5 Essential Matters for a New Executor to Consider

An Executor is a person named in a Will of a deceased person with the lawful authority to administer the deceased's estate. Being asked to be an Executor by a friend or relative can feel gratifying and an honour even. However, in taking on the role, it is important to understand what it means, the issues that might be faced, and what to do about them. For example, feuds over inheritance are on the rise because of the increased value of estates and the complexities of modern families.  An Executor, who may also be a beneficiary, can be drawn into family dramas and conflicts of interest. Here are five essential things for a new Executor to consider.

1. Familiarise Yourself with The Duties of An Executor

Being an Executor is not something that should be taken lightly or without a thorough understanding of the risks involved. Beneficiaries can, and sometimes do, sue the Executor for errors made or any undue delay.

An Executor can take professional advice to assist with the administration of an estate. In most cases, a personally appointed Executor cannot charge for their efforts unless the Court orders it or the Will expressly authorises it. This restriction does not apply to professional appointees.

2. Ensure Identification of All the Assets and Liabilities, Including Taxes

The Executor is responsible for locating, securing and protecting the assets of the estate. For example, enquiries should be made at banks where the deceased had accounts. Before probate is granted (the legal process that proves the validity of a Will), the Executor is, in effect, acting as a custodian of the estate assets. The Executor must disclose a list of all assets and liabilities as part of the probate application.

All assets should be safeguarded pending sale or distribution. Insurance policies should be checked and renewed if necessary.

Executors may find themselves personally liable by beneficiaries for any loss in value or damage caused by negligent behaviour. This might typically occur if they distribute assets to beneficiaries before establishing and making provision for the payments of all debts owed by the estate. This can be particularly important where taxes are involved.

Executors need to file tax returns in respect of the estate, including any returns before the death of the deceased if they had not previously been filed. Finalising the position with the tax authorities can take some time, so care needs to be taken over distributions before the final estate liabilities are bottomed out.

3. Ensure Proper Records Are Kept

If the responsibility of administering an estate has been accepted, an Executor will need to provide accounting records of the estate to the Court and other interested parties. These records provide details of how the finances of the estate were handled, what money was spent and for what purpose.

The Court will require Executors to provide statements regularly for the benefit of the beneficiaries. The beneficiaries may also be in regular contact for updates and requests for documents. Communication is important and striking the right balance between ensuring they do not feel left in the dark, but at the same time realising that the Executor is not duty-bound to pander to every request.

Proper records can help protect in the case of a dispute. One particular dispute that can arise is the sale of the family home, especially if someone is living in it, or if one of the beneficiaries wants to buy the others out.

If the beneficiaries feel the estate is not being administered properly, they may bring a claim against the Executor.  Examples could include the feeling that a property was sold at an "undervalue", or there was a failure to dispose of wasting assets before they lost value. This can amount to mismanagement of the estate.

 To avoid becoming personally liable, an Executor must be well organised from the start.

4. Take the Necessary Time Before Distributing the Estate’s Funds

An easy and relatively common error made by Executors is to be pressurised into distributing funds out of the estate too soon. Distribution should not take place until all potential claims against the estate are extinguished. Otherwise, the Executor could be held personally liable for any funds prematurely distributed.

Contested Wills appear to be becoming more common. In many cases, this is because of the higher value of estates, often a function of increased property values, and the prevalence of more complicated family structures.

If someone puts the Executor on notice of a claim on the estate, the administration process should be put on hold. It is important to take a neutral position and preserve the estate as the best one can.

5. Consider Appointing a Specialist Lawyer

Unless dictated in the Will, the Executor can decide who to retain if they wish to do so. A lawyer who specialises in these matters will be more able to deal with matters speedily while providing the necessary protection for the Executor.

The Executor is performing a legal function which is not without risk. The appointed lawyer will advise the Executor on matters that require their immediate attention. This can include the applicability of limitation periods, notifying beneficiaries, the disposition of the assets and the need to provide for dependants.

When a lawyer is employed, access to the lawyer's Trust Account may be available as part of the process. This could avoid the costs and inconvenience involved in having to open new bank accounts.

Contact our Wills and Estate Lawyers Sydney, NSW

Our specialist lawyers can advise on all aspects relating to Wills and Estates. If you have been appointed as an executor and would like our assistance contact Szabo & Associates Solicitors. Please call us on (02) 9158 6333 or fill in our online contact form.