Amanda Bako of Rawlinson & Hunter explains why the appointment of a professional executor can be the safe choice by relinquishing the burden and maximising the efficiency of estate administration.
With a rising number of contested wills and disputes between executors, it is increasingly crucial to ensure that appropriate, qualified executor(s) are appointed. More individuals are selecting a professional executor rather than leaving a loved one or close friend with what can very quickly become a burden which they are not equipped to manage.
Where an estate consists solely of a private residence and cash, it may be preferable to choose a family member or friend to act as executor. However there are a number of circumstances where selecting a professional executor would be beneficial.
With high net worth, assets held by individuals can be varied and sophisticated, ranging from financial investments, commercial and residential real estate, and private company shares to business assets. A suitably qualified and experienced professional will be able to manage multiple asset classes and organise the effective disposal of these assets to provide maximum value to the estate. Many professional executors will have a global team of specialised individuals who are able to tackle the complexities of various asset classes in an efficient manner.
Not only can assets be located in different jurisdictions, many families will also have members located across the globe. These factors can make the administration of an estate extremely onerous, lengthy and stressful. This can require engaging legal and tax advisors in several jurisdictions and a professional executor will have the time capacity and relevant connections to assist.
Where there are minor children or vulnerable family members involved, it is common for a will to create a testamentary trust to provide for their ongoing needs. In these situations, it is helpful to choose a trust company who can act as both the executor and trustee for greatest efficiency.
Unfortunately, many estates result in family conflict either due to the terms of the will or oftentimes because of the choice of executor, for example, where a parent chooses one child over their siblings. At what is already an emotional time, it is of benefit to have an impartial, independent executor who is able to diffuse any tension or disputes that may arise.
An executor has a duty of care when administering an estate and to its beneficiaries. Dealing with a complex or high value estate could lead to mistakes that cause loss to the estate. Executors can be held personally liable for any claims. Choosing a professional executor removes potential personal liability and financial burden.
There is a perception that appointing a professional executor can be expensive. However, when considering a complex estate, it is likely that an inexperienced executor may need to spend additional time consulting with legal and professional advisors, which could result in significant costs being incurred, but also may not maximise asset realisations for the benefit of the estate.