The administration of an estate can often be a complex process. One of the best ways to ensure that it is handled efficiently, impartially, and in compliance with legal principles is to appoint professional executors and trustees.
What are executors and trustees?
Executors are individuals or entities named in a will whose role is to administer the deceased’s estate. This typically includes organising the payment of debts, selling assets, and distributing the net estate to the beneficiaries.
Trustees are responsible for managing any trusts created by the will, ensuring that assets are administered for the benefit of the beneficiaries according to the settlor’s wishes.
What are the benefits of appointing professional executors and trustees?
Expertise
Effective estate administration requires a good understanding of probate law, taxation, and financial management. Professional executors and trustees possess the necessary expertise to navigate the complexities of taxation associated with an estate.
Impartiality
Family inheritance disputes often arise when personal executors or trustees are perceived as favouring certain beneficiaries. Professionals act impartially and make decisions based on legal principles rather than emotional influences. Their independence helps mitigate conflicts, ensuring fair administration.
Efficiency
The probate process can be time-consuming, requiring substantial paperwork and administrative diligence. Professional executors streamline the process by efficiently handling legal formalities, asset valuations, and tax filings, reducing delays in estate distribution.
Greater protection
The Solicitors Regulatory Authority insures and regulates professional executors, providing additional protection against potential errors and mismanagement.
Long term management
For estates involving long-term trusts, professional trustees ensure continuity in administration. Unlike individual trustees, who may become incapacitated or pass away, professional entities provide ongoing trust management without disruption.
Are there specific instances where a professional executor would be preferable?
Appointing a professional executor or trustee is particularly advisable in the following situations:
- Complex estates: if you have a particularly large or varied estate in terms of asset type, for example, if you are a business owner or have various investments, it may be preferable to have a professional appointed.
- Existing familial frictions: An element of friction may already exist in your family. Appointing professional executors keeps the estate administration impartial and minimises the risk of mismanagement due to damaged familial relationships.
- Trusts: if you intend to put trusts within your will, it would be helpful to have professionals in place to ensure longevity.
- Lack of alternatives: If no close family member is willing or able to take on the responsibility, professionals ensure the estate is managed properly.
While appointing a family member or friend as an executor or trustee may seem cost-effective, the benefits of professional administration often outweigh the potential risks involved with individual appointments. Professionals bring legal expertise, efficiency, impartiality, and risk mitigation, ensuring that the estate is handled in the best interests of all beneficiaries.
What are the legal responsibilities of executors and trustees?
Executors have wide-ranging responsibilities and duties regarding the estate. Broadly, the role includes tasks such as closing bank accounts, selling property, realising investments, paying debts and taxes, and distributing the estate to the beneficiaries.
The role of a trustee will depend upon the express terms of any trust established by the will, but the trustees will need to act in the best interests of the beneficiaries in accordance with the parameters of the trust.
How do you choose the right executors and trustees for your estate?
It is important that you choose an executor who you trust to carry out the role diligently. If you have a relatively modest estate, you may wish to choose a family member whom you trust and is capable of carrying out the role. If your estate is more complex and of a higher value, it would be beneficial to appoint a reputable professional to take on the role
What are the pros and cons of using professional executor’s vs family members?
Pros:
- It is likely to be cheaper to have a family member appointed as individuals cannot charge for their time in administering the estate.
- There may be comfort to you emotionally knowing that a trusted family member is looking after your estate in the event of your passing.
Cons:
- Family members are less likely to possess all of the competencies required to administer an estate.
- Family members are less likely to act impartially as executors, particularly if they are also beneficiaries.
- If the estate is not administered properly, it would likely be more costly to your estate in terms of legal fees, penalties, etc, than if a professional was appointed from the outset.
What are the costs of appointing professional executors?
Professionals are likely to charge hourly rates when administering an estate, so the costs would vary depending on those hourly rates. In simple estates, you might expect the estate to be concluded for under £5,000 plus VAT. In more complex estates, or if a contentious probate dispute arises in the estate, the fees charged by professional executors could be considerably higher.
Can you appoint both professional and non-professional executors?
Yes. This can be useful where you are trying to minimise legal costs as often the individual can carry out tasks and reduce the amount of time that the professional is required to incur to progress the estate.
What is the role of a professional executor in complex estates?
The role of the executor is the same regardless of the complexity of the estate, but using a professional executor is likely to minimise any difficulties or mistakes that could arise in more complex estates. The professional will have the required expertise to navigate the administration cost-effectively.
What is the process of appointing a professional?
If you decide to have a professional appointed in your will, they will assume power when you pass away and take steps independently to get the grant of probate and administer your estate.
If you decided to appoint an individual and they could not diligently carry out the role, then it is likely that an application to court would be required under section 50 of the Administration of Justice Act 1985 to remove the executor and have a professional appointed in their place. This can attract significant costs, hence the benefit of having professionals appointed from the outset.
Can I change my executor after drafting my will?
Yes, you can change your executors by executing a codicil to your will. Codicils bring into effect small amendments to your will and avoid needing to redo your will entirely. Codicils have the same technical requirements as a will, so you should engage a solicitor to ensure that your codicil is created properly.
What happens if a professional executor declines their role?
Any executor can decline the role. They can execute a form of renunciation, and in doing so, they are no longer obliged to take any steps in the estate. Choosing several reserve executors in your will is important to minimise the risk to your estate.
Why does impartiality matter in estate administration?
Impartiality is crucial to an effective estate administration because executors owe duties to the beneficiaries and ought not favour any one beneficiary’s interests over another. If they do, there is an increased risk that disputes will arise, which would increase costs to parties and delay the administration of the estate.
