A person who makes a will – a testator – is required to name at least one executor in the will. The executor is the personal representative of the deceased and is responsible for carrying out the wishes of the testator.
The executor’s primary duties are to collect, preserve, realise, and distribute the assets of the deceased.
The process of collecting the assets of the deceased includes identifying and taking possession of and assuming control of the assets as soon as it is practicable to do so. It also includes gathering and keeping safe the documents – including the will – relating to the assets. This means, for example, the titles to the assets and the means of accessing them, such as keys to real property. Beyond that, the executor is responsible for preserving the assets, including keeping them in a state of good repair and preserving them against loss or theft.
An important function of the executor is to retain the services of an attorney-at-law to apply to the court for a grant of probate. Probating a will is a legal process through which it is tested by the court to prove it is valid.
The attorney will need certain documents to be able to initiate the progress, so it is important for the executor to have them readily available so as not to hold back the work of the attorney.
The documents include the following: a list of all the assets of the testator, a certified copy of the death certificate, the original will of the deceased, land titles, certificates evidencing ownership of securities, and bank books. If the titles to assets cannot be found, it is necessary to apply for replacements. The attorney-at-law would then give other necessary documents to the executor to be signed in order to proceed with the process of securing the grant of probate from the court.
At the appropriate time, the documents are sent to the Stamp Office for the assessment and payment of transfer tax on death, which is 1.5 per cent of the value of the estate in excess of the threshold of $10 million at the time of the death of the testator. No stamp duty is payable, but interest at the rate of six per cent per annum is charged on transfer tax not paid after a one-year period after the death of the testator. The instrument of transfer for real property, such as land, should be sent to the Titles Office for it to be transferred to the beneficiaries in the distribution phase.
The executor also has to establish if the deceased was indebted to any person or institution. This is done by advertising for creditors, who must provide real proof of such indebtedness. The standard of proof is quite strict to protect the estate from fraudulent claims.
The debts to be paid include taxes and fees due to the government directly stemming from the settling of the estate. Examples are transfer tax on death. Taxes and other debts incurred during the life of the deceased but which remain unpaid at death are also to be satisfied.
Before distributions can be made to the beneficiaries according to the terms of the will, the assets of the estate should be realised. Before they are sold, every effort should be made to secure the best price by engaging professional valuators and sales people as well as getting additional professional advice and guidance if required.
Distributions can only be made if the estate is solvent, a situation that obtains when there is a surplus after all liabilities have been settled from the proceeds of the sale of the assets. The sad reality is that a beneficiary might not be able to derive a benefit stated in the will if the particular asset has to be sold to help liquidate the liabilities of the estate. In such a case, it is prudent for the executor to advise the affected person about the situation.
Communication is another important function of the executor. Advising creditors and debtors of the death and updating them on the progress of the administration of the estate can reduce the risk of fraud being committed against the estate. Additionally, such communication can be very useful in putting in train the process of benefit distribution, for example, cases in which “estate” is stated as the beneficiary under a life insurance policy. It is also important for beneficiaries to know what has been bequeathed to them and to understand the process of distribution.
The executor stands in the place of the testator and thus occupies a position of deep trust and is required to devote time and effort to ensure that the wishes of the testator are carried out faithfully.
Oran A. Hall, author of Understanding Investments and principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel. Email: email@example.com