Essex is home to some of the most expensive properties in the UK and there are many wealther families. However, as families become more dispersed and distant, there is an increasing problem of disputes over wills. Peter Collins from LFC Risk and Insurance, an Essex company that provides business and individuals with bespoke insurance and risk management solutions, discusses wills, inheritance and protection for executors.
Being an executor of will is often more complicated than you would think. With so many different kinds of insurance for all sorts of things, it can be really hard to understand which ones will actually be of use in the long run. One that is often overlooks is Executor Liability Insurance, but it’s actually one that should really be taken into consideration.
Executing a will can lead to major family disputes. Take the case of Peter Ustinov – he had not updated his will after writing it 36 years before he died. The result was a nine year dispute between his remaining family that risked seeing the entire estate eaten up by legal fees. Nobody would ever want that.
It’s fairly common for people to not keep their will up to date or their affairs in order. Partly because people generally hate the idea of having such morbid discussions, but also because confusing tax rules and strict regulations make dealing with any estate can become very confusing very quickly. This, coupled with the decline in appointing a professional executor, has led to the burden of responsibility falling on a nominated family member, friend or even business partner of the deceased.
Most executors don’t actually realise the personal liability they can face when putting themselves up for this voluntary, unpaid role. This personal liability can put their own financial wellbeing at risk, something that people rarely consider when they volunteer. The reason for this is that beneficiaries are able to take legal action when they feel that there has been an issue or problem with an estate. The executor of the will is directly responsible and, if they don’t have the right insurance, it can ruin them financially.
Any fines or interest that the HMRC have imposed, along with any losses that the executor has caused, intentional or not, that effects the beneficiaries and that could have reasonably been avoided will all be charged to the executor.
If there are not enough funds in the estate to cover things such as funeral expenses, estate agents fees or other similar fees, these must also be paid by the executor.
The situations outlined above are actually best case scenarios. Long, drawn out court cases aren’t unheard of where a beneficiary or family member contest the mental capacity of the deceased at the time the will was created or even the actual validity of the will.
How To Protect Yourself?
Executor Liability Insurance protects against both innocent errors that can happen when someone is unfamiliar with the tax and inheritance laws, but it also can cover any legal fees should a beneficiary or third party feel that the mistakes warrant a court battle.
If you are considering becoming an executor, the important thing is to do your research. Make sure you fully understand what it is that you’re agreeing too and make sure you have the relevant insurance in place from the moment you legally agree. It’s worth it for the peace of mind.