Say no to being an executor and still keep the client

Accountants may find it difficult to say no to an executorship. But it's possible to decline and still maintain a good relationship with your client.

Being offered executorship by a client is an honour but sometimes it is in an accountant’s best interests to maintain some distance.

By Katerina Peiros TEP and Ian Raspin FCPA

Parts one and two of this three-part series addressed the far-ranging and frequently onerous responsibilities of acting as executor for a client will-maker. In particular, the articles outlined the risks, pitfalls and not insignificant consequences of undertaking the role.

Practically, however, it can be difficult to turn down such an offer, and unless handled diplomatically may have adverse commercial ramifications.

Regardless, accountants are not without alternatives to offer a client in the event (for whatever reason) you decide to decline executorship. Importantly, these can help to preserve the existing client-accountant relationship and protect future retainer.

Alternative executor options

A will-maker’s choice of executor is limited to individuals or licensed trustee companies.

Individuals may be family, friends or professionals. Trustee companies could be the public trustee of a state or territory (for example, State Trustees Victoria, NSW Public Trustee and Guardian, Public Trustee of Queensland, and so on) or a private licensed company.

As will-makers are at liberty to appoint more than one executor, it is not uncommon for a combination of individuals and trustee companies to assume the role. Further, if they are deigned sufficiently trustworthy and sensible, family or friends might be considered, which is often a good option because they may already have intimate knowledge of the will-maker’s personal and financial affairs, an emotional connection to the will-maker and generally do not charge for their time and effort.

Professionals such as lawyers or financial advisors, when acting as executors, give rise to the same set of risks and potential conflicts as exist for accountants.

Public trustee companies are state-backed and creatures of statute; i.e. each jurisdiction has one. Accordingly, there is only a handful of private licensed trustee companies because accreditation is difficult to attain and retain. Both are heavily regulated by the Corporations Act 2001 (Cth) and Trustee Company Acts in each jurisdiction. The legislation contains an exhaustive list, and only those companies that are on the list are permitted to take on the role of executor and may be granted probate of a will.

Trustee companies offer extensive experience in estate administration and have systems and processes in place to deal with any situation. At times, however, their approach to family problems can be institutional and their fees high. Given each company has its own services and fee structure, will-makers should shop around and negotiate.

A best-case scenario could well be to appoint a combination of family or friends and a trustee company, possibly leading to executors taking a “softer touch” while also cutting costs. Notably, such options provide alternatives to an accountant from having to personally take on an executorship, without necessarily losing the estate as a client.

Safeguarding your position as trusted advisor

Many will-makers do not realise that executors need to engage professionals to assist with all aspects of administration. First and foremost, will-makers should be assured that most executors do not try to prepare their own applications for probate or contracts of sale of real estate or estate financials. As such, although the accountant may not be named as executor, nominated executors may still heavily rely on the accountant to continue to deliver the service he or she provided to the will-maker – should the accountant be able and willing to do so.

In order of decreasing responsibility, such commitments can include the following.

Executorship in tandem with a trustee company

A key advantage of this option is that the expertise of the trustee company can provide safeguards against the many risks executorship entails.

In other words, executorship would continue to generate a large volume of work for the accountant (and likely impact the personal or professional life of the executor), however, the executorial risk and responsibility would be shared with a very experienced professional executor. A downside is that cost to the client will be higher, as both executors will charge for their time, or on a commission basis.

Sub executorship

Although uncommon in practice, in theory there is nothing to stop a will-maker appointing a different executor to handle different parts of the estate. For example, Oscar Wilde, Albert Einstein, Franz Kafka and JRR Tolkien had literary executors.

Will-makers can appoint a sub executor to handle something of great personal significance or of such complexity that it requires special skills and attention. For example, they may believe that a particular accountant’s skillset is essential to effectively restructure, manage the sale of a business or oversee the valuation of a difficult or unusual asset.

Breaking a deadlock

Basically, this means that the will directs executors to refer any deadlock in decision-making to the accountant for resolution, and that all parties should be bound by the decision of the accountant.

It puts distance between executors, beneficiaries and the accountant, but gives due respect to the long-standing relationship between the accountant and the will-maker client, as well as the accountant’s skills and commercial good sense. Essentially, it binds the estate to the accountant.

This option could also be framed as some sort of casting vote or veto right bestowed on the accountant.

Engaging the accountant for all ongoing work

This proviso in a will may be coupled with a direction that the accountant’s retainer cannot be terminated unless certain conditions have been satisfied; e.g. a court approves termination or the accountant has retired.

It recognises the strengths of an individual accountant’s skills and knowledge and demonstrates the accountant’s own respect for what he or she does, as well as that on which they will not compromise.

Preparing a detailed management agreement

The accountant may assist the client to prepare a management agreement that will provide all executors with a step-by-step guide as to what is expected from them by the will-maker.

Preparation should involve legal advisors and any other professional advisers privy to the client’s affairs. This is a common agreement to prepare in the course of the client’s estate planning. Notably, such agreements are usually negotiated and signed by the will-maker and any or all executors, beneficiaries, and other key people in the business or managers. This reduces the risk of a falling out between executors and disputes between executors and/or dissatisfied beneficiaries.

The accountant, having been intimately involved in the preparation of the agreement, will be able to offer first-hand guidance to executors and beneficiaries in giving effect to the terms of the agreement.

Decisions made by the board

A will may stipulate that a board of family members or professional advisors be constituted to advise executors in their decisions. The accountant may offer to be a member of this board, to which all executors and beneficiaries are able to refer questions. Again, this option is a direct reflection of the respect in which the accountant’s expertise is held, as well as the significance of the accountant-client relationship.

Will-maker’s chosen experts

A will often contains a list of experts to whom executors must refer problematic questions. For example, the will may direct that all issues relating to the sale of a business be referred to the accountant as the expert or all real estate sale questions be referred to the property expert whom the will-maker knew and trusted.

Provided all parties are prepared to be reasonable, most problems which arise for executors in the course of administration can usually be resolved through taking expert advice. However, if reason does not prevail, executor or professional advice cannot in itself resolve the issue.

It follows, therefore, that all wills should contain strong dispute resolution procedures.

Summary

It may be difficult to refuse a client paying homage to the relationship by bestowing executorial honour on the accountant, but the longer term costs of weakness at that point may far exceed the benefits of immediate acceptance.

Sticking to your guns of expertise inspires respect and relying on the above alternatives, accountants should feel confident to say “no, but your much better alternatives are...”

There will also be instances where an accountant might not know they have even been appointed as executor, or perhaps agreed to the role a long time before reading this article. In such instances, it is open to the accountant to renounce the role and step away.

Vitally, however, renouncing is only an option if there has been no intermeddling; i.e. the accountant has not taken any active steps (however minor) that indicate they accept the role. Having intermeddled, renunciation is not available and leave of the court to resign will be necessary.

Katerina Peiros TEP is the founder of Hartwell Legal and Ian Raspin FCPA, TEP is the Director of Estates and Trusts at BNR Partners. Peiros is an accredited Wills and Estates Specialist and runs a specialist practice in this area. Raspin specialises in the taxation of deceased estates and trusts, working with both trustee companies and legal practitioners. Both Peiros and Raspin are published authors in this space.

Read next: Accountants as executors: does it add up?


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