What is an executor?
An executor is an individual you appoint through your will to carry out your wishes. A person acting as executor will become legally responsible for administering your estate: collecting in assets, arranging for the sale or transfer of property, reporting and settling various taxes, paying debts and distributing funds to beneficiaries.
Whilst any number of executors can be appointed, probate can only be granted to a maximum of four. Anyone aged 18 or overcan act as executor. Contrary to popular belief, there is no prohibition on a beneficiary being appointed as an executor.
In making your choice, it is advisable to take into account an individual’s availability, suitability, and willingness to act. Also consider any possible disputes that may arise along with the size, nature and complexity of burden placed on the executors.
The administration process can be time consuming and complicated. Ultimately, executors carry personal liability for their dealings with the estate.
What is a professional executor and what are the advantages?
Options for professional executors include an individual solicitor, a specialist legal firm or a trust corporation.
Often, professional executors are appointed to alleviate the burden on loved ones and allow them time to grieve. Dealing with the legal aspects and formalities involved with an estate at an emotionally fraught time can be extremely tough.
Appointing a professional executor can also provide peace of mind and confidence that a suitably qualified person with the relevant technical expertise will handle your affairs.
More protective will structures are increasingly popular for various reasons. Wills may include ongoing trusts to provide for minors or vulnerable beneficiaries. As more complex family structures have become commonplace, will trusts offer a solution to provide for second spouses or partners whilst ringfencing inheritance for children.
We are also seeing an increased awareness to plan around the risk of future care fees, remarriages and divorces. Where trusts are involved, a professional executor in the form of a trust corporation can offer longevity and continuity.
More complex estates might involve overseas assets, business interests or agricultural assets, all of which need to be carefully dealt with, and can involve claims for various inheritance tax reliefs and allowances.
A professional executor will be accustomed to ensuring that those aspects are handled in a tax-efficient manner, maximising the value of your estate for your beneficiaries.
Whether an estate is complex or not, unfortunately inheritance disputes are certainly on the rise. Where there is potential for conflict after death, a professional executor can offer independence and impartiality. They can make difficult decisions objectively and are removed from the emotional complications.
Are there any disadvantages?
Unlike professional executors, a lay executor cannot charge for their time in dealing with the estate, and they are limited to recovering out of pocket expenses only. Appointment of professional executors will involve additional costs for the estate.
That said, where lay executors are likely to involve a professional in the day-to-day administration in any event, then the overall increase in costs will be less significant, since the professional executor’s time will be much more limited.
Whilst cost is an important consideration, this does need to be balanced against the advantages of having a professional involved.