On Friday 11th December our team had fun taking part in the Christmas Jumper Day for Save the Children Fund. Members of staff from every office took part and we managed to raise over £300 for the charity. Thank you to our Head of Accounts, Libby Sarsfield for organising. Hats off to Stephen Carr from our Dorking office for appearing in full Elf outfit! Here are some photos from the day.
What is an Executor?
An Executor is the person responsible for administering the estate of someone who has died leaving a valid Will. This article focuses on there being a valid Will with Executors who are able and willing to act in the administration.
If there is no will, or those named are unable or unwilling to act, an Administrator (usually one the beneficiaries under the Will) shall need to be appointed to administer the estate. An administrator’s obligations are similar to those of an Executor. For further information on Administrators and/or the Intestacy Rules, please see our October edition article, ‘my role as an Administrator’ for further information.
Who can act as an Executor?
A person can act as an executor if they are appointed in the Will of the Deceased, provided that :-
1. They are at least 18 years of age; and
2. They have full mental capacity (they should inform their acting Solicitor if they have received a diagnosis which might affect their capacity for example, a dementia diagnosis etc); and
3. They are not bankrupt nor in the process of being made bankrupt; and/or
4. They are a professional (such as a Solicitor or Accountant).
A beneficiary under the Will may be an Executor.
Grant of Probate
While the power of an Executor emanates from the Will, most organisations will not recognise the Executorship until the Probate Registry has issued a Grant of Probate. This document gives the Executor the authority to administer the deceased person’s estate.
On the 2nd November 2020, new rules came into force which required applications for the Grant of Probate to be submitted online. HMCTS has recently extended its grace period to allow paper applications to be accepted until the 11th January 2021.
How many people can act as an Executor?
1. The deceased can appoint up to four Executors; and
2. All decisions should then be made jointly by the Executors.
Can the Executor renounce their Executorship?
A names Executor is not legally obliged to take up the Executorship. As long as the Executor has not become too embroiled in the Administration of the estate (“intermeddling”), they will be able to renounce their Executorship through a “Deed of Renunciation.”
What is my role as an Executor?
Once the Executor has agreed to accept their role as Executor, they will have a responsibility to the beneficiaries to ensure that the Estate is administered properly. This means establishing
the value of the Estate, paying any debts, including tax, and distributing the estate to the beneficiaries in accordance with the Will. The law requires this to be done with due diligence.
Often, the Executor will appoint a Probate Solicitor to assist them with the administration.
The administrative tasks may include:
• Registering the death;
• Ensuring that there is no later Will than that which you are propounding;
• Opening an Executor’s bank account;
• Making funeral arrangements;
• Identifying the beneficiaries;
• Establishing the value of the deceased’s assets;
• Ensuring that there is adequate insurance in place for the deceased’s properties;
• Preparing a Schedule of Assets and Liabilities;
• Assessing the Inheritance Tax position and arranging for the payment of the tax;
• Completing the necessary Inheritance Tax Account;
• Preparing an application for a Grant of Probate;
• Calling in the assets upon receipt of the Grant;
• Selling assets, if necessary, to realise cash for the purposes of the administration;
• Distributing the estate to the beneficiaries;
• Transferring the assets to those entitled; and
• Preparing Estate Accounts
Does the Executor need to take out home insurance for the deceased’s residential property?
The Executor can be personally liable if there is any damage caused to the deceased’s residential property and they have failed to take out adequate insurance.
An Executor should contact a home insurance provider to :-
• Make sure that the deceased has taken out valid home insurance;
• Ensure that the home insurance was not invalidated upon the deceased’s death; and
• Take out home insurance if there is currently no home insurance in place or if the home insurance has become invalid.
If the deceased was paying home insurance, it is strongly advised that the Executor continues to make these payment (keeping receipts in order to reclaim the money from the estate).
When can the Executor sell the deceased’s property?
Any major assets in the deceased’s sole name (such as a residential property) cannot be sold until a Grant of Probate has been obtained.
Can the Executor sell the property under market value?
The Executor you must ensure that any property is sold for full market value. If the Executor fails to achieve market value for an asset, they risk exposing themselves personally to a claim from the beneficiaries if they have failed to achieve the ‘best price’.
To establish what the ‘best price’ or current market value is, it is advisable that the Executor instructs three estate agents to provide three independent property valuations. Alternatively, or in addition, the Executor may wish to instruct a surveyor to provide a property valuation.
It may be advisable for the Executor to consult the beneficiaries before selling an asset to ensure that they are satisfied with the price. Technically, the Executor does not have to consult with the beneficiaries however, it is advisable that they notify them.
There is a practical advantage to consulting with the beneficiaries as this can avoid a claim later on that the Executor sold the property for less than its market value.
Can the Executor be liable to the beneficiaries and creditors for any unpaid debt?
Executors who have distributed assets of the deceased are personally liable to any beneficiaries or creditors for any unpaid debts and liabilities even though they may not have been aware of them at the time of distribution. In order to protect themselves, they can advertise for creditors by giving notice of their intention to distribute assets, requiring any creditor to send in particulars of their claim within the stated time (not being less than 2 months from the notice date). The notice must be placed in the London Gazette and paper local to where the deceased lived.
Can the Executor charge for the work they carry out as an Executor?
An Executor is unable to charge for their work as an Executor (save for reasonable estate expenses) unless they are acting as an Executor in their capacity as a professional.
Can the Executor claim back their Executor expenses?
