An executor in England and Wales may be personally liable for losses caused by a breach of duty in administering an estate. Where an executor distributes too early, overlooks a creditor they knew of or should have investigated, underpays inheritance tax, or pays debts in the wrong order, the beneficiaries, creditors or HMRC may seek to recover the resulting loss from the executor personally rather than from the estate. Acting honestly and without payment is not necessarily a defence.
Key facts
Executors administer the estate for those entitled to it, and owe fiduciary and statutory duties in doing so.
An application under the Inheritance (Provision for Family and Dependants) Act 1975 must ordinarily be brought within six months of the grant of representation, though the court may permit a late application.
A statutory notice under section 27 of the Trustee Act 1925 protects an executor against claims by previously unknown creditors and beneficiaries, but not against known ones.
HMRC can recover unpaid inheritance tax from personal representatives personally under section 200 of the Inheritance Tax Act 1984, subject to the statutory scope of that liability and any discharge obtained.
An executor may renounce using form PA15, but only if they have not already accepted office by intermeddling.
What does “personally liable” mean for an executor?
An executor collects and administers the deceased’s assets for the people entitled to them. Where an executor pays money to the wrong person, settles debts in the wrong order, or underpays tax, those who lose out may pursue the executor personally for the shortfall.
Acting in good faith is not, by itself, a defence. Neither is being an unpaid family member doing their best in difficult circumstances. The duty is to administer the estate with the care the law requires, in accordance with the will, the applicable succession rules, and the statutory order of administration.
Most estates are wound up without incident. The five situations below account for many of the cases where personal liability arises.
1. Can an executor be liable for distributing an estate too early?
Yes. Distributing before relevant claims and liabilities have been properly investigated is among the most common routes to personal liability.
Certain people can claim under the Inheritance (Provision for Family and Dependants) Act 1975 where a will or the intestacy rules fail to make reasonable financial provision for them. The categories include spouses and civil partners, former spouses or civil partners who have not remarried or formed a new civil partnership, children, certain persons treated as children of the family, qualifying cohabitants, and anyone who was being financially maintained by the deceased.
The usual time limit is six months from the date the grant is issued, and the court has discretion to allow an application after that period.
An executor who distributes after the six months have expired, without notice of a claim, has protection under section 20 of the 1975 Act. Distribute before then, and that protection is unavailable. Where a claim succeeds after distribution the court can also make orders affecting those who received estate assets, but the executor should not assume recovery from beneficiaries will be straightforward.
In practice many executors wait around ten months where a potential claim cannot be excluded. The reasoning is that a claim form issued within the six-month window ordinarily has a further four months for service within the jurisdiction. That ten months is a risk-management convention, not a statutory moratorium, and it does not rule out a late claim brought with the court’s permission.
Beneficiaries rarely enjoy hearing this. Where the family circumstances are at all complicated, the wait is justified.
2. What protects an executor against unknown creditors?
A statutory advertisement under section 27 of the Trustee Act 1925.
An executor must settle the deceased’s liabilities before paying beneficiaries. Where a creditor emerges after distribution, that creditor may seek recovery from the executor or, depending on the circumstances, trace assets into the hands of a beneficiary.
The procedure requires an advertisement in The Gazette and such other notices as are appropriate. Where the estate includes land, it is customary and generally prudent to advertise in a newspaper circulating in the district where the land is situated. At least two months must be allowed for claims.
Used correctly, section 27 protects the executor on distribution against qualifying claims of which they had no notice at that time. Two limits are worth understanding. It gives no protection against creditors the executor knew of or ought properly to have addressed. And it does not extinguish the creditor’s underlying claim against a beneficiary who received estate assets — it protects the executor, not the estate’s recipients.
A careful review of paperwork, bank statements and other financial records remains necessary regardless.
3. Are executors personally liable for inheritance tax?
Yes. Under section 200 of the Inheritance Tax Act 1984, personal representatives are among those liable for inheritance tax on the estate, and HMRC can pursue them personally to the extent the legislation provides.
Inheritance tax is generally due by the end of the sixth month after the month of death, with interest running from that date. Where a full account on form IHT400 is required, it must ordinarily be delivered within twelve months of the end of the month of death.
