Things you need to know before becoming an executor
No one likes to think about death, but unfortunately it’s a fact of life. People not wanting to talk about death is one of the main reasons why 60% of us risk dying without a will – and without the legal protection of our wishes for our families. It is also very important to think carefully about who to appoint as an executor. This can be a very onerous responsibility.
According to a recent article in the Sunday Times, one in five people who are appointed as an executor do not realise the just how much time and work is involved in dealing with an estate. So, here are three things you might want to know if you are asked to act as an executor of a will.
1) Know the full value
Do you know the full value of the estate upon which you are to act? Do you understand what the will says; is there a Trust that needs to be dealt with? Are you aware of the family circumstances, are there any issues/conflicts? According to the Times, 42% of executors did not know – and were uncertain how to properly proceed.
Consideration should also be given to the family circumstances as a whole. Things like the family home may need to be sold or pass fall to more than one beneficiary, if there is more than one sibling, for example. With regards to personal possessions of the deceased, perhaps valuable or family heirlooms, these need to be properly valued – would you know who these treasures should be given to? This can very often lead to disputes. A well drafted up to date will can specify all these things. Not only does it ensure that property, finances or other assets are distributed according to the deceased’s wishes, it can also save a lot of heartache for those left behind.
2) Any digital footprint
In this day and age, it is usual for many people to have social media profiles, online banking, portals for car insurance and so on. A digital legacy is something many people do not consider how their executor will manage these as part of an estate. It is therefore increasingly important to give this consideration. Recent cases even include allowing access to an Apple device so that a widow could see digital images stored of her daughter and when she needed to restore passwords.
Sometimes, it is even worth considering a separate digital executor who can manage these assets away from the rest of any physical assets. It is always best to seek legal advice before doing so. The area of digital assets is a developing area can be a legal minefield, using another person’s password without lawful authority to access digital files could be seen as a criminal offence.
3) Inheritance Tax
The Executor has the responsibility to complete the documentation required by HMRC and pay any inheritance tax due within 6 months of the date of death and arrange to pay the tax. There may be claims to be made in relation to the transferable nil rate band and nil rate residence relief. There are strict time limits in this respect. Income tax returns may be required during the administration, there may also be Capital Gains Tax payable depending on the circumstances. If an executor gets this wrong and distributes the estate before paying all tax due he or she is personally liable.
Remember, the key to ensuring an executor does the right job is by making sure all documents are accurate, up to date and stored in a safe place. There could be the will itself, property deeds, any passwords or logins or life insurance policies. Speak to your family, avoid the heartache.
If you would like more information about writing or updating a will, contact the Private Client team at Downs Solicitors to see how we can help.