How to responsibly execute a will
Becoming the executor of a friend or relative’s will is both an honour and a responsibility, says James Hender, Partner at Saffery Champness
If you have ever visited Edinburgh, you will probably have seen the statue of the dog, Greyfriars Bobby, who stood guard at his master’s graveside for 14 years. He’s a symbol of devotion to loved ones who have passed away.
While the role of an executor does not incur quite the same commitment, it can be a daunting idea. By accepting the role, you are agreeing to take on the responsibility for the estate, including the legal and financial obligations, as well as carrying out the deceased’s wishes as specified in their will.
Grant of probate
Once you are appointed, you’ll need to make an application for probate, which registers the will with the court and gives the executors the legal right to administer the estate. It must be granted before the bank accounts can be accessed and any assets sold or distributed. Before the application can be made, the following will need to be done:
- An inheritance tax (IHT) return must be completed and any IHT paid to HM Revenue & Customs (HMRC).
- The assets and liabilities of the deceased, as well as their values, will need to be identified, including property, money, possessions and debts.
- If an estate is worth more than £325,000, you must consider whether IHT is payable. The rate of IHT is 40%, but reliefs and exemptions are available.
- You will need to establish whether any gifts were made by the deceased in the seven years prior to their death as these may affect IHT.
Administration of the estate
Once probate has been granted, you will have access to the deceased’s bank accounts and assets. You must then pay any outstanding debts of the estate and other expenses, such as probate fees and funeral costs. In some cases, it may be necessary to sell assets to do this.
The sale of assets by the executors is a disposal for capital gains tax (CGT) purposes. If any gains arise on the sale of assets or any income is received after the date of death a tax return may be required for each year that the estate is in administration.
Distribution of the estate
The administration period of an estate ends when all of the assets and liabilities have been established, at which point the final distributions can be made to the beneficiaries.
Accounts should be prepared for the administration period, which will enable you to calculate the residuary estate and the distributions due. If the estate is insolvent (if the deceased owed more than the assets held), there is a strict order in which the liabilities should be paid. If this is the case, some creditors may not be paid in full and the beneficiaries may not receive anything.
Being an executor can be daunting, but with the right professional guidance it can be easier than you may fear.
This article is issued by Cazenove Capital which is part of the Schroder Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. All data contained within this document is sourced from Cazenove Capital unless otherwise stated.