Don’t misjudge executor liabilities, says Equity Trustees
Appointing an executor of an estate may seem like a simple task, says Equity Trustees wills and estates accredited specialist Anna Hacker, but the role of executor can be an onerous one that comes with multiple liabilities.
Hacker said there were still a number of misunderstandings about wills and estates and in an increasingly litigious society, the role of executor might entail more work than was initially thought.
"Most people will appoint a friend or family member as an executor, and believe it is an approach that will also save money," she said.
"However, an inexperienced, incompetent or distracted executor can cost an estate and the beneficiaries a great deal of money."
Hacker said an executor could be liable to beneficiaries for any mismanagement of the estate that could arise from a lack of understanding or expertise.
She asked how an inexperienced executor could correctly interpret "ambiguously expressed directions" with regard to issues such as capital gains tax, income tax, investment decisions and superannuation balances.
If the will was challenged, an executor could get caught up in family disputes which, given today's complicated estates, could attract a number of family members who felt entitled.
"We are a more mobile society, and single-parent families, de facto relationships, and second marriages with blended families can all make estate planning complicated and lead to people feeling entitled but not recognised," she said.
Those who do appoint a friend as executor in the hopes it would save money could also be in for a shock, Hacker warned.
"The reality is that any executor can charge for their efforts, and we have seen an increase in the number of executors charging across the board," said Hacker.
She also warned that if an appointed executor died while administering the estate, their executor would take over.
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