Let's start with some basics. When it comes to estate planning, a Will is one of the most important documents. It is essentially a road map that lists down a person's wishes as it relates to the distribution of his or her assets and liabilities.

The person writing the Will is known as a Testator. In their Will, the Testator appoints roles to people important to them such as Beneficiaries (recipients of the Testator's estate), a Guardian (for minor children), Witnesses (required to execute a Will properly to ensure its legal validity), and finally an Executor.

The Executor plays a pivotal role as s/he is responsible for executing the wishes of the Testator with respect to the entire estate in good faith. The Executor basically serves as a Trustee, or legal representative of the Testator once s/he has passed away.

Furthermore, the Executor's role is not a one-time task, but a process that unfolds over time until the entire estate has been effectively transferred to the Beneficiaries. Estate administrative responsibilities can take several months or even years, depending on the complexity of the estate. Executors must manage assets, pay bills and clear liabilities, and maintain records throughout this period.

Key Takeaways

• Understand the importance of appointing an Executor (and backup Executor) in your Will.
• Learn how to choose the right person for the job.
• Know about the various duties and responsibilities of an Executor.
• Understand compensation and timelines with respect to administering estates.
• Find out if an Executor can also be a Beneficiary and in which situations this is recommended.
• Familiarise yourself with the Yellow Smart asset transfer service and its potential benefits for your family and Executor

How To Choose An Executor For Your Will

‍

‍

One of the first decisions you take when you begin writing your Will is naming an Executor, ie the person who literally “executes” what’s outlined in the Will and carries out its instructions. Legally, an Executor can be:

• Any person/individual over the age of 18 with a sound mind
• A company incorporated in India
• A Beneficiary under the Will

The role of an Executor is an important one, as the person you choose will be entrusted with a number of responsibilities, such as the distribution of assets, settling all liabilities and dues, and coordinating any funeral-related duties.

Hence, you should make sure the appointed Executor is:

• Competent enough to understand the basic legal and administrative formalities required.
• Personable and gets along with others. They should be able to communicate well with the grieving family and keep them in the loop of their actions, with regard to the distribution of assets as per the Will.
• Conveniently located, preferably in the same city, so that they are available on the ground where the execution of the Will is to take place.
• Comfortable with taking on this responsibility. (Talking with them about it beforehand and obtaining their consent may be the best way to go about this.)
• Younger than you, so that they may survive you in order to take on this responsibility.

Selecting An Executor

Like most people, you may feel more comfortable appointing a close family member as your Executor, or you may not! If you don’t, you can always pick a professional or a lawyer. Just make sure that you choose this person wisely and with prudence. It's important to note here that you have the option to appoint a backup Executor as well, in case the original Executor is unavailable.

The Role Of An Executor

The vital role of the Executor comes into play after the death of the Testator. The Executor is legally responsible for ensuring that all the wishes and commands of the deceased Testator are honoured by all the parties involved in the Will. The Executor's responsibilities are multifold including but not limited to the below.

Legal Duties:

• Obtaining custody of the original Will and other relevant official documents of the Testator, like the death certificate, identification documents, and property and asset ownership records.
• Filling out all the necessary forms in order to transfer the assets of the Testator, like savings accounts in a bank, fixed deposits, shares, and mutual funds. The Executor might also be required to dispose of any property or belongings of the Testator, as specified in the Will, and add the proceeds to the estate for distribution.
• Making an inventory of the entire estate of the Testator by preparing a statement of assets and identifying all outstanding liabilities.
• Receiving debts owed to the Testator and paying off all outstanding debts to creditors on priority and diligently. The Executor needs to keep a record of all transactions done on behalf of the Testator. The Executor also has a right to sue on behalf of the Testator, if the need arises.
• Filing the tax returns for the deceased under the Income Tax Act, 1961.
• Providing for the funeral expenses from the estate of the Testator. If there are any directives laid down by the Testator in the Will regarding the observance of any specific funeral arrangements or rites to be observed, the Executor will need to carry them out with the assistance of the heirs, if required.
• Applying for Probate, as applicable in the cities of Mumbai, Chennai and Kolkata, in the Probate court. It is the Executor's legal responsibility to file for it in a court of law. (Read more: Understanding Probate of Will in India: A Comprehensive Guide)
• Getting the Will registered, if required, by the official authorities. For example, in some instances of property mutation, a registered Will may be preferred. Though Will registration is not mandatory, an Executor under Section 40 (1) of the Indian Registration Act, 1908 is permitted to register the Will after the death of the Testator.
• Interpreting the Will as intended by the Testator and administration of the settlement and distribution of assets as instructed in the Will to the correct Beneficiaries.

