Acting as an Executor of an estate “to be or not to be , that is the question”

A question we often get asked at Inherit is whether advisers should accept nomination by a client to be their Executor, or even attorney under an enduring power of attorney ?

This is an important topic that advisers need to consider as well as other options if they choose not to be an Executor, and so we will address this issue over two consecutive weeks

What does an Executor do?

Essentially, the Executor’s role is to manage and distribute the assets of the estate of a deceased person in accordance with their last Will.

When considering being appointed Executor, you should also inquire whether your role is to also act as Trustee of a trust created by the Will. This could include assets that are held on behalf of infant children for a number of years or beneficiaries where there is a restricted trust for a disabled or spendthrift beneficiary.

Acting as a Trustee could potentially involve you with long-term implications and responsibilities, particularly as the role of Trustee is a fiduciary role that carries higher legal duties and obligations.

Executors can also be required, by default, to perform related estate functions such as distributing superannuation death benefits, and acting as a director of a company to deal with company assets, including the operation of a business. You may also be required to hold the power of appointment of a discretionary trust or act as replacement trustee of a discretionary trust and deal with trust assets.

It is, therefore, important to understand the extent of your duties and obligations before accepting an appointment as an Executor on behalf of your client and if your professional indemnity insurance will extend to this role , even if they form part of your work as an accountant or financial planner.

In summary, the functions of the Executor are to:

- apply for letters of administration or grant of probate
- preserve the estate assets until they are distributed
- gather the assets of the estate and pay liabilities
- represent the estate and any legal proceedings
- manage the deceased person’s tax affairs
- distribute the assets according to the Will
- deal with settled land ( ie life interests)

Other duties and functions include arranging the deceased funeral, locating the original Will, locating beneficiaries, organising a death certificate and keeping full and complete accounts of all transactions made during the administration of the estate.

Conflict of interest

If you are a financial planner and manage your client’s portfolio, it is unlikely that your AFSL licensee will consent to you being nominated as an Executor because of the risk of a conflict of interest. This should be checked with your dealer group because some dealers will permit advisers to be appointed as Executors only if that appointment does not give them control over the client’s affairs. This could include being a joint or alternative joint/substitute Executor. For accountants, it is important to also check with your professional body as well as your professional indemnity insurer.

Remuneration

With the exception of a professional Executor that has a statutory entitlement to charge fees, Executors such as accountants, solicitors or financial planners cannot charge for their services as an Executor because of the general principle that an Executor must act gratuitously. The exception to this rule is if the Will authorises the Executor to charge and whether this charge is a commission or professional charge based on the work ordinarily performed by the Executor.

If you are going to accept the appointment of an Executor, it is important to discuss and agree with your client as to how you will charge, which should be clearly stated in the Will, referred to as a “charge clause”. A file note should also be held of this conversation.