Accountants and Financial Advisers: Have you been appointed as an Executor?
It is not uncommon for clients to appoint their trusted advisers as an Executor of their Will. Sometimes this appointment is a sole appointment and sometimes it is jointly with another party. But, what does this really mean?
As an Executor your obligations include, but are not limited to, calling in the deceased’s assets, paying out their liabilities and distributing their estate in accordance with their wishes. If the deceased hasn’t nominated whether they wish to be buried or cremated, it is also your duty to dispose of their body. Sounds simple, right?
We ask you, how well do you really understand your client’s affairs? Before taking on an appointment of this nature, it is critical you understand the risks, the burden and the amount of time that this might cost you (and your business).
What a lot of people don’t realise is there is no obligation on you to accept the appointment in the first instance. Prior to accepting any appointment, a proposed Executor should satisfy themselves of the deceased’s entire circumstances, including whether or not you are entitled to charge fees for such a role. Indeed, if the deceased’s Will contains an adequate charging clause such an appointment could in fact be quite lucrative. However, if there no mechanism for a proposed Executor to charge fees then it may be worth considering renouncing from the position.
If clients ask you to act as their Executor, it is important you have this conversation with them and ensure there is an adequate charging clause in their Will.
So, you have satisfied yourself that you can charge the estate for your fees, but have you assessed the liabilities of the Estate? An Executor in some circumstances can be personally liable. Like any trustee role, an Executor has an obligation to act in good faith and in the best interests of the beneficiaries. A lot of people do not realise that by accepting the role of Executor they may be exposing themselves to allegations by disgruntled beneficiaries of acting improperly, and find themselves entwined in expensive and protracted litigation having to defend themselves for simply doing a good deed for their client. Let’s not forget that there is often a reason why clients consider their family members to not be suitable candidates for the role.
Feeling anxious? It gets better!
As an Executor you can be personally liable for tax owing to the ATO, even after the estate administration appears to be finalised. So, it is critical you consider any appointment carefully and even take advice before taking any steps as Executor.
Macpherson Kelley are a national firm with offices in Queensland, New South Wales and Victoria. We are now also servicing the Gold Coast and Northern New South Wales. If you or your clients need advice in relation to Estate Administration, Estate Planning or Estate Litigation, please do not hesitate to contact us today. If you would like to know more about our services, please reach out to our Private Clients team and the coffee is on us!