Attwood Marshall Lawyers Legal Practice Director Jeffrey Garrett spoke to 4CRB community radio about the role of a lawyer as Executor of the estate.
What is an Executor of a Will?
An Executor of a Will is the person nominated to wrap up all of the personal, financial and legal affairs of a deceased person’s estate. An Executor is the person in charge of administering the estate. Usually, people name one or two executors in their Will, but they can name as many Executors as they like. It is possible to appoint a solicitor as the sole Executor or as one of the Executors.
Duties of the Executor
The duties of the Executor include, but are not limited to:
- Proving the Will is valid
- Obtaining Probate from the Supreme Court
- Calling in the assets of the estate
- Paying the debts and liabilities of the estate
- Defending the estate from contest
- Distributing assets to the beneficiaries
What sorts of problems can the Executor face?
Family Provision Claims – This is a legal contest between family members for the funds and property of a person’s estate and is a common type of estate litigation which the Executor will have to deal with. If family members are warring over the estate, they are likely to engage solicitors to carry out such legal actions, and it is the Executor’s job to defend the estate. If the Executor and beneficiaries are family members, the contest of a Will adds significant familial pressure at a time of grieving. The tension can be reduced with a lawyer as Executor, as they act outside of the family dynamic.
Unpaid creditors – If the deceased person has debts, the Executor must use the estate assets to settle those debts before the estate can be distributed to any beneficiaries. If a deceased was bankrupt, their estate is used to settle their debts. This may mean that potential beneficiaries are excluded from the provision of an estate and may even prompt people to contest a Will because they were not adequately provided for. However, the deceased’s creditors take priority. An Executor can be liable for the shortfall of a bankrupt estate if they have taken any assets from the estate before debts are repaid.
Caveats over a Grant – If someone believes the Executor appointed is not the best person for the job, or that the Will is invalid, they can apply for a caveat over the estate. A caveat is a court notice that prevents certain things from happening without informing the person requested the caveat. An Executor must respond to such an action, with the legal costs for responding to the action will be taken out of the estate at finalisation.
Civil actions – Court actions in the civil court brought against the deceased that continue after their passing. An Executor must oversee the finalisation of any such court actions and ensure the estate pays out any damages and legal costs incurred in the process.
Legal liability of the Executor
Normally an Executor has indemnity however if they are grossly negligent, they could be up for that out of their own pocket if they do make a mistake. However, it is worth noting, the courts have been very reluctant to remove Executors even where they have made a mistake. As long as an Executor has acknowledged their error, apologised for it, and has sought legal advice, it is amazing how lenient the courts can be.
The issue of Executors doing the wrong thing or being negligent or delaying things and causing losses to the beneficiaries is an emerging area of law as beneficiaries are now becoming more aware of their rights. So, you could find a situation in which the Executor is held liable to the beneficiaries for any losses that beneficiaries incur.
How do you know if you need a lawyer as Executor?
You need to think carefully about who you appoint as an Executor. Estate administration can be a difficult task and whether you need a lawyer as Executor, depends on the size of the estate, how many assets are in the estate, and how many beneficiaries you have. Some very small estates you might have a bank account, a car and other minor assets with no real fight amongst the beneficiaries. That might not be too difficult a job, however these days it is rare you get simple estates of this type. More often, people have multiple business entities, companies, trusts and super accounts, which can also have a death benefit component.
People also now tend to have multiple bank accounts, credit cards, crypto currency, and the list goes on. So, if you have a difficult estate like this, especially where you might have beneficiaries who are going to dispute the Will or going to contest the Will, naming the Executor a family member or friend is not always the ideal thing to do because the person who you appoint will have to deal with all those issues when you’re gone. If you think your estate has any of the ingredients that could make it complex, then you should consider a professional to do that for you.
Appointing a lawyer as Executor
We discuss this when you’re coming in to do your Will, because you may have multiple entities, or you may have a likely dispute in the Will, or you may have sticky issues with tax and other issues. Then, we may suggest that you may consider choosing a professional. It doesn’t have to be a solicitor, however lawyers who work in estate administration do have more expertise in this area. Choosing a lawyer as Executor is not an easy process, but you need to ensure that you are dealing with a firm and with a lawyer who is experienced, they have been around a long time and are trusted.
