Choosing an Executor is one of the most important things you need to do in constructing your Will. In this podcast, Dan Toombs talks with Brad Beasley, Partner at South Geldard Lawyers about how to choose an executor.

TRANSCRIPT

One of the most important decisions you can make in the context of estate planning is who your executor or executors should be. In considering the choice, there are some things you should pay attention to and to learn more, I’m with Brad Beasley of South Geldard Lawyers. Brad, what is an executor?

That’s pretty important to understand what the person does through the appointment in your will. And basically they, the person you appoint, they handle all of your affairs, personal or business, financial affairs through your estate administration. And the job can be sometimes and it can be sometimes difficult. For example, if you own a property as to whether or not it might get sold and then who inherits proceeds of money.

So there’s a number of roles that the executor has like decisions, applying for probate, proof of your will that effectively they’re the person who has the power to deal with your estate. They must follow the directions in your will, can’t make guesses, can’t change your directions or otherwise, they’ll be held accountable.

Now, who can act as an executor?

So anybody can act as an executor in Australia over the age of 18 years? You’ve got to be a legal adult. Obviously, they need the mental capacity to undertake the role. Sometimes it’s family. It might be a spouse, an adult child, an extended member of the family, a sibling or even a parent, subject to age and incapacity. People appoint their friends. That’s because their family may be under age or alternatively, they might not get along with their family. Sometimes commercial clients or clients with the need to appoint a professional, maybe an accountant or their lawyer.

And then there’s even professional organisations that can take on the role, such as the Public Trust office or one of the professional trustee companies.

But is it the case that most people would just assume that, look, you know, my oldest son, he’s a pretty smart guy or my oldest daughter now I should just appoint them. Is that how it normally sort of goes in your experience?

Normally the will maker looks to who’s closest to them, who’s trustworthy and who’s most capable. And lots of times in the mum and dad situation, that’ll be their spouse. But if your spouse is aged or they’re unwell, it could be your adult children. And if you have more than one child, the question is, do you appoint them all? Is there a particular order, etc.? But at the end of the day, they’ve got to be trustworthy, able to do the job and respect your wishes and follow them.

If an executor is not doing those things, they can be removed and a court can appoint an alternate executor. And again, that can be one of those people I mentioned, family friend, member or professional advisor, etc. So that’s normally who’s appointed and the role they take now

Is the person that is chosen to be the executor. Are they obliged to take on that role?

No, they’re not. So, for instance, will have a client come to see us and they want to make a will or update a will. And because the role of executor is it’s very, very important, not quite as important as to who you leave your property to. But to have somebody that’s trustworthy and capable is essential. So we strongly recommend to our clients that they actually ask the intended executor, are they prepared to do the job?

And sometimes they might get a little bit of a surprise with the answer. It might be, look, I’d love to, but for whatever reason, I can’t. My own circumstances won’t allow it. I’m moving overseas and I haven’t told you I might have some conflict with your adult children.

Brad, you mentioned at the outset the onerous nature of this role. Now, surely that in itself would sort of impact, I suppose, on the decision making in terms of who your executor should be.

Exactly. We’ve had situations where adult children don’t get along. So we’ll make or appoint maybe a brother or sister or a trusted family friend. And then the potential disputes that occur between the adult children and the beneficiaries and the pressure that they can apply upon an executor, it can be rather daunting.

And most times when family and friends take on the role, they don’t charge a fee. It’s generally only the professional trustee companies or the professional advisers who may charge a fee. So you’ve got somebody involved in a complicated estate. There are disputes between the beneficiaries. They’re not getting paid for it and they’re getting a lot of pressure. So it’s it can be a very onerous job in some circumstances. So the person who is the proposed executor, when they’re asked, should in turn, rather than maybe just blindly accept the appointment, should just inquire with the will-maker as to what might be involved and is there a likelihood of dispute?

What about the complex nature of the role itself in so far as, you know, the person’s ability to, you know, get their head around so many moving parts in terms of the distribution of assets, et cetera?

Does consideration need to be made to this?

Very much because the role of executor kicks in immediately upon the death of the will-maker. And that can to immediately go to things such as funeral arrangements, for instance, if a burial or cremation hasn’t been specified. What happens if there’s a dispute between the family about those sort of arrangements? So that’s in the very, very early days. But then the role after that will encompass identifying all of the assets and liabilities.

So, you know, what’s in the estate and what’s going to be dealt with, potentially applying to the court for a grant of probate, which is in sort of straightforward terms it’s proof of the will to ensure it is the latest will. It’s not subject to any creditor claims, et cetera, that you’re not aware of. But then it can get into things like preparation of tax returns. Now, obviously, some people have got fairly complicated financial affairs.

They’ve got trusts involved. They’ve got superannuation funds involved, partnerships. And all of those entities need to be dealt with. And obviously, the taxation side is generally a lot of liaison with accountants and lawyers if those matters are in the estate. Another instance of potential complication is if the estate is subject to a legal claim and it’s the obligation upon the executor to uphold the will and even potentially defend that claim. And then it can go into acting as a mediator, mediating to resolve disputes between beneficiaries.

And then when you get towards the final finalisation of the estate, it’s the distribution of assets and the proceeds in accordance with the will maker’s wishes.

So it can be complex, can involve lots of financial and legal matters, hence somebody who’s trustworthy and capable.

In those complex matters, is it your recommendation that perhaps somebody outside the family and perhaps even somebody that’s got a professional qualification, be it a law firm, be in an accounting practice or whatever the case might be, should take on that role?

Each person, each will-maker in each situation, need their own understanding. So there’s been situations we’ve experienced that the adult children do not get along. The parent doesn’t want to choose one child over the other, so they look to a completely independent third party professional person whom they respect, knows, capable, etc., and will amicably, but as far as possible deal with the adult children. That’s one instance.

So the next instances where say you’ve got those two adult children, rather than not having them in the role as executor, you’ll appoint the two adult children with a professional so that there’s three. And in the professional basically acts as a referee, acts as the one to make the decision in the event of a dispute. It can be a situation where you might have one spouse heavily involved in businesses and trusts and partnerships and all sorts of structures and the other spouse has their own career, but not quite as involved in it.

So sometimes the will-maker may appoint their spouse who is not quite as skilled in those trusts and partnership matters and their account because that will make us work closely with the account throughout their lifetime, seeing them every quarter, financials, BAS statements, all those sorts of things to be done. So there are reasons for professionals and either be lawyers, accountants, trustee companies, cetera to be involved.

There’s a lot to it, isn’t there?

Oh, there sure is. And it’s always regarded as something of an honour that will make us a certain person to be an executor, but that over the years, the number of times executives have expressed the sentiment that had I known what was involved or potentially involved, I might have reconsidered my decision. And as I say, because you don’t get paid as a family member or friend, it can be stressful, can be burdensome in the situations where the beneficiaries don’t get along.

In other cases, the estate administration can be a lot smoother sailing. The executive does a very good job, sometimes under guidance from the professionals, and they feel very fulfilled with having helped out a trusted family member or friend.