Executors have a number of different duties to perform when administering an estate, and it is essential that the full extent of the deceased’s debts, liabilities and potential claims are identified before an executor makes any payments to beneficiaries.

However, few executors realise that they can be held personally liable if they make a mistake as an executor, and even fewer realise that this liability can be unlimited and personal to the executor, not the estate. A statutory ‘duty of care’ on lay and professional executors was set out in The Trustee Act of 2000, which means an executor can be held legally and financially for any errors made.

To avoid issues, once you begin dealing with probate (the act of managing and distributing the estate) it is crucial to keep transparent and accurate records of all actions carried out as an executor. This is particularly vital if inheritance tax, which is payable at 40% on estates with a value of more than £325,000, is due.

Probate professionals are normally protected by professional indemnity insurance, but you will need to cover the cost of their fees – usually between 1.5% and 2% of the total estate value.

An alternative, if you’re acting personally as an executor, is to take out executor’s insurance, which protects you against legal or financial claims resulting from your actions taken as an executor. The cost of your insurance can also be claimed from the estate as ‘reasonable expenses’. The probate period usually lasts 6-12 months, and policies are taken out annually. You can also choose the level of cover required based on the estate value.