The Trustee Act permits the Executor to reclaim their out of pocket expenses, i.e. those sums that they expend in discharging their duties as a Trustee. The Executor should ensure that they keep all their receipts and present them to their acting Solicitor who will factor in these reasonable disbursements when prepare the Estate Accounts.
Should you have any queries and/or wish to seek guidance to ensure that you are acting in line with your fiduciary duties, then please do not hesitate to contact Kathryn McCullough (Our Private Client Solicitor) at kathryn@meaby.co.uk
This article is intended for general purposes only and does not constitute legal and/or professional advice. Please seek legal advice before proceeding with your matter.
Since Covid-19, local authorities have been experiencing delays in producing local authority searches. With the stamp duty holiday ending on 31 March 2021, any delays in transactions have been producing anxiety for clients who wish to buy before the end of the stamp duty holiday.
Since Covid-19, Hackney Council have been experiencing significant delays in producing local authority searches. After Covid-19 struck, their turnaround times increased and ended up being approximately two months. Then the Council experienced a Cyber attack which has meant that for some time, their systems have been down while they deal with the after effects of the Cyber attack and during this time have not been able to produce any local authority searches. Even regulated local authority searches (which is where a search agent attends the local authority’s offices in order to carry out a search themselves) are not being produced as their offices are closed to search agents during this time. Whilst their offices have been closed, the Council have been unable to provide any further estimated turnaround times as they need to deal with the situation, then assess the backlog before giving any accurate turnaround times.
Whilst Hackney’s systems are still closed the Council have now given an estimated turnaround time for local authority searches. They have given an estimated turnaround time of 171 working days. This means that any local authority searches which are now ordered will not be available before the stamp duty holiday deadline of 31 March 2021. Local authority searches are an essential document in conveyancing transactions. It answers numerous questions and provides a large amount of information from the Council’s records. It gives details of local land charges such as financial charges registered against the property, planning designations, information regarding planning and building regulations for the property, information regarding any orders noted against the property such as compulsory purchase orders or tree preservation orders, traffic and transport schemes, etc. Normally you need to receive the local authority search before you can exchange contracts as it contains such useful information and a search could reveal adverse entries. It is also usually a lender’s requirement.
An alternative to proceeding to exchange of contracts without a local authority search could be search insurance. There are two options. One is search insurance which is an indemnity policy where a local authority search is not ordered. The second option (which is a bit cheaper) is search delay insurance which is where you take out the indemnity policy where you have already ordered the local authority search and wish to proceed before the results are received. The second option is probably better than the first as sometime down the line when the search arrives you will find out what the search contains rather than having to potentially deal with an issue later down the line such as when you come to sell.
Search insurance is a legal indemnity policy which covers a buyer and their lender for costs in the event that it is later revealed that the local authority search would have revealed adverse entries. Costs can include costs of dealing with and removing an adverse entry and can also cover loss in value of the property due to an adverse entry.
We usually advise waiting until a local authority search arrives as it is much preferable to have all the information at hand before you commit yourself to exchange of contracts. If the local authority search does arrive before exchange, then you can ask the seller’s solicitors to provide any appropriate documentation or further information and you can ask the sellers solicitors to deal with any adverse entries. For example, if there are any charges registered against the property such as a Community Infrastructure Levy liability notice or a home improvement grant, you can require the sellers solicitors to pay off the charges. If the adverse entries are significant, then you can make an informed decision on whether to proceed or pull out or ask for a price reduction. It is normally better to deal with such entries before you commit to exchange of contracts rather than try to deal with them after you become the owner of the property and to deal with an insurer. However, with Hackney Council’s backlog for local authority searches being delayed for approximately half a year and due to the stamp duty holiday deadline, search insurance would appear to be the only option in order to purchase a property in the London Borough of Hackney before the stamp duty holiday deadline or to buy a property in the London Borough of Hackney for in the near future.
A potential issue with proceeding with search insurance is that a lot of lenders do not accept search insurance in connection with a purchase. They are more likely to accept search insurance for a remortgage where the borrower already owns the property. There are, however, a few lenders who do accept search insurance for searches. If you are considering buying a property in the London Borough of Hackney and wish to take out search insurance in order to proceed before the end of the stamp duty holiday deadline, then it would be worth speaking to your mortgage broker in order to identify particular lenders who will accept search insurance. It is also worth checking Part 2 of the UK Finance Mortgage Lenders handbook for conveyancers which is available online. Below is a link to the particular question which asks if the lender accepts search insurance and the answers are listed by lender:
https://lendershandbook.ukfinance.org.uk/lenders-handbook/englandandwales/question-list/2081/
If you have any property-related legal questions please do not hesitate to contact us for a no-obligation chat on 0207 7035034 or email us at info@meaby.co.uk.
Find out more on how we can help you in our Property Section.
There are three circumstances where the right to manage comes to an end:
However, the third point must be monitored closely.
It is clear that once a company has been struck off the Company Register the right to manage is no longer exercisable. If this happens, the management functions previously carried out by the RTM Company revert to the Landlord. However, when a company is restored to the register, either by order of court or by the administrative restoration process, the company is deemed never to have been struck off in the first place and the RTM rights are automatically reinstated. This was confirmed in the decision of the First Tier Tribunal in AB&R RTM Co Ltd v Rovergrange Ltd (unreported).
A recent consultation proposed that the principle in AB&R RTM Co Ltd v Rovergrange Ltd (12th April 2017) to restore the company to the register should have to be made within 30 days of the strike off taking effect. However, we are not aware of that law being implemented yet.
If you would like to discuss any stage of the RTM procedure please contact the Beth Rose: brose@meaby.co.uk or call 0207 703 5034. |