Executorship, will you or won’t you?

Karishma Choksi, founder and director of CCC WillEffect on why executorship is an invaluable service which IFAs can offer to clients.
By Guest |  18-04-17 | 
 
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Many people spend months deciding exactly how they would divide their estate and possessions after their death but they fail to spend a minute’s worth of notice on the person who would see that their will is carried out to the letter. Yes, that’s the role of an executor.

Simply put, the executor is the trustworthy and dependable person chosen by a testator to take on the difficult task of distributing the estate according to the testator’s will.

Can the execution of a will be a nightmare?

Execution of a will takes months and weeks of work from sorting out paperwork to clearing accounts, getting probate and much more. Even the simplest of wills require legal advice and documentation. Cases where large assets and one or more real estate properties are involved require extra caution as the executors of such wills can get involved in messy legal battles that can eat into their personal finances too, if they are not careful enough. It took late Bollywood actress Parveen Babi’s executor almost 12 years of intense legal battles to get her will ratified by the Bombay High Court.

Did you know that keeping in mind the issues faced by executors, certain developed countries offer executor insurances? In UK, a survey by Executors Insurance found that 12% of those who in the past had executed a will said it was “a complete nightmare”.

Whom does the testator choose as executor?

Sometimes people appoint themselves as executors of their own wills. Needless to say, that’s completely wrong. (In such cases since there is no valid executor, the court will appoint an executor. As you might imagine that is not the most desirable of solutions.)

We came across this situation recently. Mr. Saxena (name changed), a well-heeled businessman in South Bombay died leaving his property to his two sons. Both his sons were settled in America. Pratik, the elder son was named the executor. In order to fulfill his duties, Pratik took a sabbatical from his job and came to Mumbai. It took him more than 1 year to get things in order. He eventually lost his job, as his company couldn’t wait for him to return. He then had to take over/unwind his father’s old business. Pratik had recently got married and his wife was not open to staying in Mumbai - they got divorced. By the time he came to us for help, he felt he was in a nightmare because in less than a year after his father’s death and after taking on his responsibilities as an executor- Pratik was in Mumbai, without a job and without his wife.

As Indians become more global, sons and daughters rarely live in the same city as their parents. Most of them usually live in different countries. In such situations, becoming executors to their parents’ wills is not taken as a sign of esteem - it becomes an added burden in their hectic lives. They not only have to leave their well-settled lives for months, they also have to deal with unfamiliar laws and situations. Making them executors is not the best solution.

How long does it take to execute wills?

In our earlier example, it took Pratik more than one year to settle his father’s estate. That was a fairly simple settlement without any legal dispute. In cases where legal complications and disputes arise, you can expect more months and even years to go by.

The duties and responsibilities of an executor are very time-consuming. Usually, wills that arise from estates require probate, closing of accounts, payments of creditors, finding potential beneficiaries and much more. Bigger the estate, bigger the problems.

Can a financial adviser act as executor for his client?

At times, your client may want to appoint you as an executor of his/her will as you are the trusted advisor for his/her financial matters. In light of the above challenges, an IFA should have thought through the following questions before agreeing to be the executor:

  • Am I willing to commit significant time and efforts to this role which could jeopardise my primary role as a financial adviser?
  • If I refuse my client, would it upset him and therefore risk losing my years of efforts in earning his trust and building goodwill?
  • Would acting as his/her executor improve my chances of continuing to be the adviser for the next generation?

Is there a way of finding a judicious balance whereby you could oblige your client without jeopardizing your main profession as a financial adviser?

 Get professional help

Mr. Goyal’s (an IFA; assumed name) client had made him the executor of his will wherein he left his three siblings a three-storied house and various other assets. The three siblings live on different floors of the same house with their families. One of the sisters wanted to sell the house, while others were not open to the idea.

Now, Mr. Goyal’s troubles began. He had a very successful IFA practice and he realized that he would have to first spend months getting the will probated and then dealing with the distribution of assets. It was taking up a lot of his time and affecting his IFA practice as other clients began complaining of the poor service they were getting. What was he to do?

In this case Mr. Goyal can seek help of professional firms which offer advice and support to IFAs on these matters so that he can fulfil his executor role without jeopardizing his IFA practice.

Getting professional help makes sense for you as it:

  • Allows you to seek support of professionals who are specialists in these matters.
  • Creates a contract. Professional executors sign a contract with you so they will not opt out when the responsibilities arrive. You can be sure that client’s wishes will be carried out exactly according to the will.
  • It reduces the possibility of legal suits where any of the disgruntled beneficiaries try to question executor’s intentions.
  • The professionals equip you to deal with complicated situations. E.g. when one or both the witnesses die before the will comes into force. This leads to even more issues that simple individuals are unable to deal with.

Thus, while offering executorship is an invaluable service which an IFA can offer to his/her clients, without professional help, it could become a nightmare.

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