The appointment of executors out of convenience may lead to inconvenience and even put one’s estate administration and estate distribution in jeopardy, Rockwills Group Managing Director Saw Leong Aun cautioned.
It is common practice for testators to appoint, out of convenience, their spouses or children or trusted friends as executors to handle their estate administration, Saw added. While this is not wrong or prohibited, it could be counter-productive for the effective administration of the testator’s estate if the appointed executor is unfamiliar and inexperienced with the tasks at hand. He pointed out that many are ignorant that the task of handling estate administration is not easy and can be onerous as it may involve complex and long drawn administrative processes involving legal, tax, banking, accounting and administrative matters.
“So the convenience of appointing executors based just on trust may not be a convenient thing after all,” he said, adding that the role and tasks of executors have been very much understated with many having the notion that it should be something that anyone can handle.
Saw said one of the lesser known fiduciary responsibilities and duties of an executor recently caught public attention with the news of the proposed Stamp (Amendment) Bill 2017 tabled in Parliament. “It is not surprising that some people were taken aback that unpaid duty, penalty or sum due from a deceased person could be recovered from the executor of the deceased’s estate.”
The proposed amendment to the Stamp Act stipulates that the executor should not distribute any of the assets of the deceased unless provision had been made for the duty or penalty payment. This would mean that the executor of a deceased’s estate would be liable to make good the unpaid duty or penalty even when he had already distributed the estate to the beneficiaries in accordance with the deceased’s will.
The Inland Revenue Board was also in the news saying it is legally empowered to collect outstanding taxes from the rightful next-of-kin of the deceased under Section 74 and Section 106 of the Income Tax Act.
Saw added that although it is already required for all debts — ie loans, credit card dues and taxes — to be settled by the executor before proceeding to distribute the remaining assets to beneficiaries according to the instructions in the wills, the amendment to the Stamp Act further reinforces this requirement as a duty the individual executors will have to carry.
“This augurs well for estate planning as it also serves to heighten the awareness of the roles and responsibilities of executors, which are not widely known and understood.
Rockwills has been holding regular educational talks on various aspects of estate planning in its efforts to raise awareness of the importance of estate planning and in a recent collaboration with resident associations found that couples were concerned about their jointly-owned assets and whether they were doing it right by appointing each other as executors to handle their respective estate administration.
Source: Media Release