The person or people that you nominate to be your executor(s) should be people that you know and trust and preferably that have some basic commercial skills and experience.
The executor(s) appointed by you will have a legal duty to act in the interests of an estate’s beneficiaries.
An executor can be held personally liable for any financial losses incurred during the settlement of an estate.
An executor needs to:
- Observe special rules;
- Avoid conflicts of interests; and
- Ensure the interests of the estate are put above their own.
Generally the executor needs to have allowed adequate time for creditors to make their claims against the estate.
In terms of liability for debts of the estate, the executor needs to make sure that before any distributions are made, all proper debts of the estate have been paid or adequately provided for.
A common trap is where executors fail to pay any tax liabilities owing by the estate, before making final distributions to the beneficiaries. In this event, where executors don’t retain sufficient funds to pay tax, they will be held personally liable.
Often executors, in their role as trustee of estate assets, must invest the estate assets for a period of time, before the beneficiaries are entitled to receive their share. For example, a beneficiary may be a young child and the will may have said the child is not to receive their share until attaining 21 years of age. In these circumstances the executors has a legal obligation to act “prudently” when selecting and managing investments.
Executors are often close friends or family members and generally do not charge a fee for their services. The general rule however, is that executors have a right to apply for a commission for their efforts, however the court will only give them that allowance if it’s truly justified. Of course where the executor is a professional executor, such as a solicitor or accountant a professional fee will apply.
