Being named as an executor is a mark of trust, but it is also a legal role with real obligations, and many people accept it without a clear idea of what it involves. In this ‘Executor duties in the UK: a complete legal guide’, we set out what the law expects of an executor in England and Wales, from the first days after a death through to the final distribution of the estate, together with the protections available to executors who carry out the role carefully.
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Who Is An Executor And When Do The Duties Begin?
An executor is the person appointed in a will to deal with the estate of the person who has died. Their authority comes from the will itself, which means they can take certain steps, such as securing property, before a grant of probate is issued. The grant then confirms their authority to the outside world, so that banks and other institutions will deal with them.
The duties begin at the date of death. Even before the grant, an executor is expected to take reasonable steps to protect the estate, for example, by making sure a property is secure and insured and that valuables are kept safe.
What Are The Core Executor Duties UK Law Imposes?
At the heart of the role is a duty to collect in the estate, pay what it owes, and distribute the balance to the people entitled to it, all in accordance with the will and the law. In doing so, an executor acts in a fiduciary capacity. That means they must act in the interests of the estate and its beneficiaries rather than their own, avoid conflicts of interest, and must not profit from the role unless the will allows it.
An executor must also act with reasonable care and skill. Where they deal with investments, the Trustee Act 2000 imposes a statutory duty of care, and the standard expected is higher for a professional executor than for a family member acting in a personal capacity. Lay executors are not paid for their time, but they are entitled to recover proper expenses from the estate.
What Does Administering An Estate Involve In Practice?
The practical work usually follows a clear sequence. The executor identifies and values the assets and debts as at the date of death, reports the estate to HM Revenue and Customs and deals with any inheritance tax, and applies for the grant of probate. Once the grant is issued, they collect in the assets, which may involve closing accounts, selling or transferring property, and cashing in investments as appropriate. The remainder of the estate is then distributed between the beneficiaries.
Throughout, an executor must keep accurate records of everything received and paid out. Those records form the basis of the estate accounts, which show the beneficiaries exactly how the estate has been dealt with. A beneficiary is entitled to ask for information about the administration, and an executor who keeps careful records is far better placed to provide it.
What Tax Responsibilities Fall On An Executor?
Tax is one of the most demanding parts of the role. The executor must establish whether inheritance tax is payable, report the estate accordingly, and arrange payment. Inheritance tax is due by the end of the sixth month after the month of death, after which interest is charged on any unpaid amount.
The executor is also responsible for the deceased’s own income tax affairs up to the date of death, and for any income tax or capital gains tax arising on the estate during the administration. If an asset is sold for more than its value at death, a capital gains tax liability may arise. These obligations must be settled before the estate is finally distributed.
How Should Debts And Creditors Be Dealt With?
Debts must be paid before the beneficiaries receive their inheritance. To guard against claims from creditors they do not know about, executors can place statutory notices under section 27 of the Trustee Act 1925, in The Gazette and a local newspaper. Once the notice period of at least two months has passed, an executor who distributes the estate is protected against claims from creditors who did not come forward.
It is also prudent to carry out bankruptcy searches against beneficiaries before paying them, since an inheritance due to a bankrupt beneficiary may need to be paid to their trustee in bankruptcy instead.
When Should The Estate Be Distributed?
The law recognises what is often called the executor’s year. An executor cannot be compelled to distribute the estate within twelve months of the death, which allows time to deal with the administration properly. That said, executors should not delay without good reason, and interim payments are often made where the position is clear.
There is a further reason for care in timing. A claim under the Inheritance (Provision for Family and Dependants) Act 1975 must normally be brought within six months of the grant. An executor who distributes before that period has passed, while aware of a possible claim, may be exposed if a claim later succeeds.
What Happens If An Executor Makes A Mistake?
An executor can be held personally liable for losses caused by a breach of their duties, such as paying the wrong person, overlooking a debt, mismanaging assets, or underpaying tax. This is the aspect of the role that most concerns people, and rightly so.
Reassuringly, there are protections. Following the proper procedures, such as the creditor notices described above, provides a shield in specific situations. The court also has power under section 61 of the Trustee Act 1925 to relieve an executor from liability where they acted honestly and reasonably and ought fairly to be excused. The surest protection, however, is to take professional advice at the right moments, so that mistakes are avoided in the first place.
How Can Bartletts Solicitors Help?
An executor remains responsible for the estate, but is entitled to instruct a solicitor to carry out the work, with the cost met from the estate. Our wills and probate team acts for executors every day, either handling the whole administration or supporting with specific parts, such as the inheritance tax position, creditor notices, or the estate accounts. We explain each step in plain language, so that you always understand where matters stand and what your obligations are.
To speak to our experts please call us free of charge on 0800 988 3674 or Make A Free Online Enquiry.
