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Choosing Executors and Attorneys

| Tax | Pensions | Investment | By Ugiagbe Ugiagbe

The day to-day decisions we make in everyday life can be complex enough. But minor indecision pails into insignificance when greater concerns arise, like not being able to make decisions at all.

Following death or a decline in mental capacity, an up-to-date will and lasting power of attorney can ensure an individual’s wishes continue to be met into the future. They are two “must-have” documents in estate planning.

Selecting executors and attorneys can be challenging as much as rewarding. We’ll help you understand what each role entails, the benefits of planning and how you can identify suitable candidates for each role.

Executor = for the inevitable

An executor is appointed in your will to settle your estate following your death according to provisions clearly laid out by you. They should aim to ensure your will is executed without unnecessary complication or delay.

The power your executor holds through your will becomes effective once the will is accepted for probate. Having said this, while grant of probate gives the executor the legal right to disburse the estate, the role of the executor starts on your death. There will be a need to examine the will and potential trust documents before probate is awarded. The probate process can take some time, which varies depending on the complexities of individual estates - the old adage of “how long is a piece of string?” applies. Nevertheless, this should not deter you from planning.

While there are some striking similarities between executor and attorney, the key difference is that an executor holds no power or authority over your affairs while you are alive. You do however, want to make sure the right people are caring for your wealth after you die. Remember, your executor takes on the job of carrying out the instructions you leave behind. Whether or not they are entitled to receive anything under the terms of your will, they have an obligation to act in the best interests of any beneficiaries.

Even wills concerning smaller estates with instructions that appear simple can soon become complicated without effective, early planning.

Key roles of an executor

  • Wrapping up your affairs.
  • Applying for probate.
  • Ensuring the correct amounts of Inheritance Tax, Income Tax or Capital Gains are paid to Her Majesty’s Revenue & Customs (HMRC).
  • Valuing your estate.
  • Ensuring the distribution of your property and assets as per your wishes.
  • Clearing any outstanding arrears from the assets of the estate.
  • Making any appropriate arrangements with Lawyers, Accountants and Financial Advisers.
  • Preparing final estate accounts for approval by the beneficiaries.

Key considerations in choosing an executor

Can you have / do you need more than one person?

The role of an executor is broad and arguably requires varying skillsets. The consensus is that having one individual is easier than having several, streamlining the process with less paperwork and less time wasted. Some people think having more input brings a higher element of risk. Giving multiple people the same power can lead to unnecessary disagreements and complicate a process that might already be difficult.

The decision is yours to make. You may feel it suitable to have co-executors with varying skillsets handling various tasks more efficiently (especially if you have a wide variety of assets). What should be noted is that with clear planning and concise communication, the justification for co-executors might be negated. It may be worth exploring.

Trust is a good trait

Ultimately, whoever you choose must be trustworthy. It’s important to remember that the wishes laid out in your will are yours. It is going to be up to your executor(s) to follow your instructions accordingly and deal with any disagreements that may arise.

An eye for detail

Handling paperwork and legal issues, distributing the estate and making immediate arrangements are a given. Further considerations might include the effect of Inheritance Tax (IHT) and Capital Gains Tax (CGT) and again, any complexities that come with this.

Due to upward shifts in equity and property values, as well as the stagnation of the IHT threshold (known as the Nil Rate Band), IHT is becoming more of a consideration for many of us. Given this upward trend, securing an individual to act on your behalf following your death should be crucial in planning.

Executor health

Is your executor well? A lot of work and potential pressure can come with the role so ideally, whoever you choose will be fit and healthy while driven to “get things done”. By law they’ll need to be of sound mind.

Timing’s everything

Hopefully you’ll survive long after your will is finalised, but you don’t want to be in a position whereby you outlive your executor. If an executor predeceases and no other living executors exist, the courts decides who becomes the executor and circumstances can quickly skew. As a rule of thumb, it can be beneficial to consider an executor younger than yourself, at least 18 years old (a legal requirement) or above.

Feedback and advice

You don’t need to make the decision behind closed doors. Share thoughts and listen to others’ views that you can trust. Our clients can understand and pinpoint any potential issues as part of their estate planning, by sharing their life circumstances with knowledgeable and sympathetic professionals. We also have tools that allow us to mitigate the impact of IHT and CGT on a loved one’s estate, offering advice and experience that can help make matters feel less challenging while ensuring wealth stays where it belongs.

A combination of a Solicitor and a trusted family member could well meet the role of executor. Somebody appropriately educated to handle legal issues while a loved one deals with personal matters is an idea that often arises. We guide clients to help them make the decisions that best suit their circumstances.