Penalties may apply where an account is inaccurate, particularly where the inaccuracy is careless, deliberate, or deliberately concealed. That includes an over-optimistic property valuation, an overlooked shareholding, or a lifetime gift in the seven years before death that nobody thought to report. Valuation is where DIY estates most often come unstuck, because the executor has no reason to suspect a problem until HMRC raises one.
Personal representatives should also consider obtaining a certificate of discharge before making a final distribution — though such a certificate has statutory limits, including where material facts were not disclosed.
4. What happens if an estate turns out to be insolvent?
Where the debts exceed the assets, a strict statutory order of priority applies under the Administration of Insolvent Estates of Deceased Persons Order 1986 and the related insolvency legislation.
Paying a sympathetic creditor out of turn, or worse paying a beneficiary, may leave the executor personally responsible for the resulting loss. Where there is any doubt about solvency, no non-essential payment should be made until the question is resolved.
5. What should an executor do about a beneficiary who cannot be traced?
Wills sometimes name a relative nobody has heard from in twenty years. Distributing and hoping they do not reappear is not a strategy.
There are established options: proportionate searches, usually through a professional genealogist; missing-beneficiary indemnity insurance; or an application for a Benjamin order permitting administration on the footing the court specifies. In some cases payment into court or another form of court direction is appropriate.
All of these cost less than distributing without protection and later having to restore the missing beneficiary’s entitlement out of your own funds.
Can you refuse to be an executor?
Yes. Being named in a will does not oblige anyone to act.
An executor may renounce using form PA15, provided they have not already intermeddled or otherwise accepted office. Intermeddling means taking steps that amount to assuming the functions of an executor, rather than merely arranging the funeral or preserving assets in an emergency — but closing a bank account or paying a bill from estate funds may cross the line. Once an executor has intermeddled, renunciation is generally unavailable without a court order.
Where a will names several executors, one or more can have power reserved, stepping back while the others proceed and retaining the option to apply later.
An executor can also accept the role and instruct a solicitor to do the work, with properly incurred administration costs generally payable from the estate rather than personally. That is usually the sensible route where there is a property to sell, a business, assets abroad, a blended family, an untraceable beneficiary, or any indication of a dispute.
Common questions
How long does an executor remain liable? Not for a fixed period, and not in the way many executors assume. A beneficiary or creditor who has lost out can bring a claim after the administration is complete, subject to the applicable limitation rules. Many breach-of-trust claims carry a six-year limitation period, but no limitation period applies to certain claims involving fraud, fraudulent breach of trust, or the recovery of trust property retained or converted by a trustee. The starting point and any postponement of time are fact-sensitive. Section 27 notices, careful handling of the 1975 Act claim period, and indemnity insurance materially reduce the exposure without necessarily eliminating it.
Does professional indemnity insurance cover a lay executor? Not by virtue of the appointment alone. A lay executor has no professional indemnity cover simply because they have accepted the role. Missing-beneficiary, creditor and other indemnity policies can be bought for specific risks within an estate, but there is generally no cover available for an executor’s own errors.
Can an executor be paid? A lay executor cannot ordinarily charge for their time unless the will contains a charging clause, or the beneficiaries or the court authorise payment. Reasonable out-of-pocket expenses can be reclaimed from the estate. A professional executor may charge where the will permits it or another lawful basis for remuneration applies.
What is the executor’s year? Under section 44 of the Administration of Estates Act 1925, a personal representative is generally not bound to distribute the estate before the end of one year from the death. It is neither a deadline for completing the administration nor an absolute bar on earlier distribution — but it is useful to know when a beneficiary starts applying pressure at month four.
Is an executor liable if a co-executor makes the mistake? Potentially. One executor is not automatically liable merely because a co-executor committed a breach. Liability may arise where the executor participated in the breach, improperly delegated functions, enabled the loss, failed to exercise proper oversight, or stood by knowing of the mismanagement. Passivity is not necessarily protection.
Speak to a probate solicitor
Sarah Rushworth is a Solicitor and Director at Laker Legal Solicitors, acting for executors in estate administration across Lancaster, Preston, York, Bath, Maidstone and Kings Hill. Her work includes complex estates and inheritance tax calculations.
If you have been named as an executor and want to understand what you are taking on before you commit, contact Sarah on 01524 753040 or at sarah.rushworth@lakerlegal.co.uk.
This article is general information about the law of England and Wales, not legal advice on any particular estate. Tax figures, time limits and procedural requirements change; confirm the current position before relying on anything set out here.
