional Executor can provide continuity. There is no risk of the Executor dying before the administration of the estate is complete, which could happen with an individual.
5. Complex Affairs
Professional Executors are used to dealing with complex issues such as cross-border matters, tax or to ensure that a business will continue to operate after the death of a key member. There are a variety of tasks involved in the administration of an estate that a lay person may not be familiar with. Carrying out these tasks correctly is crucial because of the risk that Executors can be personally liable if they find themselves in breach.
6. Cost
While it may seem like the cheaper option to appoint a family member or friend, the complexity of administering an estate will likely mean they appoint a solicitor on to act on their behalf, meaning that the costs would work out much the same.
What to do next?
Here at Myerson Solicitors, our Wills, Trusts and Probate team are highly experienced in drafting Wills and administering estates and can also act as professional Executors and Trustees on your behalf. If you would like assistance, please do not hesitate to get in touch at lawyers@myerson.co.uk or call us on 0161 941 4000.