Fiduciary Duties:

Executors owe a fiduciary duty to Beneficiaries, which means that they are obliged to act in the best interests of the estate and its Beneficiaries. These duties include:

• Prudent Financial Management: They must manage estate accounts and assets carefully, making prudent investments, paying bills promptly, and keeping clear records of financial transactions.
• Impartiality: Executors should treat all Beneficiaries and legal heirs fairly and impartially as per the wishes of the Testator, avoiding conflicts of interest or favouritism, in their best interest.
• Accountability: Executors are required to maintain regular accounting statements and reports to ensure transparency in the estate's management.

Ethical and Moral Responsibilities:

Beyond their legal and financial duties, Executors also have ethical and moral responsibilities, such as:

• Respecting the Wishes of the Decedent: Executors must carry out the wishes of the deceased as outlined in the Will, even if they personally disagree with those wishes.
• Maintaining Confidentiality: They should maintain confidentiality over the financial affairs of the decedent.
• Communication and Transparency: Executors are encouraged to maintain open and transparent communication with Beneficiaries, keeping them informed about the progress of estate administration.

In summary, the role of an Executor is multifaceted and involves a blend of legal, financial, and ethical responsibilities. Executors must be prepared to navigate the complexities of the legal system, make sound financial decisions, and uphold the moral duty of ensuring the wishes of the deceased are respected while acting in the best interests of the estate and its Beneficiaries. Understanding these responsibilities is essential for anyone considering taking on the role of an Executor or for Beneficiaries seeking to comprehend the executor's duties in the distribution of an estate.

Compensation Charged By A Professional Executor

‍

‍

If you do choose to go with a professional, an Executor's compensation, often referred to as a fee, is the payment they receive for their services in administering the estate. If it's a family member or close friend, they may not charge a fee at all. However, a professional Executor will have certain charges. It's important to be aware of the amount and method of compensation, which can vary depending on several factors.

An Executor's pay is intended to compensate the individual for their time, effort, and expertise in managing the estate. This compensation is typically considered an expense of the estate, meaning it's paid from the assets of the estate before distribution to the Beneficiaries. The following factors contribute to understanding a professional Executor's compensation:

• Will Provisions: The Will itself may specify how the Executor should be compensated. It might set a specific fee, a percentage of the estate's value, or leave it to the discretion of the Executor and the Beneficiaries.
• Complexity of the Estate: The complexity of the estate plays a role in determining compensation. Handling a simple estate with a few assets and Beneficiaries may warrant a lower fee compared to managing a complex estate with numerous assets, debts, and Beneficiaries.

Common Methods of Payment

Executor compensation can be paid in different ways, including:

• Percentage of the Estate: The Will may specify a percentage of the estate's value as the Executor's fee.
• Hourly or Flat Fee: In some cases, the Executor may agree on an hourly rate or a flat fee for the Executor's services.
• Reimbursement of Expenses: In addition to a fee, Executors are typically entitled to reimbursement for any out-of-pocket expenses incurred while managing the estate.
• Negotiation: In some situations, the Executor's compensation may be open to negotiation between the Executor and the Beneficiaries, subject to court approval.

What Happens If You Don’t Appoint An Executor

If you don’t end up appointing an Executor to your Will for the administration of the estate, the court will appoint one for you. This person, known as an administrator, is usually chosen from your immediate family or legal heirs. Please note that this may not be ideal. You know the dynamics that are at play when it comes to your family best, so it is always better to take this decision yourself.

How Yellow Can Help You Plan Ahead To Help Your Executor & Loved Ones

Navigating post-death formalities can be complex, particularly when managing diverse assets across different institutions and jurisdictions. Executors, especially those without prior experience, can find themselves grappling with added challenges.

That's where Yellow Smart's services come in. An acronym for Smooth Asset Recovery and Transfer, our aim is to guide Executors through the specific procedures and requirements of the Will administration process.

Administering a deceased person's estate is a weighty responsibility. It is crucial to ensure that all necessary steps and obligations are met before distributing the assets to the Beneficiaries. Our team of specialists is able to provide comprehensive support and services across India, at every step along the way.

Here's how we can assist you:

Knowledge and Support: We will familiarise your Executor with their rights and responsibilities, ensuring they are well-informed through the entire process.

Probate Assistance: We will guide them through the complex process of applying for probate, or letters of administration, streamlining the legal aspects.

Tax Compliance: Our experts will help your Executor in filing tax returns and managing any financial liabilities of the deceased, ensuring compliance with tax regulations.

Asset Identification and Cataloguing: We will help them identify and document all the assets owned by the deceased, ensuring a comprehensive estate inventory.

Additional Support: With 500+ specialised on-ground agents pan-India, we are here to provide any necessary assistance to help your Executor successfully fulfill their duties and distribute the estate.

With Yellow Smart by your side, you can help your loved ones navigate the complexities of estate administration with confidence and efficiency, ensuring a smooth transition of assets even after you’re gone. Learn more: Yellow Smart Asset Transfer Services

‍