What is an executor of a will?

What is an executor of a will?

An executor of a will deals with a person’s financial affairs – their estate – after they die. The executor is usually named in the deceased person’s will.

An estate could consist of:

• Any property the deceased person owned

• Money held in a bank or building society – or cash

• Stocks and shares, including ISAs and other investments

• Pensions

• Personal possessions and heirlooms.

There may also be the proceeds of a life insurance policy – often used to cover funeral costs – to take care of.

If someone dies without leaving a will, the person who deals with their estate is known as the administrator.

What does an executor of a will do?

The role of an executor of a will includes:

• Seeking the grant of probate. Probate is proof that confirms a person is legally entitled and able to act as an executor of will. It’s the first step in administering an estate.

• Finding and supplying all the financial documentation belonging to the deceased person.

• Preparing a list of all property, money and possessions within the estate.

• Sending the death certificate to any organisation(s) holding a person’s assets, such as their former employer.

• Asking for bank balances and freezing any bank accounts that were active at the time of a person’s death.

• Opening a bank account on behalf of the estate.

• Verifying and clearing any debts owed to the estate or any debt owed by it.

• Working out and paying any inheritance tax that might be due.

• Sharing out the estate in accordance with the will.

If the deceased person had a will, the estate will be distributed in line with their wishes. If the person died without leaving a will, it will be shared according to a set of legal instructions called the rules of intestacy.

Dealing with debts

Part of the role of the executor of a will is to contact the deceased’s creditors. To do this, the executor puts a deceased estates notice in The Gazette.

It’s important that any debts are cleared before pay-outs are made to the person’s beneficiaries. If debts arise after the estate has been distributed, the executor might have to use their own money to pay them.

Debts are paid directly from the estate, using the deceased person’s assets to cover the cost. If the assets don’t cover the value of outstanding debts, then typically a creditor won’t be able to recover this from surviving relatives.

Note, however, that where debts were jointly owed – such as joint mortgages or loans – the debt may transfer in full to the remaining person responsible for paying them off.

What order should debts be paid off in?

There’s a strict payment order when it comes to clearing a deceased person’s debts using their estate.

• Secured debts – these must be paid off first, and include mortgages on properties and loans for assets like cars. Creditors will try to recoup their debts by selling these assets. If the asset doesn’t cover the debt, the ‘secured’ debt becomes ‘unsecured’.

• Funeral expenses – these must be paid second and should be proportional to the value of the estate. If the estate doesn’t carry huge value and several thousand pounds are spent on the deceased’s funeral, there may not be enough left to cover the other debts.

• Testamentary expenses – paid third, these debts relate to administrators and any expenses they incur through dealing with someone’s estate: for example, travel expenses and postage. Receipts should be kept for all expenses, otherwise it will be difficult to claim them back.

• Preferential debts – paid before other ‘unsecured’ debts, although typically rare, preferential debts include wages due to be paid to employees of the deceased.

• Unsecured debts – fifth in line for payment, unsecured debts include outstanding utility bills, credit and store card debts, and bank loans.

• Interest on unsecured loans – once any unsecured debts are paid, any interest that’s accrued on unsecured loans can be paid.

• Deferred debts – the final debts to pay are deferred debts, which cover informal loans from friends or family members, for example.

Dealing with taxes

An executor of a will should tell the tax office (HMRC) when the person whose estate they’re responsible for dies. There may be tax to pay or a rebate due. They should also inform any other bodies that were paying the deceased benefits.

GOV.UK has a Tell Us Once service for people who were residents of the UK, Scotland and Wales when they died. Once you’ve registered the death or have the final or interim death certificate from a coroner, Tell Us Once will notify most government organisations – including HMRC – in one go.

A registrar should explain the Tell Us Once service when you register the death – giving you a unique reference number to use online or a phone number if you prefer to call. You need to use the reference number within 28 days.

