The common law and statute place many obligations on a person appointed as Personal Representative; whether they have been appointed as Executor under a Will or as Administrator where the deceased died without a Will. The law make the Personal Representatives personally liable to make good from their own funds any losses a beneficiary suffers because of any breach of their obligations.
This information sheet has been prepared to assist clients who are considering appointing persons to administer their estate, or who are undertaking the administration of an estate.
This statement of duties and obligations of a Personal Representative is not comprehensive and is not intended as a full statement of the law; as the duties will vary depending on the nature of the assets in the estate and the beneficiaries. Specific guidance should always be sought from a lawyer experienced in this area of law.
Act in accordance with law or Will
The duties are basically the same irrespective of whether the person died leaving a Will. In the event of there not being a Will some duties and rights do not arise until the Grant has been issued by the Court, whilst where there is a Will most duties and rights arise immediately following the death.
The Personal Representative must act in accordance with the terms of any Will and the general law. The Personal Representative must ensure that all funds and property due to the estate pending distribution are collected in and held by or in the names of the Personal Representatives. These funds and property must be properly insured and only used to benefit the persons named in the deed as entitled to benefit. The Grant is the legal document issued by the Probate Court confirming that the persons named are the only persons entitled to deal with the deceased’s assets.
Act prudently, honestly and responsibly
The duty of a Personal Representative is to use, in relation to the securing and collecting in of the deceased’s assets the reasonable care a prudent person would exercise in relation to their own finances and property; including obtaining appropriate professional advice on matters outside their personal experience or knowledge. The Personal Representative is expected to bring to bear any skills and expertise he may have to the role; and hence a higher duty is placed on a professional Personal Representative. Personal Representatives should record the decisions they take and reasons behind them as these could be challenged in court by a beneficiary years later.
The Personal Representative must always act in the best interests of the beneficiaries as a whole and this overrides any personal, family, business, religious or ethical interests or beliefs they may hold. If a conflict of interest arises then the Personal Representative should excuse himself from voting on the decision or follow the independent professional advice sought. This can be very difficult for the nonprofessional Personal Representative if there are internal family conflicts or pressures, especially over requests for keepsakes or items of the deceased’s jewellery (which are not specifically dealt with in any Will) and which may have an intrinsic value. Personal Representatives should properly evaluate and have valued if necessary, before giving away or otherwise disposing of any asset not specifically left under the terms of the Will. The Personal Representatives should seek the agreement of the beneficiaries who take the residue of the estate, as by disposing of the asset they may be depriving those beneficiaries of money properly due to them. Also if Inheritance Tax is payable on the estate an accurate valuation of all the deceased’s possessions will be required by the Inland Revenue.
The Personal Representative must not be seen to be obtaining any personal profit. Personal Representatives other than those acting in a professional capacity are unable to charge for their services. Similarly Personal Representatives must not be seen to profit by themselves or their family or associates, buying or selling assets to or from the estate.
Where the Personal Representatives are given discretion under any Will they must fully acquaint themselves as to the terms of that discretion and any limitation placed by statute or the deed. The Personal Representatives must record their decision and reasons for the decision. Any decisions reached must be fair to the interests of all beneficiaries.
Three Stages
Immediately following the death to register the death and organise the funeral if no member of the family is willing to do so. The person arranging the funeral becomes personally liable for the funeral costs, though they have the first call on the deceased’s assets to be reimbursed the reasonable costs incurred. What is reasonable to spend on a funeral has to be measured against the average cost of a funeral, the person’s station in life and the total value of the estate. If the estate is small in value, or there are likely to be potential disputes between beneficiaries, or there are children, disabled or charities that are due to inherit; the executors should be wary of arranging expensive funerals as they may not be able to get subsequent consent to reimburse themselves the full cost. The costs of any wake or headstone are not expenses to be paid from the estate without the consent of all beneficiaries but fall on the family member requesting them.
The Personal Representatives at this stage should secure and take into their custody or control all assets of the deceased, including arranging for notification to be given to any banks or savings institutions to reduce risk of unauthorised withdrawals.
Next step is to arrange for the assets to be valued and to obtain as much details of the deceased’s debts and liabilities, so that a calculation can be made as to the size of the estate and whether IHT will be payable. Except in the smallest estates (usually under £10,000) a detailed account has to be rendered to the Inland Revenue as part of the application for the Grant. When applying for the Grant an initial instalment of tax may also have to be paid.
Post Grant. Once the Grant has been issued then the Personal Representatives’ duty is to transfer to any beneficiary any item specifically left to them and otherwise realise the assets to pay the deceased’s debts, including income tax and balance of any IHT due. The duty on the Personal Representatives is then to divide the balance in accordance with any Will or in strict accordance with the rules on Intestacy. With the agreement of all beneficiaries, assets can be transferred direct to a beneficiary without being sold in settlement of their entitlement.
To account
Personal Representatives must inform beneficiaries and, if they are under 18 or disabled, their parents or carers, as to their entitlement. The Personal Representatives are required to provide accounts to all beneficiaries as to the value of the estate and detailing transactions made during its administration. The Personal Representatives must ensure tax returns are made and the tax paid during the duration of the administration. The Personal Representatives remain personally entitled to ensure all debts and taxes are paid.
Conclusion
The law therefore imposes responsibilities on a Personal Representative which can be complex and time consuming and for which unless they are a professional carrying out his normal professional duties they normally cannot be paid for. The time spent dealing with even a simple estate; collecting in all the information needed, ensuring the correct tax returns and payments are made at the correct time can when added together amount to several full weeks. Instructing solicitors to deal with the administration on their behalf enables the Personal Representatives both to devote that time to their own lives, as well as ensuring that the estate is properly administered and they are not at risk of being sued for failing to administer the estate properly or pay all the debts due.
Should you be considering appointing a Personal Representative, or have been appointed as a Personal Representative and are unsure how to proceed you should seek professional advice.
For further information as to the range of services we provide to assist Personal Representatives in carrying out their duties or to discuss any specific concerns please contact our experienced team of solicitors on 020 7940 4000 indicating which of our offices would be easier for an appointment, or email Christopher McNeill.
