Executors’ and Administrators’ Duties

Jenny Walsh

Introduction

When someone dies, others need to take on the formal responsibility for dealing with the deceased’s estate. If there was a will, the executor/s will usually be named; but if there was no will, an administrator will need to be appointed by the Probate Court to handle matters.

Collectively, the executors and administrators are often referred to as the personal representatives (the PRs).

What Are Executors and Administrators?

Executors and administrators have the legal responsibility for collecting in and valuing the deceased’s assets, paying off any debts and other expenses, and distributing the net estate to the beneficiaries.

The executors are typically the individuals (usually family or close friends) and/or professional firms appointed by the individual’s will. Osbornes Law, for instance, are often appointed as an executor under the terms of our clients’ wills.

That said, it’s not unusual for a named executor to have died or is unable to take on the responsibility by the time the deceased dies. They may, for example, be elderly and infirm or have moved abroad – in which case an alternative executor may be appointed.

Where there is no valid will, the deceased will have died intestate and administrators must be formally appointed before they can deal substantively with the estate.

• Related reading: What is an Independent Administrator?

What is an Executor of a Will?

The executor is a person (or firm) with legal authority to manage the deceased’s estate. They are responsible for calling in all the assets, dealing with any debts and expenses and ensuring the terms of the will are properly carried out. This means fulfilling the deceased’s wishes in set out in the will and distributing the estate among the beneficiaries.

The executor’s key responsibilities include:

• Locating the will and ensuring it’s the deceased’s latest will
• Calculating the value of assets and liabilities of the estate
• Paying any inheritance tax due
• Applying for the Grant of Probate
• Collecting in the assets
• Paying debts and liabilities, taxes and expenses
• Distributing the estate to beneficiaries
• Drawing up estate accounts

What is an Administrator of an Estate?

An administrator deals with the deceased estate in much the same way as an executor. An administrator is formally appointed following a death where there is no will (or the will is invalid).

An estate administrator is appointed by the Probate Registry with the Grant of Letters of Administration. This is a legal document giving the administrator the legal powers necessary to administer the estate.

However, it’s not just anyone who can apply to be appointed: strict rules set out the order of relatives entitled to act as administrator. For example, the surviving spouse or civil partner has first priority, followed by any children and then parents.

An administrator’s role is similar to that of an executor, except that when a final distribution of the estate is made – the beneficiaries are (in an intestacy) those set out in the statutory rules of intestacy.

Occasionally the deceased’s will does not name an executor – in which case an administrator will need to be appointed. The grant in this case is Letters of Administration with Will annexed, and the estate will then be distributed according to the terms of the will.

Executor vs Administrator: Key Differences

While the roles of executors and administrators are much the same, it’s important to understand the key differences between them.

• An executor derives their legal authority from the will itself – the Grant of Probate confirms that authority. Executors can, therefore, begin to handle the estate from the time of the deceased’s death
• An administrator derives their authority from the Grant of Letters of Administration itself, which means they have no legal power to deal with the estate until the grant is issued. In practice, if there is no will the administration of the estate may be delayed as the administrator will need to wait for the Grant before acting. th

Once administrators have the grant, they enjoy the same legal powers and responsibilities as executors.

What Does an Personal Representative Do before Probate is Granted?

As soon as they can following the death, executors need to locate the will (if there is indeed a will) and ensure it is the latest will – and that it is valid. It also needs to be checked for any requests relating to funeral arrangements.

Details and documents relating to all the deceased’s assets and debts need to be collected; and the PRsneed to check adequate insurance cover is in place for any property, especially if left empty and unoccupied.

PRs also need to estimate the value of the estate and calculate any inheritance tax payable before the application for the grant is made. PRs can ask the bank to pay funeral expenses and IHT directly to the funeral provider or HMRC..

Responsibilities After Probate is Granted

Once you have the Grant of Probate, you can continue to administer the estate, presenting the grant as proof of your authority for calling in the assets. You will also need to open an executor or administrator bank account for holding the money on behalf of the estate and beneficiaries.

Tax returns may need to be completed; and any outstanding inheritance tax and other tax liabilities and other debts of the estate must be paid.

Where there are estate properties, care must be taken – particularly if lying unoccupied. Ahead of any sale of transfer, it is the PRs duty to ensure the property is protected from risks, such as water and fire damage, electrical problems and criminal damage. Adequate insurance must be maintained to cover the risks.

Timeframes and Key Steps

Unless the estate is simple and straightforward, it can take months before the PRs are in a position to make distributions to the beneficiaries. The general rule is that the PRs should start to distribute the estate within 12 months of the death (this is known as the ‘executor’s year’) if this is possible.

