Legal Liabilities of Executors

This information is provided for information purposes only and should not be considered as a substitute for full legal advice. Executors can also be held liable for losses caused by errors they made in the administrative process. For example, an executor who fails to keep clear and complete records of the administrative process through estate accounts, as required, is more likely to make a real error in the distribution of estate funds, which could result in losses for a beneficiary. Such an error, even if honest and genuine, makes an executor vulnerable to lawsuits by a beneficiary, possibly even through legal proceedings. If there are not enough funds to pay the deceased`s debts in full, the estate is insolvent. There is specific legislation that determines which creditors are paid first in an insolvency estate; Executors must comply with these rules to avoid personal liability. As regards the distribution of estate assets to beneficiaries listed in the will, Harris v. HMRC [2018] UKFTT 0204 (TCC) reminds executors that in the event of non-payment of tax, they will ultimately be held liable and sued by HMRC, even if the executors distributed the estate funds to the beneficiaries and those beneficiaries had promised the executors: that they would pay the inheritance tax due. on the estate, but did not. It is therefore always important to ensure that executors receive inheritance tax from HMRC before estate assets are fully distributed, so that inheritance tax due can be paid from estate funds. Our partners at Moore Barlow Private Wealth also have extensive experience representing professional executors and can be appointed executors in your will to professionally assist and advise your tied executors to better protect them throughout the administrative process. If the executor fails to comply with his or her legal obligations, a beneficiary can sue him or her for breach of fiduciary duty. If there is more than one beneficiary, all beneficiaries must agree to sue an executor.

Unknown debts are one of the greatest dangers for executors. It is best to take all possible precautions. After collecting the deceased`s property, executors should take steps to settle any outstanding debts. They must pay creditors in full before distributing the estate to the beneficiaries. But sometimes the executors are wrong. They could pay creditors in the wrong order and run out of money before paying them first. Or they could steal money directly from the estate that would otherwise have paid off a priority debt. In this case, the aggrieved creditor may personally sue the executor. In this situation, the executor`s liability is limited to the amount of the estate`s assets. If you are a creditor of an estate, you should consider legal advice from a law firm that specializes in estate administration.

They can help you better understand your rights, whether you can make a claim, when, and whether your claim may be eligible for priority payment. Even with the best estate planning and administration, administration can go wrong. If your claim is wrongly denied, you may need to take legal action. This means that the estate will be distributed in accordance with the will or the Intestate Succession Act 2019 if there is no will. Before that, however, any liabilities or debts of the estate must be dealt with. An executor or administrator who fails to do so may be personally liable for amounts improperly transferred from the estate. It is important to understand what needs to be done before a distribution takes place. Not all executors know that until legal ownership is transferred to the beneficiary, the beneficiary is required to protect the assets of the estate. This includes ensuring the protection of assets through adequate insurance, including unused property, and ensuring that the institutions in which the deceased held assets are informed of the death of the deceased so that they can take the necessary measures to protect the assets, such as freezing accounts. If you are the beneficiary of an estate and believe that the executor is acting dishonestly or incompetently, you should talk to a lawyer about your legal rights.

You may be able to sue to replace the executor, get damages, or both. If you are interested in the will and believe that the executor has harmed you by violating a legal obligation, you should contact a probate lawyer. Experienced will, trust and probate lawyers can advise you on how to proceed. The lawyer can also help you file the necessary legal documents and represent you in court. Because these claims could result in a decrease in the number of assets available for distribution, executors and administrators must wait six months after probate letters or letters of intent are issued to distribute the estate. This allows dependents and spouses to apply for release. If an executor or administrator ignores this period and distributes the estate earlier, they may be held personally liable to support creditors or spouses. Executors and administrators can obtain written permission from dependents and spouses who agree to a previous distribution.

Executors and administrators may wish to receive legal advice on all matters related to potential claims under these laws. In terms of mistakes, it is often mistakenly assumed that all the debts of the deceased die with them. In fact, executors are responsible for dealing with the deceased`s financial liabilities, including acknowledging debts to the estate and ensuring that they are paid out of available funds. This includes all entitlement to Department for Work and Pensions social benefits, income and capital gains tax, mortgages and outstanding bank loans, and any more informal debts incurred by the deceased. Many executors also contribute significantly to paperwork. For example, forms that must be signed by all executors must be sent to everyone. (In some cases, scanned documents that have been signed are acceptable, in others, only originals are acceptable.) It is essential that executors review the debt situation and seek appropriate protection for distributions. Coping with the death of a loved one is hard enough, no matter what potential liabilities you incur as an executor. At Moore Barlow, we are experts in estate administration and provide you with professional advice so that you can fulfill your obligations and duties as executor while protecting you from potential liabilities in this capacity. As part of this inheritance tax obligation, executors should also take into account the possibility of being subject to inheritance tax on transfers of property made by the testator during the seven years preceding his death, in short „potentially exempt transfers” or „PET” for short.

For example, a PET could take the form of a gift to a child, which could give rise to the inheritance tax obligation if the donor dies within seven years of the transfer, and to the extent that the donation exceeds a available zero rate. In this case, HMRC would have to be informed and the executors would also be liable for the inheritance tax due on the transfer if the beneficiary of the gift fails to pay the inheritance tax due within 12 months of the death of the deceased. When a person writes a will, they appoint an „executor.” The executor acts as the personal representative of the person who made the will. The executor administers the person`s estate after death. Executors have legal obligations to the deceased and the estate. Executors can be sued if they violate these obligations. Being guardian of the estate of a loved one is often a necessary role that many of us who have lost a loved one would undoubtedly take on to ensure that our parent`s wishes are granted.