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Tower Street Finance

An executor of a will explained

 
 

What is an executor of a will?

What does an executor of a will do? When a person makes a will they name an executor or executors to be responsible for carrying out their instructions, such as managing their estate and distributing inheritance to beneficiaries when they have died. If there isn’t a will, or the executor(s) aren’t willing to act, or are no longer capable due to physical or mental health issues, then an administrator is appointed to carry out the role.

What power does an executor of a will have?

Executors have a number of responsibilities such as:

Arranging the funeral – if the will specifies

  • Collecting all assets, including property and money due to the estate of the person who has died
  • Applying for the grant of probate – if it’s needed*
  • Paying any debts owed by the deceased and settling any inheritance tax due
  • Distributing the estate to the people named as beneficiaries in the will once probate has been granted. 

*Anything left by the deceased such as money, property and personal possessions are known collectively as their ‘Estate’. An executor needs to calculate the total value of the Estate. Typically, if an Estate exceeds £15,000 Probate must be granted. Only once the Grant of Probate is issued will the executor have legal authority to carry out the instructions left in the will.

How do you deal with inheritance tax (IHT) as an executor?

It’s the responsibility of the executor, or personal representative, to manage any inheritance tax liability. Appropriate IHT forms need to be completed and the bill needs to be settled with HMRC before the estate can be released – in other words the executor needs to pay the IHT bill, often out of their own pocket, before they can claim it back from the estate.

If you’re an executor and you’re struggling to pay inheritance tax click here to find out about the Tower Street Finance IHT Loan. 

Who can be an executor?

Anyone aged 18 or above can be an executor. Normally two executors are named in a will, but up to four executors can act at a time.

What is the executor of a will entitled to?

What if the executor is also a beneficiary? There is no rule to prevent executors from also being beneficiaries. However, sometimes an executor of a will is just that and not a beneficiary.

What expenses can an executor claim?

Executors can claim back any out-of-pocket expenses from the Estate. This may include Probate Court fees or Inheritance Tax. It’s recommended that Executors provide beneficiaries with receipts and invoices for these payments.

If the will names a professional Executor then they are entitled to charge a fee for their services.  However, if the beneficiaries are not happy with the fees they do have the right to request that the named executor renounce their role. In this situation a substitute executor would step into the role of executor.

Can an executor also be a witness to the same will?  

Yes. An executor can be one of the two official witnesses needed to validate a will so long as they are not also a beneficiary.

How does an executor distribute money?

Once the Grant of Probate has been issued executors can distribute the estate following the instructions left in the will.

Before anything can be distributed the executor has a duty to settle any outstanding debts. Once this has been done, whatever is left can be distributed to beneficiaries. There is a strict order of priority for distributing the estate – ‘pecuniary legacies’ which includes gifts of specific sums of money are distributed first, followed by the ‘residuary estate’ which is any money remaining.

If beneficiaries want or need access to an inheritance sooner than the Grant of Probate will allow Tower Street Finance’s Inheritance Advance is a unique product that allows access to up to 60 per cent of the inheritance more quickly. For more information about Inheritance Advance click here.

Does an executor have to show accounting to beneficiaries?

Yes. The executor is legally required to keep track of any costs and be able to provide evidence of any estate transactions.

How long does an executor have to settle an estate?  

On average probate can take anything from 9 to 12 months, or longer for complex cases, to complete.

Pecuniary legacies should be paid out within a year of the death. This is known as the ‘executor’s year’. If the executor isn’t able to pay the pecuniary legacies within that timeframe then beneficiaries can claim interest.

How do executors pay bills?

If the estate is liable for Inheritance Tax (IHT) it’s the executor’s duty to settle the bill. Inheritance Tax needs to be paid before the estate can be distributed to beneficiaries.

Find out more about IHT here – Inheritance Tax Explained.   

What happens if an executor dies?

If there isn’t another executor named on the will or all of the executors have died then in England and Wales the Non-Contentious Probate Rules will apply. These rules state that a residuary beneficiary can act as an executor. Who this is has to be agreed between the named beneficiaries.

If an executor dies after probate has been granted then the executor of their will need to take on the role of administrating the estate – this is called ‘Chain of Representation’. This may also mean that the new executor needs a new Grant of Probate. In the event that the deceased executor didn’t leave a will then the Rules of Intestacy will decide who deals with the estate of the deceased executor.

What if the executor does not distribute the estate after probate?

The executor must follow the instructions left by the deceased in their will. But, there are some exceptional circumstances where an executor can withhold settlement.

If unknown debtors come out of the woodwork the executor can delay settlement with beneficiaries for up to six months until any debt is settled. If the executor has concerns over the welfare and wellbeing of a child beneficiary, they can apply to the court to withhold distributing inheritance until the child turns 18 in England or 16 in Scotland. If the executor believes that a beneficiary is vulnerable, then the executor can pay the inheritance into a discretionary trust.

What happens if the executor does not follow the will?

If you discover that an executor or executors have not carried out their duties properly you can take legal action against them.

Can an executor change a will?

Surprisingly the answer to this question is yes – but only if any beneficiaries who would be worse off by the change are in agreement.

What if I don’t think the executor is acting in the beneficiaries’ best interest?

Executors need to follow the law and the instructions left in the will. If an executor attempts to withhold bequests or act against the interest of the beneficiaries, such as perhaps selling a property from within the estate at a low price the beneficiaries are unhappy with, then they can be taken to court.

What happens when joint executors can’t agree?

Usually, two executors are named on a will but there can be anything up to four. Multiple executors need to jointly agree as they share all the responsibilities – and that’s were problems can arise. If executors can’t agree they need to renounce their role or be removed via the probate court.

How you can find out more about the IHT Loan

The IHT Loan is a new product from Tower Street Finance that can help executors (or personal representatives if there’s no will) will estates where there is an Inheritance Tax (IHT) liability to pay but no funds available, and it is holding up the legal process.

Find out more by clicking here