Blog

by Hannah Clarkson

When an individual passes away, their assets, liabilities, and other financial affairs must be settled according to the law and the wishes expressed in their will, if one exists. This complex process, known as estate administration, is overseen by an executor or administrator. These roles come with significant responsibilities, each carrying a unique set of duties to ensure the smooth distribution of the deceased’s estate.

1. Understanding the Roles: Executor vs. Administrator

An executor is a person named in a will to manage the deceased’s estate. If no will exists, or the named executor is unable or unwilling to serve, then the court appoints an administrator under rule 22 of the Non-Contentious Probate Rules 1987. This is the closest living relative – normally the husband, wife or civil partner (including if you were separated) followed by any children 18 or over (including legally adopted children but not step-children). You cannot apply if you’re the partner of the person but were not their husband, wife or civil partner.

While both roles involve similar duties, the key difference is how they are appointed—executors are chosen by the deceased, while administrators are appointed by the court.

You might also hear executors or administrators referred to as personal representatives. This is a general term for the person responsible for dealing with the estate.

For best practice we complete a will search to see if a will or later will exists to avoid incorrect distribution and a family tree verification where there is no will. Personal representatives have the legal authority and responsibility to distribute the estate correctly. They will be held liable should a later will come to light after the estate has been distributed.

2. Fiduciary Duty

The executor or administrator has a fiduciary duty to act in the best interests of the estate and its beneficiaries. This duty requires them to be honest, fair, and diligent in managing the estate. They must avoid conflicts of interest and cannot benefit personally from their position, other than receiving any compensation specified for their services.

The executor/administrator is responsible for administering the estate in accordance with the terms of the will/rules of intestacy and the law.

They should ensure that they understand the terms of the will, who benefits and how, this can be sometimes difficult if the will is written in old language and includes a lot of legal jargon, or includes complicate will trust. If the Will is not correctly interpreted it can have devastating effects and have large tax consequences and claims from disgruntled beneficiaries. I have seen this many of time for example where a married couple have included a Nil Rate Band Discretionary Trust and this has been administered wrongly, having compounding consequences when the second spouse comes to die.

They should also understand the powers permitted by the will so that they know what they can and cannot do. There are usually standard powers to help smooth the administration process.

If the deceased died without a will then who benefits from their estate is governed by the rules of intestacy contained in section 46 of the Administration of Estate Act 1952. Only married or civil partners and some other close relatives can inherit under the rules of intestacy.

3. Obtaining Probate or Letters of Administration

One of the first responsibilities is to obtain legal authority to manage the estate. For an executor, this involves applying for probate, a legal document that confirms the executor’s authority to distribute the estate according to the will. If there is no will, the administrator applies for letters of administration, which serves a similar purpose. You will be unable to sell/transfer property and assets without this legal document.

4. Locating and Securing Assets

The executor or administrator must locate all of the deceased’s assets. This includes bank accounts, property, investments, personal belongings, and digital assets. Once located, these assets must be secured to prevent loss or damage. For example, they might need to change locks on property, notify financial institutions of the death, or freeze bank accounts.

For best practice we complete an assets search which includes a creditor and liability search for robust due diligence.

5. Valuing the Estate

After securing the assets, the executor or administrator must determine their value. This might include vehicles, or valuable personal items, and reviewing financial statements to ascertain the value of bank accounts, stocks, and other investments. The valuation is crucial for both the distribution of the estate and the calculation of any taxes owed.

6. Paying Debts and Taxes

Any Inheritance Tax due is payable within 6 months of the date of death and in fact the personal representatives are personally liable for the Inheritance Tax. This must be paid before probate will be issued. This can be difficult to arrange if you have limited access to the assets.

Before the estate can be distributed to beneficiaries, all debts and taxes must be paid. The executor or administrator is responsible for identifying and settling any outstanding debts, including funeral expenses, credit card balances, mortgages, and other loans. They must also file the deceased’s final income tax return, as well as any estate taxes due. In some cases, this might require selling assets to raise the necessary funds.

7. Distributing the Estate

Once debts and taxes have been paid, the executor or administrator can distribute the remaining assets to the beneficiaries. If a will exists, the assets are distributed according to its instructions. If there is no will, the estate is distributed according to the laws of intestacy, which dictate how assets are shared among surviving relatives. This process requires careful attention to detail, especially if there are multiple beneficiaries or complex assets.

8. Liability/Handling Disputes

A personal representative can be held personally financially liable for any loss resulting from a breach of their duty, even if the mistake was made in good faith, such as:

• failure to pay the debts and liabilities of the deceased
• failure to pay all Inheritance Tax, Income Tax & Capital Gains Tax due
• failure to distribute funds to an individual who is successful in their claim against the estate
• failure to identify, and correctly distribute funds to the beneficiaries, including any missing beneficiaries or missing assets

Executors and administrators may face disputes among beneficiaries or other parties interested in the estate. These disputes could involve the interpretation of the will, the valuation of assets, or the fairness of the distribution. It is the executor or administrator’s responsibility to address these disputes, potentially involving mediation or legal counsel if necessary.

Acting as the executor of a will can be a very daunting prospect because of the amount of legal, tax and administrative responsibilities. An executor’s responsibilities last for the duration of the administration of the estate and can also carry on afterwards if there are trusts.

Disappointed family members or dependants have up to 6 months to make a claim after the grant of representation has been issued, while the deceased’s creditors can potentially make a claim against the personal representative for up to 12 years after the death.

9. Record Keeping and Reporting

Throughout the process, the executor or administrator must keep detailed records of all transactions related to the estate. This includes documenting the assets collected, debts paid, and distributions made. They may also be required to submit an accounting of the estate to the court and beneficiaries, providing transparency and accountability.

10. Closing the Estate

After all assets have been distributed and final reports have been filed, the executor or administrator must formally close the estate. This involves completing a final accounting and distributing any remaining assets.

Conclusion

The role of an executor or administrator is both an honour and a significant responsibility. It requires a meticulous approach to managing the deceased’s estate, ensuring all legal requirements are met, and acting in the best interests of the beneficiaries. Given the complexity of the role, it is often advisable for executors or administrators to seek professional advice to navigate the legal, financial, and emotional challenges involved in estate administration.

This is general advice only and BMA Law will note be accountable for any reliance on the same. Should you require any further assistance or specific advice then please do not hesitate to contact our Wills & Probate Solicitor, Miss Hannah Clarkson.