02 Nov The Top 10 Duties Of An Executor
We are often asked by our clients about what they are required to do when someone dies and they have been appointed executor of their will.
An executor of a will is the legal personal representative of a person when that person dies. The executor, in a legal sense, “stands in the shoes” of the deceased and must make decisions in relation to their assets and liabilities.
The role is very important and can be onerous and time consuming.
You should therefore choose very wisely when you make the ultimate decision: who is to take care of my affairs when I’m gone?
If you have been appointed executor of a will, we strongly recommend that you seek our advice regarding your rights and obligations.
We’ve identified the top 10 duties of an executor when faced with this major responsibility.
1. Determine if there is a will
If there is a will, there’s a way, as they say. Without a will, no one can be appointed executor in the first place.
So it is important, and indeed critical, that if you think it is likely that you have been appointed executor of a will, to search for that document and determine whether that document is indeed the “last” will of the deceased.
2. Arrange the funeral
The executor has the right to dispose of the deceased’s body, including organising the funeral. The executor’s decision in this regard is final, even overriding the wishes of the family.
3. Identify and collect the assets
The executor is responsible for collecting, maintaining and protecting the assets of the estate pending their final distribution. This involves undertaking exhaustive searches, making the appropriate disclosure to the Supreme Court when applying for the Grant of Probate (see below), preserving the assets, for example by maintaining insurance.
4. Pay debts of the estate
The real and personal property in the estate (usually, the cash assets of the deceased) should be applied towards the payment and discharge of funeral, testamentary, legal and administrative expenses and in payment of debts and liabilities of the deceased and the estate generally.
5. Obtain Grant of Probate
In a lot of cases where the assets of the estate are substantial (eg where there is real estate involved), an executor will require a grant of Probate in order to deal with or administer the will or the estate. This involves an application in the Testamentary Causes Jurisdiction ofthe Supreme Court.
6. Pay Tax
You know the old saying: there are two certainties in life, death and taxes. Any outstanding tax liability by the deceased is an estate debt. If the deceased earned income prior to his or her death then the executor or administrator is responsible for lodging any outstanding tax return(s) up to the date of death and, when the assessment(s) issues, to pay the outstanding tax out of the estate.
7. Establish and Administer Trusts
If the will creates any trusts such as trusts for minors or testamentary trusts and the executor has also been appointed the trustee of the trust, as is invariably the case, then the executor must quarantine the relevant estate funds or assets in the form of “trusts”. In the case of estate funds, this is usually done by establishing bank or other investment accounts and, in the case of estate assets such as real property, registering the assets in the executor’s name as trustee of the trusts. The executor must then administer the trusts in accordance with the terms of the will. If the beneficiaries are minors, the trustee’s obligations can apply for many years
8. Keep and Pass Accounts
The executor is required to keep accounts and receipts in relation to monies coming into and out of the estate. Beneficiaries have a right to request this information and documentation from the executor, and it is therefore critical that proper records and accounts are kept. Equally, the Supreme Court has the power to request the executor to produce such records and accounts.
9. Prosecuting or defending claims against the estate
Another duty of an executor is to prosecute (ie make and finalise) any claims the executor may have against third parties, provided that the entitlement to pursue these claims did not cease upon death. An example might be where the deceased loaned money to a third party or if the deceased’s death was a result of negligence. Equally, the executor has a duty to defend any claim that may be made against the estate as part of the executor’s overall duty to preserve the estate assets.
10. Distribute Estate
The executor’s ultimate duty is to distribute the estate to the beneficiaries in accordance with the provisions of the will. Clearly if there are trusts in the will (see paragraph 7 above) this may not happen in its entirety for many years. It is absolutely critical that the executor only distribute the estate once all the debts of the estate are discharged and any claims made against the estate are resolved.