InsightsInsight - Wills and Probate - POSTED: January 31 2024
Are there risks in being an executor?
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Being an executor is a risky business. As the executor of a Will or administrator you have personal and unlimited liability. This means that if you make a mistake you could end up footing the bill for any financial or legal claims that occur as result.
There are many complex legal and tax rules associated with administering an estate, which means the scope for lay executors and administrators making mistakes is high. Whilst DIY probate may be cheaper, you need to consider whether it is really worth the personal financial risk.
There are numerous examples of situations where executors and personal representatives have been forced to pay for mistakes from their own pockets, usually because they had already distributed the estate when the error came to light.
- In 2012, the executors of the late Terence Guy were held personally responsible for settling underpaid income tax of the deceased to the tune of approximately £14,500
- Executors have been forced to personally repay pension credit and NHS care funding that was incorrectly paid to the deceased
- Where an executor did not declare a gift made by the deceased, HMRC issued a fine of £10,000 which the executor was made to pay
- The responsibility for settling inheritance tax rests on the executor, in a case where the executor distributed assets to a beneficiary who had promised to pay the tax, but then didn’t, the executor was held personally responsible for paying the inheritance tax
Executors and administrators can protect themselves by employing a professional to administer the estate. Solicitors are highly trained and have experience in the legal and tax rules associated with administering an estate and can advise executors and administrators on the correct procedures to reduce the risk to them. In addition, law firms are regulated by the Solicitors Regulation Authority (SRA) and are obliged to be insured. Therefore any mistakes may be covered by their insurance.
If you are writing your Will, you may also wish to consider whether or not you wish to appoint family and friends as executors and place them in such a risky position. You may wish to appoint professional executors instead such as Brachers Trust Corporation Limited and take away the burden and risk from those closest to you.
This content is correct at time of publication
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