Role of the executor

In response to the article, 'Role of the Executor' published on July 30, 2012, one reader wrote, "The article was quite informative and timely. Perhaps you could follow up with an article on probate of wills (how and why) so that the ordinary layman can be informed.

The response will be given in two parts. In this first part, the reason for applying for probate and the costs involved in doing so are discussed.

Many persons still hold the mistaken belief that nothing needs to be done to give effect to the terms of a will for the gifts to pass to the beneficiaries named. That is not so. Recognising that a will is one of the most powerful legal documents a person can prepare, it is often prepared without the assistance of an attorney and the interpretation of the clauses of the will is done at a time when that person can no longer say what he intended because he is deceased, means that some determination must be made that the will was prepared in accordance with the law before the person's estate is distributed in keeping with that will.

Probate literally means to examine and prove, so when a will is probated, the court examines it and verifies that it was prepared in accordance with the Wills Act. This enables the personal representative of the deceased's estate, to commence the administration of the estate and carry out the wishes of the deceased.

Below are the steps recommended for an executor to take after the person whose will he is appointed to act has passed away:

Seek the advice of an attorney-at-law.

Collect all original documents, for example, the will, certificates of title, share certificates, insurance policies, bank books etc.

Apply for a death certificate from the Island Records Office (at the very least, secure the original burial order).

Gather original receipts for funeral expenses.

It is usual for one of the executors appointed under the will to go to an attorney who will advise him of the procedure for the application for the grant of probate and the cost of doing so.

Some of the costs incurred by the estate are set out below:

Stamp duty of $2,000 must be paid before filing the application in the Supreme Court.

Advertising fees of approximately $15,000 will be incurred after probate is granted. A notice to creditors has to be published in the newspaper.

Transfer tax is charged to pass ownership of all real property (i.e. land and buildings) and shares from the testator/ testatrix to the beneficiaries under the will. It is calculated as a percentage of the value of the real property and shares as at the date of death. (It should be noted that transfer tax is charged on these items whether they are jointly owned or not.)

In 2011, significant amendments were made to reduce transfer tax rate to 1.5 per cent. This is a marked improvement given that the rate of transfer tax was 15 per cent up to June 2005.

Where the property is held as joint tenants, the tax will only be charged on the interest of the testator/testatrix, rather than on the full value of that asset. Therefore, if there were two joint tenants and one died, only one-half of the value will attract transfer tax.

Stamp duty was approximately three per cent of the total value of the estate until the law was amended in 2011 to reduce that charge to a maximum of $25,000, depending on the value of the estate. (The estate includes money in the bank, motor vehicles, shares and real property that are not jointly owned and insurance policies in which the estate is beneficiary.)

Attorneys' fees vary between three to six per cent, and six per cent of value of the entire estate. The minimum fees charged by most attorneys range between $70,000 and $100,000. There may be additional costs for other applications, for example, to note death when title to property is held as joint tenants.

The law permits executors to charge a commission at the rate of six per cent of the value of the entire estate for the work carried out in winding up the estate. This fee is shared among all executors.

There may be other costs, depending on whether legal action has to be taken in relation to the will or the circumstances in which the person died.

Sherry-Ann McGregor is a partner and mediator with the firm Nunes, Scholefield, Delon and Co. Send Feedback and questions to lawsofeve@yahoo.com or lifestyle@gleanerjm.com

Next week, we will examine the actual application for probate, including the documents which need to be prepared and the steps involved.