There may be delays in certain circumstances beyond a year. For instance, ongoing delays at the Probate Registry directly impact the PRs’ ability to collect in the assets and, therefore, distribute funds to the beneficiaries. Nonetheless, the PRs have duty not to unreasonably delay distributing the estate. Delay must be justifiable in the circumstances.

For example, if there is a probate property – sale contracts cannot be exchanged until the grant is available. But suppose the PRs decide not to market the property until the grant is received, then they delay putting it on the market without good reason despite now having the grant. If the PRs eventually sell the property for less than they would have done had they marketed the property promptly, the beneficiaries could have a potential claim against them.

On the other hand, the PRs may have a perfectly reasonable purpose in delaying distribution, for example if they are taking steps to guard against the risk of unknown beneficiaries coming forward; or where a claim has already been made against the estate.

If a claim under the Inheritance (Provision for Family and Dependents) Act 1975 is threatened, then distribution should not take place until 10 months from the date of the Grant as this is the time limit for issuing and then serving the claim.

Maintaining regular communication with the beneficiaries should reassure them. Keep them updated as to the administration and help manage their expectations. Rushing the estate administration because of pressure from beneficiaries could lead to costly errors and personal liability for losses to the estate.

Can an Executor Be a Beneficiary?

It’s actually very common for an executor also to be an estate beneficiary. Most people, when making their will, typically choose to appoint a loved one as executor, such as their spouse or adult children – the very people they will usually want to inherit from their estate.

But even if they are a beneficiary of the will, every executor has a legal duty to administer the estate with due regard to the interests of all beneficiaries and creditors of the estate.

How Does a PR Pay Beneficiaries?

Distribution to the beneficiaries should not usually be made until all estate debts, inheritance tax and other taxes and expenses are paid. Once they are in a position to distribute funds, payments must be made in accordance with the deceased’s wishes as set out in the will.

In most cases, this will be a simple and straightforward task, but there are cases where great care is called for. For example, there may be insufficient funds to pay everyone named in the will or a specific gift may have lapsed.

This is one of many reasons why estate administration is often complex and taking specialist legal advice is the wisest course of action from the start.

It is wise to collect in payment details and ID for unknown beneficiaries and conduct bankruptcy searches before a payment is made.

Common Challenges in Estate Administration

While problems can arise at any point during the administration of an estate, the majority can be dealt with swiftly. For example, creditors may be anxious to have a long-standing debt settled, but with sensitive handling the PRs can agree a payment plan. Tax issues can usually be resolved with HMRC.

However, disputes can become frustrating and deeply distressing, whether it’s a claim that the individual lacked capacity to make their will or a disagreement over the ownership of an asset. Common disputes include:

• Contested wills – eg claims the will is invalid
• Claims by children of the deceased for financial provision
• Executor disputes
• Disagreements over distribution of the estate
• Disputes with HMRC

Fortunately, most estate disputes can be resolved promptly with strategic advice and support from the probate team at Osbornes Law. Disputes can usually be settled with good communication and negotiation. In many cases, mediation is advisable – helping the parties identify the key issues in dispute, encouraging them to come to a fair agreement to avoid expensive litigation.

Locating Missing Assets

One of the PRs’ fundamental duties is to call in all assets of the deceased, so what if you’re unsure of the extent of their assets? It’s not uncommon for individuals to die and leave a confusing patchwork of records that make it difficult to determine exactly what assets they owned.

These so called ‘hidden assets’ could range from unknown insurance policies or shares to debts owed by a third party. The PRs’ duty is to take sufficient reasonable measures to identify and locate these assets. That could involve searching the deceased’s property and any safes for paperwork, asking relatives and close associates, the unclaimed assets register and employing external agents to carry out investigations.

Employing a third party may not be reasonable and cost-effective if the estate is relatively small but consideration will at least need to be given to that option.

If assets are recovered after the grant has been issued, the PRs will then be required to account to HMRC as further tax may be payable.

Tax and Legal Complexities

Few estates avoid challenging tax or legal issues arising at some point during the administration.

As the trustees of the estate assets, executors and administrators owe a duty to exercise due care in administering the estate. This includes paying all taxes due (those the deceased owed at the date of death and taxes arising during the administration period), complying with legal requirements and dealing with legal issues.

Even the simplest of estates will involve tax considerations; and the larger and more complex estates will necessitate specialist advice from probate specialists experienced in dealing with tax issues on death.

Dealing with the estate of the deceased at a time of grieving can be difficult and distressing. The specialist probate team at Osbornes Law are available the discuss how we can support you. We can also take over the legal work on your behalf at any time during the administration of an estate.

Contact Us for Support

Contact us today for a consultation with our specialist estate administration lawyers who can advise you on what to do next. To book an appointment with an expert contact us by:

• Filling in our online enquiry form; or
• Calling us on 020 7485 8811