When should an executor stop and take advice? Ten warning signs to look out for

Most executors begin their roles wanting to deal with the estate carefully and efficiently. In many cases, the administration may be relatively straightforward. However, issues can emerge that are not immediately obvious and can expose an executor to delays, disputes, or even personal liability.

Knowing when to pause and take advice can be just as important as knowing what to do next. 

1. The Will is unclear, homemade or appears incomplete

A Will may look straightforward but contain unclear wording, inconsistent provisions or practical difficulties. There may also be questions about whether all pages are present, whether alterations were made correctly, or how the Will was signed and witnessed.

If there is uncertainty about what the Will means or whether it was validly executed, executors should take advice before applying for the grant or taking steps based on its terms.

2. There were significant gifts or transfers before death

Large payments, transfers of property or gifts made shortly before death may affect the Inheritance Tax position. Executors may need to establish what was transferred, when it happened and whether the deceased continued to benefit from the asset.

What initially appears to be a simple bank transfer may instead have been a gift, a loan, payment for care or part of a wider family arrangement. Executors should avoid making assumptions where the paperwork does not tell the whole story.

3. A beneficiary is estranged, vulnerable or unable to manage their own affairs

Additional care may be needed where a beneficiary cannot be located, lacks capacity, is bankrupt, is under 18 or may be vulnerable to financial pressure. Estranged family relationships can also make communication and decision-making more difficult.

Executors must administer the estate according to the Will or intestacy rules, regardless of the relationships involved.

4. The deceased owned a business or an interest in a company or partnership

Business interests can create questions around valuation, control, ownership and succession. There may be shareholder or partnership agreements to consider, as well as restrictions on how an interest can be transferred.

The tax treatment may also depend on the nature of the business and the deceased’s involvement in it. Advice should be obtained before shares or business assets are sold, transferred or distributed.

5. The estate includes several properties or investment properties

A property portfolio can raise issues beyond obtaining probate and arranging a sale. Executors may need to deal with tenants, mortgages, insurance, repairs, rental income and the tax consequences of a later disposal.

They must also consider whether any property was owned personally, jointly, through a company or under an informal family arrangement.

6. There are assets or beneficiaries abroad

Foreign property, bank accounts, investments or business interests may involve local succession rules and separate administrative procedures. A UK grant may not be sufficient to deal with an asset in another country.

There may also be questions about domicile, residence and taxation in more than one jurisdiction. Early advice can help the executors understand which steps need to be taken and in what order.

7. It is unclear whether an asset was genuinely owned jointly

The fact that two names appear on a bank account or title does not always answer who was beneficially entitled to the asset.

Executors may need to look at how the asset was acquired, who contributed the funds, how it was used and whether there was any agreement between the owners. This can affect both the destination of the asset and the amount reportable for Inheritance Tax.

8. There are concerns about capacity, undue influence or the circumstances in which the Will was made

Questions may arise where a Will was made late in life, represented a significant departure from earlier intentions or benefited someone closely involved in arranging it.

Executors should not attempt to decide disputed questions themselves. If concerns are raised about the validity of the Will, they should avoid distributing the estate until the position has been properly considered.

9. The estate may not have enough money to pay its debts

An insolvent estate must be administered carefully because debts and expenses must be paid in a particular order. Paying one creditor or beneficiary without understanding the financial position may expose the executor to personal liability.

If there is any doubt about whether the assets will cover the estate’s debts, tax and administration expenses, the executor should take advice before making payments or distributions.

10. There is pressure to distribute the estate quickly

Beneficiaries understandably want to know when they will receive their inheritance. However, pressure from beneficiaries should not cause an executor to distribute before the assets, liabilities and tax position have been properly established.

An executor who distributes too early may be personally responsible if a debt, tax liability, claim or beneficiary later comes to light. An interim distribution may sometimes be appropriate, but only after sufficient funds have been retained to cover the remaining risks.

Not every unusual feature will turn an estate into a dispute or a lengthy administration.

However, executors should be alert to circumstances which require further investigation.

Seeking advice early does not necessarily mean handing over the entire administration. It may simply give the executor clarity on a particular issue, help avoid an expensive mistake and allow the estate to progress more smoothly. For more information on the issues outlined or advice on your individual circumstances please get in touch with your usual Crowe UK contact.