What Happens if I Make a Mistake as an Executor?
15 December 2017
If you are acting as the Executor of an Estate, you can be held legally and financially liable for any errors that you make, even if these are genuine mistakes. You are personally responsible for administering the Estate in line with the law and in line with the deceased’s wishes (if they have left a Will).
Many people don’t realise that there’s no limit to the financial liability that an Executor could face if they fail to carry out their duties correctly or fail to pay off any outstanding debts that the deceased person had. Any outstanding payments or claims that come to light after the process had been completed would then need to be covered personally by the Executor, not by the Estate. As such the financial implications of getting things wrong can be huge.
What Does an Executor Do?
When someone dies, everything that they owned is collectively known as their Estate. The Executor of an Estate is the person responsible for winding up the deceased person’s affairs. This will include estimating the value of the Estate, calculating any Inheritance Tax that is due and paying this to HMRC, paying any outstanding debts and settling final bills using money out of the Estate.
Anything that is left will then need to be distributed by the Executor to the people who are set to inherit from the Estate. These are known as Beneficiaries. Once all money and assets in the Estate have been distributed to the Beneficiaries, these will not be able to be recovered to pay outstanding costs or debts that were previously overlooked. The Executor then becomes personally liable for these costs as a result.
If the deceased person left a Will, then this will name Beneficiaries and outline what they should inherit from the Estate. If the deceased person did not leave a will, then the law dictates who should inherit their Estate. Under the law in England and Wales, there is a strict order to who should inherit from a deceased person. This order is set out in the Rules of Intestacy.
Who Might Make a Financial Claim Against an Executor?
If an organisation or a Beneficiary feels that they have been left short by an Executor’s calculations, then they are likely to challenge this.
It could be that when the Executor was identifying outstanding debts of the Estate, they missed one or more) of these. Creditors might then come out of the woodwork at a later date and demand that the debt is settled by the Executor.
If a Beneficiary of an Estate is bankrupt, then it’s against the law to distribute their inheritance to them directly. Instead, it will need to be given to their “trustee in bankruptcy” who will use it to pay creditors before passing it on to the Beneficiary. This means that if an Executor gives inheritance directly to a bankrupt Beneficiary, then the Beneficiary’s creditors could hold the Executor liable for the money that is owed to them.
Miscalculating Inheritance Tax can also have serious repercussions for an Executor. If HMRC suspect that Inheritance Tax has not been calculated correctly, then they will investigate this. If they find that the Estate paid too little in Inheritance Tax, then the Executor will have to personally make up the shortfall.
Reducing the Risk
The role of Executor is complicated, highly detailed and time consuming. It also comes with significant responsibility and associated risk. For details see Executor Duties Explained. Dealing with all of this can become very stressful, particularly at a time of grief.
If you are unsure about any element of the Estate administration process or your responsibilities as an Executor, then you can instruct a Probate Solicitor to take on the responsibility of administering the Estate on your behalf.
With Co-op Legal Services’ Probate Complete Service, you can rely on us to make the right investigations on your behalf, apply for a Grant of Probate, prepare the tax and Court documents and distribute the Estate correctly. Our Probate Solicitors also have the necessary expertise to put measures in place which will protect you (as Executor) from personal liability for any claims or unknown debts.
If you decide to instruct Co-op Legal Services to deal with the administration of the Estate on your behalf, then we can take the weight off your shoulders. You could relax knowing that we will take on any liability and responsibility that would otherwise sit with you personally.