Executors Should Avoid These Actions
Executors have a crucial role when it comes to dealing with the management of an estate and the Will of a deceased individual. There are a number of traps that they can fall into. As they are personally liable for any losses caused to an estate through their actions they must take particular care with their actions and seek professional assistance where required.
Withdrawing Funds Early
They should avoid taking funds from the deceased’s bank account and they should also inform the bank as soon as the individual has passed away. The bank accounts that form part of the estate will be passed to the executor or they will be frozen until a grant of probate is obtained. There is only one exception to the rule and that is to use the money to cover the cost of the funeral or inheritance tax, however, an invoice will be required from the funeral director and the payment will be made to them, or HMRC, directly.
A Lasting Power of Attorney Should No Longer Act
Executors should not allow attorneys or other representatives to continue to act on behalf of the deceased. Once the individual passes away, the representative should stop acting. As a result, the original LPA document, as well as a copy of the death certificate, should be returned to the Office of the Public Guardian to advise them of the death of the donor.
Funds Should Be Kept Separate
It is important that executors keep their own funds separate from that of the deceased so they should be kept safe in a separate bank account. The executor might be required to draw up a set of accounts that demonstrate what the estate consisted of and what was paid out for the beneficiaries so it is important to keep accurate records of every payment and transaction.
Executors Should Avoid Distributing the Estate Until the Right Time
This should not be done until all creditors have been identified and paid. If the estate is distributed before a creditor makes a claim this becomes the liability of the executor. They then have to ask the beneficiaries for some of the money to be repaid and of course, they can refuse to do this leaving the executor themselves with the bill to pay.
Executors Should Not Give in To Creditor’s Demands
Creditors are going to want what they are owed and with this will come letters and demands. However, all creditors should be informed of the passing and that there is a legal process in place that has to be followed before they can be paid. It is vital to ascertain what assets are in the estate before any payments out are made in case there are insufficient funds to cover everything.
Creditor Priority Should Be Established
What this means is that executors should avoid paying creditors until they have them labelled by priority. There are some creditors that are more important than others such as mortgage lenders or secured loans and a strict statutory order as to when they should be paid. They will have the first opportunity to take what they are owed. After this, unsecured debts such as utility bills, council tax or unpaid rent can be paid.
Legacies Should Not Be Paid if an Estate is Insolvent
If the debts exceed what the estate is worth, then legacies should not be distributed to beneficiaries. Therefore, executors must work in favour of the creditors instead of the beneficiaries, regardless of how difficult that might be. Again, full accounts will have to be provided to the beneficiaries to show why they will not be receiving any funds.
If in doubt, always seek professional assistance. Any legal costs can be met from the estate.