Being named an executor is both an honour and a responsibility. Executors are tasked with managing the estate of someone who has passed away, ensuring that debts are settled, and assets are distributed according to the Will. While the role is important, it’s easy to make mistakes that can lead to delays, disputes, or even personal liability. Here are ten common mistakes executors make and how to avoid them.
Executor Mistake# 1. Failing to Understand the Role
Many executors underestimate the complexity of the role and begin acting without fully understanding their legal responsibilities. As an executor, you’re required to:
Administer the estate according to the law and/or the terms of the Will.
Act in the best interest of all of the beneficiaries.
Settle debts, taxes, and other liabilities before distributing assets.
How to Avoid This Mistake
Before taking any actions, educate yourself on your duties as an executor. Seek professional advice from specialist probate practitioners to ensure you’re prepared for the task.
Executor Mistake# 2. Distributing Assets Too Early
It’s tempting to distribute assets quickly to beneficiaries, especially if they’re eager to receive their inheritance and exert undue pressure. However, doing so before all debts and taxes are settled can leave you personally liable if there are insufficient funds left in the estate to cover these obligations.
How to Avoid This Mistake
Wait until you’ve obtained the Grant of Probate (or Letters of Administration if there’s no Will), identified all liabilities, and ensured there are enough assets to settle debts and taxes. Only distribute what remains after all obligations are cleared. It is advisable to wait for at least 6 months from the date the grant is received before distributing anything.
Executor Mistake# 3. Poor Record-Keeping
Executors must keep detailed records of all financial transactions related to the estate, including receipts, payments, and distributions. Failing to do so can lead to disputes with beneficiaries or inquiries from HMRC. It is also an obligation of the executor to provide Estate Accounts to the Court and Beneficiaries as and when required.
How to Avoid This Mistake
Create a thorough system for documenting every financial action you take on behalf of the estate to the pence. Use spreadsheets or software to track income, expenses, and distributions. Share periodic updates with beneficiaries to maintain transparency.
Executor Mistake# 4. Mismanaging Tax Obligations
Handling inheritance tax (IHT), income tax, and capital gains tax can be daunting. Miscalculations or missed deadlines can result in penalties or increased liabilities for the estate.
How to Avoid This Mistake
Consult a tax professional to ensure you’re aware of all tax obligations and deadlines. Take advantage of available exemptions, such as the nil-rate band and residence nil-rate band, to minimise the estate’s tax burden.
Executor Mistake# 5. Overlooking Digital Assets
In today’s digital world, many people hold valuable online accounts, including cryptocurrency, cloud storage, or subscription services. Executors often forget to account for these digital assets, leading to lost value or complications for beneficiaries.
How to Avoid This Mistake
Identify and manage all digital assets by:
Securing access credentials.
Cancelling unnecessary subscriptions.
Ensuring valuable digital assets are distributed according to the Will. Seek guidance if you’re unsure how to handle these assets.
Executor Mistake# 6. Failing to Preserve or Insure Assets
An executor’s responsibility includes safeguarding the deceased’s assets until they are distributed. Neglecting to secure or insure valuable items, such as property, jewellery, or artwork, can lead to loss or damage, potentially reducing the value of the estate and could lead to personal liability for the executors.
How to Avoid This Mistake
Ensure all assets are properly secured as soon as possible. For properties, maintain appropriate insurance, and if necessary, update the policy to reflect that the property is now part of an estate. For valuables, consider professional storage solutions or appraisals to protect them while awaiting distribution.
Executor Mistake# 7. Failing to Identify Beneficiaries Properly
Executors are responsible for ensuring that all beneficiaries are identified and accounted for. Failing to verify details such as addresses, bankruptcy, insolvency, or capacity issues can lead to delays or legal challenges or even paying inheritance to the wrong person!
How to Avoid This Mistake
Verify the identity and circumstances of all beneficiaries before making distributions. Check for issues like bankruptcy or lack of capacity, which may require special handling, and seek professional advice to address these complexities.
Executor Mistake# 8. Misusing the Executor Role
The executor role is fiduciary in nature, meaning you must act solely in the best interests of the estate and its beneficiaries. Trying to gain personal benefits, such as prioritising your payments or using estate assets improperly, can lead to legal consequences.
How to Avoid This Mistake
Always act with transparency and integrity. Keep detailed records of your actions and consult professionals to ensure you meet your fiduciary obligations without any conflicts of interest.
Executor Mistake# 9. Starting the Process and Wanting to Renounce
Once you begin administering an estate, you cannot renounce your role without court approval. Intermeddling by taking actions such as paying bills or accessing accounts can bind you legally as the executor. Once you start, you can't just stop and so think carefully if it is an obligation you are willing and able to take on, especially because this obligation could run for many months and even years where Trusts might be involved.
How to Avoid This Mistake
Understand your responsibilities fully before starting the process. If you feel overwhelmed, seek professional guidance or consider appointing a solicitor or trust corporation to act on your behalf.
Executor Mistake#10. Failing to Observe Statutory Laws and Regulations
Estate administration is governed by complex laws and regulations. Executors who are unaware of their legal obligations risk breaching statutory duties, which can result in personal liability.
How to Avoid This Mistake
Recognise the limits of your knowledge and seek expert advice. Partnering with a probate specialist can ensure compliance with legal requirements and prevent costly mistakes.
How Toucan Law Can Help
At Toucan Law, we specialise in guiding executors through the complexities of estate administration. From understanding your responsibilities to managing tax obligations, our expert team is here to provide clear, compassionate support every step of the way. We can also help administrators who are acting where there is no Will.
Don’t navigate this challenging role alone. Contact Toucan Law today to ensure your duties are handled correctly, efficiently, and with the least amount of stress and personal liability.
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