I am the Executor of a deceased person’s estate; What is my role/duties?
We have prepared the following FAQ Guide for Executors to cover some of the questions we are often asked, and that we consider the most important aspects to an Executor when undertaking such an important role.
This Guide aims to help you understand the basics and offer some practical advice on estate administration and how instructing Innes Johnston can help you with this (often) daunting task.
What is an estate?
In a nutshell, a deceased person’s estate includes every asset they owned as at the date of their death. Common examples of these assets include: –
- Money – this can be in cash, money held in a bank or building society accounts, either solely or jointly, and proceeds from a life insurance policy;
- Money due to the person who has passed away;
- Funds held in shares and investments;
- The deceased person’s home or any additional properties they owned such as rental properties and holiday homes;
- Any personal belongings such as their car/vehicle, jewellery, and antique collections.
- This list is not exhaustive but provides an idea of what assets you will likely be dealing with when administering an estate.
An estate does not solely comprise its assets, it also includes any debt or liability that the person who has died owes to another person or company. A common misconception is that debts die with you, which is sadly not the case. A person’s debts must be settled from their estate before any assets are inherited by the beneficiaries.
What is my role as Executor of the estate?
Upon a person’s death, the Executor will have been appointed by way of a Will or can be appointed by the Sheriff Court where there is no Will. They are ultimately required to ensure the estate is administered/wound up properly and distributed in terms of the Will, or the Scots Law of Intestacy if there is no Will.
An Executor has numerous legal duties and responsibilities that come with the role, including: –
- Registration of the person’s death and organising their funeral;
- Establishing the value of the assets in the estate through communication with relevant banks/financial institutions;
- Paying any inheritance tax due on the estate;
- Applying for Grant of Confirmation;
- Ingathering the estate funds;
- Ensuring that any debts or liabilities are repaid in full;
- Paying any estate administration tax, including (but not limited to) income tax received on untaxed interest, dividends, rental income, and capital gains tax on any profits made during the administration period (date of death to final distribution);
- Dealing with Legal Rights claims, where applicable;
- Distributing the estate to the beneficiaries;
- Providing a comprehensive estate accounting to the beneficiaries.
What information am I obliged to provide the beneficiaries in the estate throughout the administration?
The Executor is obliged to inform any beneficiaries of the estate that they are entitled to a share in the estate, be it a one-off legacy payment/gift or a residual share. During the administration of the estate, the Executor has a duty to ensure the residual beneficiaries are kept reasonably informed in respect of the estate.
While the Executor is the only person who is entitled to see the Will ahead of Confirmation being granted by the Sheriff Court, it can be good practice to provide the residuary beneficiaries with a copy of the Will for their information. At the conclusion of the administration period, the residual beneficiaries will also be entitled to a copy of the estate accounting prior to, or at the point of, receiving their inheritance.
Do I have any personal liability as an Executor?
Often individuals are unaware of the personal liability that exists when undertaking the role of an Executor. It is essential that Executors take steps to ensure they are winding up an estate correctly. This is extremely important as an Executor can become personally liable up to the value of the estate assets. This can occur in circumstances where the Executor distributes the estate funds before they have taken adequate steps to account for and pay off all the debts and liabilities in the estate.
There is therefore a well-established principle in Scotland that the Executors of an estate should wait until 6 months after the date of death to begin distributing the estate funds to the beneficiaries. This ‘6-month rule’ allows unknown creditors to come forward to intimate a claim for payment of outstanding debt. Distribution within this 6-month period will render the Executor personally liable for these debts regardless of whether they have personally received only some or even none of the estate proceeds. The Executor will not be personally liable for any debts intimated after this 6-month period has lapsed.
Please note, however, that the position regarding Legal Rights claims in an estate is wholly different and this should be borne in mind. Seeking advice where Legal Rights are involved is crucial to ensure your understanding and calculation of these is correct – See our previous article on legal rights for further information.
How can instructing Innes Johnston Solicitors to act on my behalf assist me in my role as an Executor?
There can be many benefits to instructing the help of a Solicitor to aid you in your role as an Executor. One of the main reasons relates to the fact that an Executor can be held legally and financially responsible should any mistakes occur when winding up the estate, as discussed above. Instructing a Solicitor can, therefore, provide an Executor with peace of mind that each step taken in winding up an estate is being managed correctly.
Solicitors can also be an invaluable source of information on aspects of estate administration that you may not have considered.
A Solicitor can advise and ensure that you are utilising any potential tax reliefs and allowances available to an estate. For example, your Solicitor will be able to advise on and use any unused Inheritance Tax Nil Rate Band and/or Residence Nil Rate Band, where appropriate. You may also be advised on the use of instruments such as a Deed of Variation or Minute of Appropriation to maximise the estate’s tax relief.
Your Solicitor will ensure you discharge your legal responsibilities as an Executor lawfully and, as discussed above, will help you with your duty to ensure all estate liabilities and Legal Rights claims are met prior to final distribution.
Most importantly, seeking assistance from a Solicitor will provide you with much-needed support, professionalism, expertise, and impartiality.
Author | Debbie Fisher