As well as the unique reference number, you’ll need the following to use the Tell Us Once service:

• The deceased’s surname

• The date of death

• The name, contact and address details of the executor of the will – which may be yours

• The name, address, contact details, date of birth and/or National Insurance number of any living spouse

• If there’s no living spouse, the details of any next of kin

• If the deceased was in a hospital, hospice or nursing home when they died, the name and address of that institution, plus whether they were there for more than 28 days

You might also be asked for other documents, which are detailed on the GOV.UK website.

Probate and letters of administration

If you’ve been named as executor of a will and the deceased’s estate includes a property, you’ll likely need to apply for probate through the government.

If there was no will, no person was named executor or the named executor is unable to take on the duty, someone else – known as an ‘administrator’ – can deal with the estate. They’ll usually need to apply for ‘letters of administration’.

Here’s how each works:

Probate

Generally, where properties are involved in a person’s estate, an executor of a will needs to apply for probate. This might not be necessary where an estate was only made up of cash and personal possessions, or the deceased person owned land or property as a joint tenant with others.

Executors can apply for probate by post or online at GOV.UK once they’ve valued the estate. This means estimating what the estate is worth, which includes:

• Any assets and personal possessions the deceased person owned on the day they died

• Any gifts they made in the seven years before they died - this might include cash or items of value

• The value of any beneficial trusts the deceased was involved with.

Letters of administration

Where there’s an administrator instead of an executor, they’ll most likely require letters of administration to handle the estate. Like probate, this shows legal entitlement to deal with the deceased’s affairs.

You can apply to be an administrator if:

• There’s no named executor and the person who died left their estate to you in a valid will

• You’re the married partner or civil partner of the person who died

• The person who died was your parent or grandparent

• You’re the parent of the person who died

• You’re a sibling, niece, nephew or other relative of the person who died.

Unmarried partners and same-sex partners who haven’t registered a civil partnership can’t act as administrators.

You can only apply for letters of administration by post. You’ll need a PA1P form if the person left a will and a PA1A form if they didn’t. You can download these on the GOV.UK website. If you don’t have internet access, you can call the HMRC Probate and Inheritance Tax Helpline on 0300 123 1072.

You’ll also need to send proof of any assets owned by the person who died, as well as details of any debts owed.

How much is the fee for probate or letters of administration?

The fee for probate or letters of administration will depend on the value of the estate. If it’s less than £5,000, there’s no fee to pay. Where it’s over £5,000, there’s an admin fee of £273.

Who can be the executor of a will?

Anybody aged 18 and over can be an executor of a will. People commonly choose their spouse or civil partner, or their children, to deal with their estate after their death.

You can have joint executors of a will – as many as four can act at a time. But this can complicate things.

You could pick one member of your family and a professional – a solicitor, for example. You can also choose substitute executors in case your original executor dies before (or around the same time as) you.

It’s a good idea to check whether your chosen executor is happy to take on the task. They may not feel comfortable with the responsibility.

What happens when a solicitor is executor of a will?

The process will be the same as if a friend or family member were acting as executor of the will. Choosing an executor who has legal experience and a sharp eye for detail could be a good idea in cases where the estate is complex, very valuable or where the will may be disputed.

Having a solicitor deal with your estate also means friends and family won’t have to take on an executor’s duties while they’re grieving. The downside is that solicitors can be expensive.

A professional will probably charge a ‘reasonable’ fee for their services. This will be paid from the deceased’s estate and there should be a ‘charging clause’ in the will enabling them to recoup their fees.

If you decide to choose a friend or family member as your executor, they can always appoint a professional, like a solicitor or accountant, at a later date.

Can the executor of a will be a beneficiary?

A will executor can be named as a beneficiary. However, they can’t be one of the official witnesses to a will.

What is the executor of a will entitled to?

A will executor who’s a family member or friend isn’t entitled to be paid for their role. But they can claim back any expenses they incur through handling the affairs from the estate. They may also receive a gift for their role, if it’s included in the will.

What makes a good executor of a will?

A good executor is someone you feel you can trust, who is also willing to take on the responsibility that comes with the role. This can be a friend, family member or someone unrelated.

They’ll need to be able to follow all the instructions that you leave in your will – and to find solutions to any problems that may arise.