Lasting Power of Attorney (LPA): for the unexpected

An attorney is someone you designate to make decisions or act on your behalf if your ability to do so is compromised, or if you no longer wish to do so.

People are quick to put life insurance in place to safeguard unexpected death, but surprisingly we’re rather aloof when it comes to protecting our ability to make decisions. Without measures in place, there could be a negative impact on hard-earned wealth if someone’s mental state were to suddenly decline or dwindle over time.

Nobody, not even your spouse or a direct descendant, has a given legal right to make decisions on your behalf. An LPA changes this, empowering the person or persons you choose as your attorney to seamlessly take control and handle your affairs.

Types of LPA

Property and Finance

A Property and Finance LPA enables the attorney to make decisions on your behalf regarding management of your money, bank accounts, pensions and selling or buying property.

Health and Welfare

A Health and Welfare LPA allows the attorney to make decisions about your non-residential and residential care, medical issues, treatments and even your dress and daily diet.

You can choose to have one kind of LPA or both. It’s advisable to put both in place to ensure all areas of your life can be legally managed by someone you trust.

Key roles of an attorney

Property and Finance Health and Welfare
  • Ensuring your finances and possessions remain safe and separate from their own.
  • Making decisions in your best interests regarding pensions, property, investments etc.
  • Claiming benefits and dealing with taxes on your behalf.
  • Applying for a statutory will if one isn’t in place. They cannot however replace an existing will.
  • Making (or helping you make) decisions around daily routine, for example hygiene, dress and diet.
  • Deciding on medical care – if and what treatment is necessary.
  • Establishing where you live - either at home or in a residential setting.
  • Determining any need to spend your money on clothes and personal care items for your benefit.

Key considerations in choosing an attorney

Can you have and do you need more than one individual?

The short answer is yes. The principles that apply to an executor apply to an attorney too. Different skills may be required for a health and welfare attorney as opposed to a property and finance attorney. A significant amount of people will have just one attorney for both but there is no right answer to whether or not you need more than one individual. Again, having less people involved can streamline processes and avoid possible conflict between attorneys. Furthermore, it allows decisions regarding best interests to be made swiftly. The caveat to this? Two heads can sometimes be better than one.

Trust and understanding: good traits

Given the similarities of an executor and an attorney, good traits for suitable attorneys are similar too. You need to trust them. They should understand you, make decisions that they know you would want and look to respect your values.

Remember, an attorney normally comes into play once you’ve lost the ability to make a decision. You would want someone to stand up for what you would want.

Caring and assertive

Your attorney would ideally be someone who can communicate calmly and assertively, especially under pressure, to achieve an outcome best for you. Knowing your medical wishes, attitude to risk and views on both residential care and non-residential care will stand them in good stead. This is even more pertinent where best interest discussions with medical or care industry professionals may need to take place.

Unconditional

Most people select their spouse, a relative or a close friend to be their attorney. In addition to trusting the person completely, it’s important to feel comfortable enough to discuss healthcare wishes openly with him or her. Attorneys can be put in heavily emotional situations and it’s fair to ensure they’ll know for certain what you would want, were you in the position to act yourself.

Humility

A common misconception is that assigning an attorney is a loss of liberty. This is not true. Loss of capacity to make decisions can happen to any of us and can really leave a person and their possessions vulnerable. While LPAs are only relevant during an individual’s lifetime, you can be sure that someone you trust is legally entitled to act on your behalf and pursue your best interests if ever needed.

Legalities

Your attorney must be at least 18 years old and cannot be bankrupt if appointed to make decisions about property and/or money.

More than one attorney can be appointed at the same time. However, as with choosing an executor, clear planning and concise communication might negate the justification for multiple attorneys.

The bottom line

The same basic starting point applies when it comes to assigning executors and attorneys – who to trust? Then go from there…

In the wise words of the late Benjamin Franklin, “failing to plan is planning to fail”. Don’t leave your estate at risk.

Ugiagbe Ugiagbe

Trainee Adviser

Tax treatment depends on individual circumstances and may be subject to change in the future.

Warning – the views expressed by Courtiers in this summary and any video and video transcripts, are reached from our own research. Courtiers cannot accept responsibility for any decisions taken as a result of reading this document, watching the featured video or reading the video transcript and investors are recommended to take independent professional advice before effecting transactions. The price of stocks, shares and funds, and the income from them, may fall as well as rise. Past performance is not necessarily a guide to future returns.

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