Professionals as Executors
Some Executors who are not professional, and even some who are – such as accountants and financial planners – will engage a firm who is experienced in this area. They will engage solicitors to get the Grant of Probate, to call in the assets, get tax advice it’s required and distribute the assets. There is a minefield of things that can go wrong in dealing with those issues. To ensure the estate administration process is completed without delay, financial loss to the estate or tension caused to the family of the deceased, many people choose to nominate a solicitor as an Executor.
Benefits of appointing a lawyer as Executor
In those circumstances or warring siblings or family members, a solicitor can help because he or she can call the shots, and this can stop a lot of that squabbling. A solicitor won’t eliminate all the enquiries and queries and the issues that go on, but sometimes the lawyer acts almost like an umpire for the warring parties to get the matter finalised quicker and cheaper than what would happen if say three family members were appointed.
- Legal skill
A lawyer as Executor will have the necessary legal expertise to deal with your estate. There can be many complex matters during the administration of an estate such as sorting out the deceased’s tax affairs, selling a property and managing investments. By appointing a lawyer as Executor, beneficiaries are assured all matters are dealt with correctly. If beneficiaries have questions or disagreements, a lawyer as Executor will have the necessary expertise to answer them. A lawyer as an Executor can relieve the loved ones of the deceased from the burden and stress of administering the estate. Lawyers give impartial and ethical advice to the highest possible legal standard. They are legally bound to ensure the estate is administered correctly.
Unfortunately, tensions amongst family members and friends are common after a loved one has passed away. This can cause difficulties in the administration of an estate, especially if siblings are in dispute. A lawyer can act as the mediatory guide on legal decisions while being sensitive to the needs and dynamics of a family. A professional executor with legal experience specifically in estate administration can ensure that all matters are dealt with impartially and in the best interests of the estate.
- Always there to act
If a friend or family member is appointed as Executor, and at the time a person passes away their Executor is unable or unwilling to act, then certain laws kick in to govern who will act as the personal representative. This may fall to someone who the deceased would want to act in that role. Appointing a lawyer allows ensures there will always be someone who is capable of stepping into the role of Executor.
Some people may be concerned about the costs when appointing a professional executor. However, administering an estate is a complex process. Mistakes can be costly to the estate. A lawyer who is highly experienced in estate litigation will ensure the administration is efficient and correct, which will, in turn, save on costs from the estate.
Can the lawyer who drafted the Will be Executor?
Unfortunately, many people who are appointed as the Executor they will ask the firm who holds the Will to administer an estate, however most of the time these firms are generalised and not experienced enough in this area and can struggle with the complexities of the administration of an estate. The issue is that on the role of Executor, you may be liable for a lot of things – whether it be paying tax or debts – and if you don’t do everything by the book beneficiaries can come after you and hold you responsible for things that have gone wrong. If most laypeople knew about the legal risks in being an Executor, they would run for the hills, and even most solicitors need to exercise caution. It is best to seek legal advice from a firm that is experienced in the administration of an estate to avoid this problem.
How to remove or change an Executor
When testator is alive
You can go and change your Will at any time and simply appoint a fresh executor.
After a testator has passed away
If a nominated Executor does not want the responsibility of being Executor they can decline and a different Executor of the estate can take over the duties. If a beneficiary feels the Executor is not carrying out his or her duties properly, the Executor has a conflict of interest or is acting improperly, it may be necessary to bring an application to have the Executor removed by the court. The courts have wide powers to remove an Executor and will consider the Executor’s mismanagement and misconduct before making a decision. It is very difficult to remove an Executor and a court is very loathed to remove them unless there are exceptional circumstances.
If a new Executor has not been nominated, beneficiaries can apply to have a court-appointed administrator in the role of Executor. If a solicitor is not appointed as an Executor, it is advisable for the new Executor to seek legal advice from a solicitor to ensure the estate administration process runs smoothly.