Been asked to be an executor of a Will?

Arranging the funeral; obtaining a grant of probate; accessing details of all assets and debts; paying inheritance tax (IHT); identifying, gathering in and valuing all the assets; paying the deceased person’s debts (including outstanding debts, mortgages and taxes); selling properties and investments; distributing the estate in accordance with the Will; managing any Trusts that appear within your loved one’s Will: just some of the duties of an executor.

Here’s the low down on the parts that some people feel they might struggle with and why we always recommend that people making a Will online with our Will writing template use a professional executor, who should preferably be regulated by a professional body. Honey Legal (also known as The Will Associates Asset Management Limited) is regulated and happy to work alongside a trusted family member, friend or business partner to provide a professional through service. 

Within the Will, we recommend stating how you would like to divide the duties up. Typically, people writing an online Will with us have a family member responsible for dealing with other family members, areas of sensitivity and overseeing the whole process, and a professional executor from Honey Legal (or another financial planner or solicitor of their choice) dealing with the tax and legal side of things.

In fact 62% of people who write a Will online with Active Will’s online Will template choose to use Honey Legal as an executor.


Arranging the funeral

If the person for whom you are an executor does not have a funeral plan in place, or does not state their wishes regarding their funeral in their Will – this could get tricky.

So – before agreeing to be an executor – establish whether your loved one has a funeral plan in place – or has at least detailed their wishes in their Will. If not, encourage them to do so. If they are not keen to agree, we’d recommend not accepting the responsibility of being an executor, unless you can get some kind of documented proof of their wishes regarding their funeral arrangements.


Obtaining a grant of probate

If your loved one also has a professional executor – they will take responsibility for this and keep you informed at all times, so there is no need at all to be concerned about this duty and the associated risks.

If not, there is step-by-step advice on how to apply for a grant of probate on the Government’s website.

In addition to filling out a probate application form and an inheritance tax form, you will need an official copy of the death certificate, the original Will and 3 copies, plus any codicils (that is additions or amendments to it). It will cost you £215 to apply for the grant of probate (unless the estate is worth less than £5000 – in which case there is no fee).

You will need extra copies of the grant to send to everyone that needs proof of your right to access your loved one’s information, e.g., banks, building societies, retirement fund providers, mortgage providers and other financial organisations.


Identifying, gathering in and valuing all assets 

Again, if your loved one has also named a professional executor in their Will, they will take care of this. If there is not a professional executor, once you have the grant of probate, you need to contact all the financial organisations with which your loved ones had both debts and investments. You need to get an ‘open market value’ of all assets – investments, properties, vehicles, jewellery, artwork, everything they owned or owed – valued in order to complete and submit an inheritance tax form. 

Getting an ‘open market value’ means finding out the price each asset might reasonably be expected to make if sold on the open market at the time of your loved one’s death. Some valuations will be obvious – bank accounts, shares, etc. Others (property, land, antiques, jewellery, art, vehicles) will need to be formally valued. If property or land is unusual in some way – especially if it has the potential for development – a surveyor’s report is advisable. However, you value land or propriety – be sure you can justify your valuation as HMRC can raise a penalty if it considers your valuation is not correct.

Paying off your loved one’s debts

You will also have to pay off any debts before the estate can be finalised. Any outstanding loans, mortgages, care fees, taxes etc, need to be settled. It is possible you will need to sell your loved one’s property in order to meet these costs. 


Paying IHT

Settlement of the IHT payable on the estate may seem like a straightforward task. The problems arise when you realise that the IHT has to be paid before the Grant of Probate is issued and you cannot gain access to the bank account until you have Probate. You have a Catch 22 situation and often executors find themselves taking out costly loans to pay the IHT in advance of the sale of property or closure of bank accounts. This can be time consuming, confusing and expensive unless you know what you are doing. Using a professional executor who is able to properly assess the estate and determine whether borrowing is necessary can remove stress and worry as well as save money.

If you do not use a professional executor, you will need to value the assets, determine which have tax exemptions, fill in a return (potentially including multiple supplementary forms), assess what tax is due and then access the money to pay that tax.

If you make an error – you – as executor are personally liable to the HMRC for the penalty imposed and, as illustrated on figure 1 below, this could be 100% of the tax due. Any penalties cannot be reclaimed from the estate.

Penalties for failure to pay IHT

There are three main categories of HMRC penalties:

  • Failure to deliver on an account
  • Inaccuracies in returns delivered
  • Late payment of IHT overdue 

When it comes to inaccuracies in returns, you can be penalised for errors categorised as ‘careless’, ‘deliberate but not concealed’ (or ‘deliberate and concealed’.

To ensure that you cannot be penalised make sure you take reasonable care to:

  • Follow HMRC’s written guidance
  • Make enquiries of asset holders
  • Obtain correct valuations
  • Keep accurate records
  • Advise HMRC of any error you become aware of ASAP and unprompted 

Figure 1: Penalties for inaccuracies in IHT Returns

Considering that you will be personally liable to HMRC for any penalty, you would be well advised to instruct professionals to prepare the IHT forms and pay the tax due for you if your loved one has not arranged for a professional executor to work alongside you in their Will.

Safer still, why not make sure they’ve arranged for a professional executor to work alongside you before you agree to accept the responsibility? Even when the legal part is over, you will still be responsible for distributing the estate in accordance with the Will and managing any Trusts that appear within your loved one’s Will. Having had professionals look after probate and IHT will leave you with enough energy and confidence to see the rest through.

At the end of the day, most people want to remove worry and risk from their loved ones. This is why we’ve been appointed as executors for UK estates valued in access of £2.3 billion, so don’t be embarrassed about insisting. Plus, if your loved one chooses us as their professional executor, they get a free legal check (usual price £35), which often flags up fairer and more tax efficient ways of managing their estate now and after they die.

They – and you – are in safe hands.

Still unsure? 

Take a look at our Youtube tutorial on the role of an executor. It’s just over a minute long so not too time consuming. 

Why not download Age UK’s booklet – How to be an executor too. It provides further sage advise from a trusted source. 

And, whilst your mind is on the topic, if you’re at all concerned about dying without a Will (find out what happens when you die without a Will here), why not write a Will online now using our best-selling online Will template?

 


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