31/05/2011

It seems that one of the hardest things for most testators these days is choosing who will be their executor.  And the more complex the Will the harder it becomes.

In the good old days (when the worst swear word on TV was "bother" and there were no such things as phone contracts) people making their Will (who are called 'the testator') simply chose their spouse as their executor.  If the spouse died before them then they would substitute their eldest son. Simple.

These days estate planners bring up all sorts of other things to think about that now make the choice a lot harder.

Firstly, if my spouse is my Executor and also my sole beneficiary how can I be sure that they will use my estate for the benefit of our children.  They could re-marry and use the assets for their new wife.  Anyone remember Lang Hancock and Rose?

To protect their kids’ inheritance the testator might want to give only the income from their estate to their spouse with the capital going to the kids after the spouse dies.  Will that be enough for the spouse in their advanced years?

The family home will be excluded anyway because almost certainly it is held as joint tenants so that the testator’s half will go to the spouse automatically rather than through the Will.  Maybe that should be changed.

So perhaps the Executors should be the spouse and some at least of the children.  If there are more than two children there’s the problem of choosing which ones, noting that the more executors there are the more problems there will be in administering the estate particularly if some of them live in other States or countries.

Cases like Katz v Grossman, where the daughter chosen as trustee/executor took steps to cut her brother out of the estate, make the decision one to be carefully considered.

If there is a testamentary trust in the Will there is the issue of an independent executor/trustee.  With the recent attacks on discretionary trusts by the courts, if the testamentary trust is designed to protect the assets of the beneficiaries from their creditors then the greater level of independence of the trustees the less likely the trust will be viewed as simply an extension of the beneficiary.

Then there is the issue of the complexity of the estate and whether the person you would most like to be executor has the necessary commercial and financial experience to handle the role – not to mention the time.  Of course you could choose a professional executor (accountant, solicitor or even a trustee company) but that comes at a cost to the estate.  It may nonetheless be worth it in the long run.

The choice of executor is important and must be made carefully in order to ensure that the testator’s wishes and goals are met in all the circumstances.

If you have any questions in regard to this article, please contact TOWNSENDS BUSINESS & CORPORATE LAWYERS on (02) 8296 6222.