The Sunday Times has examined new research which shows that millions are executing Wills without realising what the personal risks are.

In what is believed to be the first publicly available research into this matter in the UK, Executors Insurance estimate that approximately 6 million people are experienced executors but only 4% of those people realise they are exposed to unlimited and personal financial liability.

The Sunday Times article looks at the real life case of Colin Lever, who HMRC attempted to fine even thought he had increased Inheritance Tax payments on his mother -in-law’s estate, when her house sold for more than had been anticipated.

Guy Everington of Executors Insurance said:  “Few people are aware that if they execute a Will they are personally vulnerable to claims if they make a mistake.  Beneficiaries, creditors, and HMRC can hold an executor to account for mistakes, with the potential for very serious legal and financial repercussions.”

The new research, conducted by Censuswide Research Agency on behalf of Executors Insurance, asked over 2,000 UK adults about key concerns of executors (executors are appointed to ensure the wishes of the deceased are properly carried out and that the estate is distributed correctly).

The research findings indicated that:

Millions of people are experienced Will executors (about 6 million adults according to Executor Insurance’s estimate). About 16% of adults have either executed a Will or are in the process of doing so, and a further 11% were executors but paid a solicitor, bank or other probate professional to advise and manage the probate.  A further 12% of adults (about 5 million people) are named as executors, but have yet to be called on to fulfil the role.

Many executors reported unexpected difficulties in the role.  While about half of adults who executed a Will found it straightforward (47%), about 12% by contrast described their experience as “a complete nightmare” and 17% found it far harder than they ever expected.

A surprisingly high number of people are likely to be executors:  Family and friends are the executors for about 75% of Wills: 62% of Wills name family members as executors and 16% have friends (about 3% have both). This contrasts with about 24% who have asked solicitors and about 3% who have asked banks and other probate professionals.

Only 4% of adults knew their financial liability for mistakes was unlimited. Most adults did not know the position:  67% of adults did not understand the extent of their liabilities while 28% mistakenly thought they had no personal liability or that it was limited.

Your legal responsibilities and personal financial liability for mistakes last for up to 12 years from taking on the role (or 15 years if there is a minor involved). Only 11% of adults were aware that liability lasted such a long period, while 43% mistakenly thought their liability finished once all payments were made from the estate.

Few people correctly knew when the role formally begins (and hence when their unlimited liability begins).  Only 4% of adults knew that the role begins when they “take any action in the role of executor” (which arguably could involve simply opening an envelope to read a letter about distributing the estate).

So should people simply pay a solicitor to avoid any possible hassle? 

Guy Everington says: “Many people pay solicitors or other probate professionals to execute wills on their behalf, which is certainly advisable where there are complications.  However, their costs are far higher than doing it yourself.

Others feel they want to take on the role of an executor because they want to do their duty and carry out the last wishes of a close friend or relative. Others choose to do it because they want to save beneficiaries money particularly where the estate is small – using lawyers and banks can significantly reduce the amount left for the family. “

For people executing a Will, protection is available through Executors Insurance’s Executors Liability Policy, which covers legal costs and claims.

Some costly problems encountered by real  Executors where insurance would have given them some protection

Causing losses to the estate by not acting promptly. The failure of an executor to advise the NHS in time after death to receive a full reimbursement of care fees previously paid. Loss to executor £33,000 (the loss would have been covered by insurance)

Loss in assets value discovered too late.  An asset was discovered long after the death and had by this time fallen in value. The 12 months’ statutory period for claiming IHT loss relief had expired, so the executor was not able to extend the reporting period and factor in the loss of value, giving rise to a substantial loss to the estate (the loss would have been covered by insurance)

Executors omission.  An executor failing to declare a gift given by the deceased to a third party – resulting in a personal fine of £10,000 from HMRC. (The fine is not covered by insurance but defence costs would be).

Problems from complications and long-running disputes.  Executors became embroiled in a dispute over the validity of a mutual will. In the initial stages they were able to obtain reimbursement from the estate for legal costs but eventually costs spiralled to £350,000 on an estate worth just over £134,000, potentially leaving beneficiaries with nothing. The Court of Appeal deemed this was due to the executors’ mismanagement and involvement in the dispute, and they were made personally liable for the entire costs. (Shovelar vs Lane). (All costs would have been covered by insurance).

If you would like further information about the Executors Survey 2015 email us at enquiries@executorsinsurance.co.uk