Taking on the role of Executor carries with it a great deal of responsibility. An Executor has the legal authority to administer an estate and as part of that process, must identify and value the deceased person’s assets and ensure they are distributed to the relevant beneficiaries per the terms of the deceased person’s Will, or according to the rules of intestate succession in Scotland. In attending to the executry administration, an Executor will often instruct a solicitor to assist them with the role, as there is a strict legal process to be followed.
What is in an estate can vary widely, from a house and a few bank accounts to, crofts, businesses, bitcoin, fishing quotas, prize winning race horses, classic cars and many more obscure items.
Where the deceased owned a valuable antique or collector’s item such as a classic car, famous painting, rare book or expensive jewellery, the Executor should be mindful of the need to ensure the objects are safe and suitably insured until they are sold or passed to their new owner, or the Executor could be held personally liable for theft, loss or damage where they have acted inappropriately.
A qualified auctioneer or expert should be involved to provide advice on selling the item, for example, in a specialist auction, or to a client they know would be interested in purchasing.
Some specialist items can be deemed to be of National importance so it is possible to obtain an exemption from Inheritance Tax (“IHT”) if certain conditions are met.
An Executor may be faced with administering an estate which involves an ongoing business, and that may be a sole trader, a partnership, or a company. The deceased’s interest will need to be preserved and valued. It is crucial that the Executor takes specialist advice from a corporate and potentially an employment lawyer, as well as the business’ accountant to make sure they are doing all they can. They also may have to make sure they are not conflicted as regards their own personal circumstances.
Again, many businesses can claim relief from IHT known as Business Property Relief (“BPR”) which can be very valuable.
Linked to having a business interest, a deceased person may have owned and run a farm, and the Executor will need to consider factors similar to those detailed above. Often the main concern will be the continued running of the farm during the estate administration period and the Executor will therefore need to ensure cash is available to pay for animal feed and welfare etc. How easy or not this will be will largely come down to the deceased’s own planning including whether they had a Will.
Depending on if the deceased owned the croft or was a tenant, strict rules will apply as to how it can be passed down. For instance, a croft tenancy cannot be bequeathed to more than one person and notice must be given to the landlord and also the Crofting Commission, within one year of the date of death.
From an IHT perspective, an Executor may achieve Agricultural Property Relief and/or BPR in relation to the farm or croft.
Likewise, should the deceased have an interest in a fishing quota, there will be industry-specific timelines, guidelines and rules to adhere to ensure that the quota can be passed on.
If you are lucky enough to have owned a prize-winning horse then once again there are additional “hurdles” for your Executors. Often an individual will only own part of a race horse and other parties may have an interest and ideas about what’s best. The Executor will likely need to find a way to work with many parties and deal with the expenses and hopefully, the winnings during the administration period.
Not only must an Executor become a bit of an expert in many different areas, they must carry out many other duties. They may find themselves part detective as they search for bitcoin passwords or hidden safes. They must apply to the Court for Confirmation and ensure HMRC has received the right amount of tax, be that IHT, Capital Gains Tax or Income tax. They must ensure any debts or claims on the estate are considered and paid. They must discharge Legal Rights (a claim that spouse and children have to the moveable estate) and at the end of it all, prepare an account to show all of the intromissions with the estate.
This article has hopefully highlighted not only some of the duties involved in acting as an Executor, but the importance of getting your affairs in order to ensure the assets within your estate can be handled effectively by your appointed executors and protected for your loved ones. This is particularly the case if you own assets that could be classed as slightly unusual.
At Harper Macleod, we cover an extensive range of specialisms ranging from private client to corporate law, as well as employment, crofting, marine and banking, and would be able to provide advice on all of areas of estate administration.
Harper Macleod’s Private Client team can assist with all matters related to making a Will in Scotland.
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