Being named the executor of a Will is an important task; however, many people don’t know what it means or what they should do. So, we’ve put together a handy guide to walk you through everything you need to know.
What Is an Executor?
An executor is someone who has been named by the testator (the writer of the Will) to take legal responsibility for carrying out their wishes. Many choose family members, such as their spouse or child, but anyone over eighteen with full mental capacity can perform the role.
It is common to choose more than one executor to share the role’s responsibilities. Most people choose two executors, but it is possible to select up to four. It is also a practical choice, as should an executor pass away before the testator, another person will be available to manage their estate.
The duties of an executor include:
- Paying bills or debts left by the estate
- Paying Inheritance Tax
- Applying for probate
- Distributing gifts in accordance with the testator’s wishes
- Opening a bank account on behalf of the estate
- Finding the correct documentation
Sometimes, executors may also be responsible for registering the testator’s death, informing relatives, and arranging the funeral, but this may not always be the case.
Inheritance Tax
One of the key parts of being an executor is paying any Inheritance Tax due on the estate. As an executor, it is vital to know the estate’s value, including property, bank accounts, and possessions.
Inheritance Tax is due on the estate if it is valued at over £325,000. However, if a house is left to the children or grandchildren of the testator, this rises to £500,000. If the testator had a spouse who passed away and did not use any of their allowance, they can then pass on £1m tax-free to their beneficiaries.
You must pay any Inheritance Tax due before applying for probate to begin distributing the rest of the estate.
Steps for Being an Executor
Being an executor can appear more complicated than it is, so it can be helpful to break the process down into steps:
- Find the latest Will – having an up-to-date Will is essential for any executor.
- Check for funeral plans – if it is your duty to arrange the funeral, check for any requests the testator has outlined. You may be able to pay for the funeral out of the estate.
- Value the estate – knowing how much the estate is worth determines if you need to pay any Inheritance Tax as well as how much needs to go to each beneficiary.
- Apply for probate – as the executor, probate gives you the authority to manage the testator’s estate. Once granted, you can send a copy to banks or other organisations which hold money and bank accounts of the testator so it can be released to you.
- Open an executor bank account – this can hold all the testator’s financial assets, making paying off debts and giving gifts much more straightforward.
- Pay off outstanding debts – you must pay off any debts, including any tax, before distributing any gifts.
- Distribute gifts – as the executor, you must distribute gifts according to the Will, including money, property, and possessions.
- Complete the accounts – this will show the assets and what was paid and distributed, and it will need to be signed by the beneficiaries of the Will.
These tasks may sound like a lot, but the process takes place over several weeks, and multiple executors will often work together to ensure everything gets done.
Distributing the Estate
One of the main tasks that falls to an executor is distributing the estate to the named beneficiaries of the Will. This can only begin once probate has been granted, and there are several things to remember before making any gifts.
Beneficiaries who are bankrupt may not be entitled to receive any inheritance the estate has left them. You can carry out bankruptcy searches to verify this. It is also important to note that any beneficiaries under eighteen may require trustees to hold assets for them.
Personal property can be granted to beneficiaries before probate is applied for, but it is advised that you have anything over £500 valued beforehand. It may also be advisable to wait approximately two months before distributing any assets in case a claim is made against the estate.
Jointly Owned Assets
Joint assets may be distributed differently than sole assets. If a person passes away, but their spouse is still living, their joint accounts and joint property will pass to the surviving partner, although the value of these assets is still included in the estate when calculating Inheritance Tax.
However, this may not be the case if both account holders agree that their share will pass to someone else or are declared as tenants in common rather than joint tenants. As tenants in common, the testator can then dictate where their share of the home or account will do, which should be outlined in the Will.
Resigning As an Executor
Some people do not want to be an executor of an estate due to other responsibilities, ill health, or a lack of time. If they feel it is not right for them, they can resign at any time by signing a Deed of Renunciation, which needs to be drawn up by a solicitor.
Once an executorship is renounced, someone else needs to take their place if they were the only executor named. If nobody steps up, the courts will appoint someone else as administrator, although this may be someone the testator would not have been happy with. If another executor is available, they can take over on their own. People can still be a beneficiary of a Will if they step down from being an executor.
Being an executor is a lot of responsibility, but the process can be more straightforward with a clear Will. Get in touch with The Planning Bee to start your Will today with expert advice from our legal professionals.