Responsibilities of an executor
One of the most important decisions when making your will is choosing who will be your executor.
The first responsibility of an executor is to ensure that the deceased’s funeral arrangements are attended to, although this will usually be handled by family.
In more general terms it is the executor’s job to ensure that your wishes, as specified in your will, are actually carried out.
This may include selling properties, contacting people you leave money to, paying all debts, finalising tax affairs and distributing monies from your estate. Even a relatively straightforward will involves a significant amount of work and responsibility so it is prudent to choose an executor you trust and who has a good business sense.
To ensure the person will have your interests at heart and a commitment to fulfilling your wishes, it is advisable to discuss the matter with that person before nominating him/her as an executor.
When the will is simple and uncomplicated, such as an estate consisting of little more than the family home and a small amount of money, it is usual to have a family member or close friend as executor.
However, in practice, they will usually retain a solicitor to make sure everything is done properly. The executor will instruct the solicitor to verify the estate assets and correspond with various banks, financial institutions and companies where the deceased held assets.
He or she will also notify these bodies of the death and obtain the requirements to deal with the deceased’s assets.
In some cases an executor may be required to assume other roles as result of the appointment. These could include acting as the trustee or appointor of the family trust or becoming the director of a family company.
Some people choose to have their solicitor, accountant or other trusted advisor act as executor of their wills.
A trustee company such as The Public Trustee, Perpetual or Trust Company of Australia can also be appointed to this role. There are several situations where this is desirable. For example, when the estate involves a business, it is usually essential that the business carries on smoothly, or at least is wound up in a considered way so that there is not such a financial impact on the survivors.
It is a great advantage to have an independent commercial person, experienced in business, who is able to act quickly at a time when family members may be stricken with grief or confused about what needs to be done.
Another situation in which it is common to use a professional person or company as an executor is when the family situation is complicated by divorce or remarriage. Here it is valuable to have someone seen as an impartial outsider deal with potential conflicts.
An executor is entitled to be reimbursed out of the estate funds for any expenses properly incurred in the administration of the estate.
An executor can also claim commission, provided the residuary beneficiaries consent or the court approves the claim.
Professional trustee companies charge fees for the work executor in accordance with published rates.
In cases where you have appointed a professional person, it is common to include a provision in the will that he or she be paid their usual professional fees.
If you want to ensure that the person you have chosen to take on the role of executor is rewarded, you can provide for a gift to be made to them.
Dr John de Groot is a leading specialist in succession law. Visit degroots.com.au