Today, we are going to follow up our article on what steps to take when someone dies by informing you about the duties of personal representatives, otherwise known as executors and administrators. Personal representatives are people who have the personal responsibility and legal authority to ensure that the deceased’s estate is distributed correctly.
While ‘personal representative’ is used as a general term, it is important to point out a key distinction between executors and administrators.
An executor is directly appointed by a valid Will or a codicil as someone charged with the responsibility for administering the testator’s property and carrying out the provisions of the Will. They are the person who will be seeking to obtain what is termed a Grant of Probate. On the other hand, an administrator is relevant in situations where there is no Will involved. Without a Will, the person responsible for dealing with the deceased’s estate is the administrator, usually the next of kin. However, there are a few other ways in which an executive may be appointed without being expressly appointed in a will.
Miss the previous article in which we discussed what the first steps to take are following a death? Click here.
What is a personal representative responsible for?
A personal responsibility is legally responsible for the money, property and possessions of the deceased from the date of death until the assets have been distributed to the beneficiaries.
You may have to deal with the following during the aforementioned administration period:
- The payment any debts left by the person who died
- Sale of assets such as properties or shares
- Pay Income Tax on things like rental income from property, profits from a business or interest from investments
- Pay Capital Gains Tax on profits from selling shares, investments or property
- Reporting of the estate value, income and tax liability to HM Revenue and Customs
How can a personal representative be appointed?
There are a few methods in which a personal representative can be appointed. These include the following:
- In the Will
- Implied within the Will
- Or by a person nominated in the Will to appoint an executor. If this person is nominated in the Will, they may be able to appoint themselves as an executor
- Through the chain of representation
- By the court
However, the executor must still accept the office of executor in order for the grant of representation to be issued to them. If an executor does not wish to take a grant then they may have so-called ‘power reserviced’ or renounce the office.
The chain of representation
The chain of representation is an important aspect of estate administration which ensures that the deceased’s wishes are honoured in the event that personal representatives die before completing their role.
Let’s look at the following case as an example:
1. John, the Executor: John is named executor in Paul’s will and starts administering the estate.
2. John Dies: John dies before the administration of Paul’s estate is complete
3. Mary, the Successor: John’s Will names Mary as his executor, so she takes over.
4. Mary administers the estate: Mary can administer John’s estate under the chain of representation, as well as Paul’s.
However, if an executor who is in the chain dies without a valid Will in place, then Rules of Intestacy will determine the person with the authority to administer the Estate.
What are the powers of personal representatives?
Once the executor has confirmation of their authority to act via the grant of probate, or grant of letters of administration for an administrator, they have a number of powers, duties as well as the responsibility of renumeration. Their powers include the following:
- sell, mortgage or lease
- insure
- postpone distribution
- appropriate
- accept receipts for a minor’s property
- pay money into court
- invest
- compromise
- maintain a minor
- advance capital
- run the deceased’s business
- employ an agent
- employ nominees and custodians
Although this may seem like a monumental task, personal representatives have the choice to delegate all of any of these responsibilities to an agent. Our family law team have the experience to help you all with all manners of probate, including obtaining a grant of probate, responsibilities of being an executor, as well as administration of an estate.
Liability of personal representatives
https://www.rothleylaw.com/articles/personal-representatives-duties-and-responsibilities/
Personal representatives should also be aware that they may be held personally liable for mistakes which are made while administering the estate. In terms of the personal representative’s dealings with third parties, beneficiaries of the deceased’s Will, and beneficiaries on an intestacy, they may find themselves liable through their actions or omissions.
During the period where the estate is being administered, personal representatives are personally liable for the following:
- Meeting their obligations under any contracts they enter into
- Any torts they commit
- Any losses to the estate resulting from their breach of duty
It is advised that PRs should take all possible steps to obtain the details of creditors and beneficiaries of the estate before administering. This will help to ensure that they are not left open to personal liability as a PR.
As a result, notice of the PR’s intention to distribute the estate must comply with section 27 of the Trustee Act 1925 to protect them from liability. The distribution of the estate must be advertised in the London Gazette as well as any newspaper which is based in the area where the deceased lived or carried out their business.
Our thoughts
As you can see, personal representatives play a crucial role in estate distribution and administration. Without a Will, your personal representatives will be chosen according to intestacy rules, which may not reflect your wishes. Creating a Will allows you to specify who you want to administer your estate. It’s advisable to appoint someone you trust and who is capable of managing your estate effectively. Ideally, you should appoint at least two executors, and in some cases, professional executors such as solicitors might be a suitable option. If you have any questions about this, please feel free to contact us.
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