Executors - a cushy job?   

    
WARNING: Without some simple, no-cost precautions, much of your estate could line the pockets of people you don't even know!

"Think your family is safe because you have a Will  and an Executor? Think again!"

Most of the more than 70 percent of the public who have never written a Will think of it as a document for outlining what they want done with their basic assets. But in many cases, if this was all it was, instructions could be written in just a few sentences. Possessions can generally be considered with far less emotion than personal relationships.

And one very personal relationship is always formalised in a Will: the appointment of an executor. A Will is also used to formalise the appointment of guardians when there are (or may be in future) children who need protecting.

Naturally, a great deal of consideration goes into the appointment of guardians.

It would be a careless person who would not get an okay in advance from prospective guardians. After all, we're leaving them, totally and irreversibly, in control of our kids. Often, a majority of the Will is given over to giving detailed authority to the executor to ensure that they have the necessary powers can carry out all the tasks needed. If they do not, they can be in serious and expensive trouble.

Is your executor the right person for a difficult job?

Why is it, then, that so many executors don't learn of their appointment until after the death of the person for whom they are supposed to act? Why are so many ill prepared, confused and utterly stressed? Could it be that most of us have only a vague idea of the role of executor? And, consequently, many merely look for someone who is inexpensive (read spouse?) and completely trustworthy (read spouse again, maybe)?  You may be surprised to learn that 70% of estates end up being dealt with by solicitors, as the family executors can’t cope, so they run to the solicitor who helped them buy their house, or pick one out of the Yellow Pages.  Little consideration is given to cost, experience or speed of service – but at least they will normally be a bit cheaper than a bank!

If cheap and honest were the only criteria, selection could be quite simple. But an executor also needs to be highly organised and efficient; be able to take charge - but with compassion; be bright enough to absorb a wealth of detail accurately and quickly; and be comfortable with financial dealings (knowledgeable would be better) at all levels appropriate to the estate.

Your executor has total control of your finances the moment you die and, as a result, almost total influence over your family's financial well being until your estate is settled. He or she needs to get the job done quickly and accurately so your family can get on with their lives.

If you have a business, your executor may have total control over that. Without the necessary powers in your Will, it may be that the only action he can take is to pay out redundancy money to employees as he/she has no power to help the business keep running or to sell it off as a going concern.

For many of us, our executor is our spouse. Frequently, everything goes to him or her anyway, and most of us feel our spouse will do whatever is right by the family. Why else curse a husband or wife with such a thankless task? But the truth is that, if the many administrative details are not looked after quickly and properly, there might be no cash for groceries no matter how much money is in your bank account.

If you were to hire someone for a meaningful job, would you not interview several applicants before hiring one of them? Would you not make sure they have everything they need to carry out the tasks of the job? So, does your executor have the right qualifications?

A quick checklist will tell if you have the right executor, if you have never been an executor yourself, you may not realise how tough a job it is.

Let's take a quick look at some of the things your executor must do. This may help you to decide who should have the job, or if professional help (perhaps in the form of a co-executor) will be needed.

1) Prepare your final tax returns. Your executor will have the ability and the authority to hire tax advisers and to pay them from the estate.

2) Get approval from the tax people to distribute assets. This may not be given until the final tax bill has been paid. Protect those who look to you for support by having at least some of your cash in separate bank/savings accounts. It will be immediately available to them when you die.

3) Arrange your funeral as stipulated in your will. (Your executor should know your wishes in advance; your will may not be opened until after the funeral.)  Bear in mind we can arrange pre-paid funerals which can include pretty much total organisation (and payment) in advance thus relieving those left behind of financial and personal stress and giving a very easy answer to friends and relatives who (inevitably) want different arrangements!

4) Find all the bits, pieces, documents, insurance policies and "stuff" that are part of the tangible evidence of your life and preserve them for those you wish to be their new caretakers. Our Peace of Mind Service goes a long way to helping to keep key contacts and other items up to date, and we would be quite happy to store an inventory for you. As you know, we positively encourage "ethical wills" - at their simplest a letter to those left behind.

5) Pay all outstanding bills. Have a single place for keeping them, known to your executor and immediate family. Let there not be any surprises.

6) Make partial distributions or arrange loans so immediate family can get by until the estate is distributed.

7) Buy or sell estate assets, including investments. Though there are generally legal restrictions on the types of investments that can be made, you may wish to stipulate further limits in your will. Deposit accounts are often ideal for the short term. In the case of a spouse who is also an executor, it is unwise for many to make financial decisions that could have far-reaching consequences at a time when they are far from "together". There's time for that later.

8) Hire professional help, such as lawyers and accountants (though SWW Trust Corporation can deal with most things) and financial advisers (if you don't have one, we know sympathetic ones in virtually every part of the UK).

9) Act as trustee for young beneficiaries. The executor may make decisions, for instance, that influence how much money (if any) is available for education. Many Wills (accidentally or otherwise) set up Trusts which may last for 20 or even 79 years - what price your family executor for dealing with complicated tax and investment considerations on their own?  Even the experts have to call in specialists quite often!

10) Obtain the Grant of Probate on your estate. Some jointly-held assets such as property or bank accounts do not go through probate, avoiding probate fees.  But speak to us about this as sometimes the savings on probate fees can be dramatically outweighed by extra Inheritance Tax.

11) An executor rarely has an easy task even when your affairs are well organised; it can be near hopeless when they're a mess. For all this work a professional executor is entitled to compensation, usually in the range of 3% to 5% plus VAT. Many firms have quite high minimum fees and others charge entirely according to the value of the estate. One bank would charge £18,750 for an estate comprising solely of a bank account with £300,000. The work would take them less than 2 hours!  Solicitors commonly charge £150 to £250 an hour plus VAT and plus what is called a "value element" of up to 1.5% of the whole value of the estate, plus VAT.

Our probate service (SWW Trust Corporation supplied this article - see www.SWWtrust.co.uk) just charges for the hours it puts in at a rate substantially below those mentioned above - with no "bunce" value element.  You can agree a fixed fee if you prefer.  They are also happy to just help with the difficult bits - in a recent simple case, the estate was around £200,000 and we did most of the work, and charged just £750. Your friendly bank would have done another hour or two's work and charged over £11,000. A low charging solicitor might have charged just £3,000. But we work with your family executors, only taking over if they want us too.