Your comprehensive guide to appointing an executor

Appointing the right executor is one of the most important decisions when preparing a Will. Executors play a central role in the administration of an estate including applying for probate safeguarding assets, settling debts and ensuring that beneficiaries receive their entitlements. This guide outlines the responsibilities and potential liabilities of an executor in the Cayman Islands, along with the protections available to them under local law.

Who should be appointed as executor?

In any properly drafted Will, the testator¹ will appoint one or more executors. Any individual can be named as an executor, provided they are of sound mind and the age of majority. The testator can appoint co-executors, if he or she wishes decisions surrounding the administration of his or her estate to be made by more than one person. It is also good practice for the testator to name one or more substitute executors in the event that his or her first choice is unable or unwilling to act at the time.

An executor can be a family member or a trusted advisor; even banks and trust companies are possible candidates.

Executorship can be onerous and so each prospective executor should be consulted about the appointment and agree to act before being named in the Will.

Duties of the executor

On the testator’s passing, the executor will be required to apply for a grant of probate in the Grand Court of the Cayman Islands. The application for the grant can either be made in person or by hiring the services of an attorney, where the application can be made “on the papers”. An application for a grant of probate must be made within 6 months of the date of death. If the executor fails to do this, leave of the Court must be obtained before an application can be made.

Once the grant of probate has been issued by the Grand Court, the executor will have the authority and duty to collect in the assets of the testator’s estate, pay any debts and liabilities and distribute the net estate to the beneficiaries named under the testator’s Will in accordance with his or her wishes. This may involve some of the following:

1. Locating the testator’s Will and any other documents which may relate to the assets held in the testator’s individual name;
2. Notifying third parties such as the beneficiaries named under the testator’s Will;
3. Preparing a list of the testator’s assets and liabilities and hiring an appraiser to value the assets;
4. Keeping accurate records;
5. Paying any debts and liabilities such as funeral expenses, claims by creditors etc.; and
6. Distributing the testator’s net estate to the beneficiaries in accordance with his or
her wishes.

Pursuant to the Succession Act (2021 Revision), the executor will have one year to administer the estate. This means that he or she must distribute the estate to the persons entitled under the testator’s Will within that time-frame. The executor will also need to file:

i) within 6 months of the date of the issue of the grant, an inventory of estate; and
ii) within 12 months of the date of the issue of the grant, an affidavit of general accounting.

The inventory of estate is a declaration to the Court of all of the assets comprising the testator’s estate and their true values. The affidavit of general accounting confirms to the Court that the administration of the estate is complete and the estate proceedings can close. The Court may ask for formal accounts to be produced when filing this affidavit.

Liabilities of an executor

An executor has a fiduciary obligation to act in the best interests of the estate and the beneficiaries named under the Will. The executor should exercise care and skill in administering the estate and should take steps to preserve the assets of the estate. A breach of these duties can result in a legal action being brought against the executor by the beneficiaries of the estate.

An executor may be held personally liable for the debts of the estate up to the value of the assets in the estate, although he or she has the right to discharge any such debts out of those assets. If, however, the executor were to distribute the whole of the estate to the beneficiaries leaving a creditor outstanding, that creditor may bring a personal claim against the executor (even if the executor had no notice of the claim). The executor may protect himself against such eventuality by advertising for claims against the estate in the manner described in the next section.

In addition, an executor may be personally liable for any losses to the estate caused by a breach of his or her duties as executor, although it is common to limit that liability expressly in the Will to losses caused by dishonesty or recklessness on the part of the executor.

Protection afforded to executors in respect of claims issued by alleged creditors of the estate

An executor can take advantage of a statutory protection by way of issuing a notice, inviting such claims from creditors, and setting a deadline for responses. There is a statutory period of at least 28 days and following the expiry of that period, the executor is able to distribute the net assets of the estate to the beneficiaries entitled under the Will and is relieved of personal liability for claims of which he or she has no notice.

Fees and expenses payable by the executor

Throughout the administration of the estate, the executor may need to seek legal advice, for example, when applying for the grant of probate or considering if any claims issued by alleged creditors are meritorious. The executor may also need to employ a valuation agent to value the assets of the testator’s estate or an accounting firm, to draw up the accounts. Such fees and expenses which are reasonably incurred by the executor are payable out of the assets of the estate (and not personally by the executor).

Such fees and expenses should be properly documented for record purposes and provided to the beneficiaries of the estate when making the final distribution.

 

 

1. A testator is a person who has written and executed a last will and testament that is valid and in effect at the time of his or her passing.