What is an Executor?

What is an Executor?  What are an Executors Duties?

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In general terms, the definition of an executor is considered to be the person or people who are responsible for sorting out a persons financial affairs after they have died.   Strictly, they are only executors if they were appointed in the Last Will of the person who has died.  The term “personal representative” is a wider term identifying executors in the wider sense.

The executors job

is to find out what the persons assets and liabilities were, to pay any tax due and then apply for Court approval (a Grant of Probate in its’ various forms), then to collect in the assets of the estate, pay off any debts and then distribute what is left over in accordance with the Last Will, or in accordance with the Rules of Intestacy if there was not a valid Last Will.

Until the assets are distributed, the executor must ensure that property and other assets are secure and properly insured, and if they fail to do so they may be personally liable for any losses caused by their neglect.

It is common for lay executors to run into problems:

  • incorrectly identifying tax liabilities and leaving themselves open to tax penalties potentially doubling the unpaid tax.
  • Paying the wrong beneficiaries.  Many wills are badly worded and family relationships confused.  Children are not always legally children, more distant relations are often not correctly identified.  In one case we saw recently, there were thought to be 11 cousins able to inherit, but in fact there were three more in New Zealand whom no one mentioned.  The executor could have found herself personally liable to pay them their share as she had already paid all the money out to other cousins.
  • Not correctly checking for debts which can come back to haunt the executor years later.
  • Working out the beneficiaries shares incorrectly – charities can be exceedingly uncharitable if they don’t get every penny they are due!
  • Taking expenses from the estate above those they are allowed to by the Will, or by law.
  • It is possible to take our Executors Insurance to cover accidental errors, but for full protection it would be necessary to renew it for 12 years, after which most creditors would not be able to claim against the executor.  Executors may be worried about an error during probate and concerned about their unlimited personal financial and legal liability. Many find such cover prudent, as most Last Wills allow reasonable expenses – such as the cost of the policy, to be reimbursed from the estate.   The Trustee Act of 2000 imposed a statutory “duty of care” on both lay and professional executors, which means you can be held legally or financially responsible for any errors you make.
  • Do watch out for the possibility of claims under the Inheritance (Dependants and Family) Act 1975 which allows dependants – children, partners, mistresses, flat mates – anyone who might claim to have been supported by the deceased person – to sue the estate in the person of the executor for financial compensation for their loss of support.  The claim need not have any foundation in reality to cause a great deal of trouble and expense.
  • Executors frequently mix estate money with their own because they fail to open up and correctly manage a proper executors bank account.
  • Not actually wishing to act as executor but “intermeddling” with the estate so they find themselves legally required to act as executor, even though they had no wish to do so.

As part of the reasonable expenses of an executor, it is normally perfectly possible to delegate all or part of the job to a professional firm of executors who will be paid by the estate.  Our Instruction Form is included in the Free Guide to Executors Duties that you can download above and to the right.  There is no obligation.

What is an Executor?