Accountants are increasingly being approached to be named as an executor for their client’s future estates. While often initially considered to be an honour, accountants are increasingly regretting this undertaking when they are confronted with the role of administering the former client’s deceased estate.

In this arena of ever increasing litigation, real life claims examples made against accountants include:

  • a sole practitioner who was appointed as one of three trustees to a large multi-million-dollar estate. Due to a conflict between one trustee and the investment portfolio, the trustees were dragged into a significant litigated settlement with the beneficiaries of the estate
  • an accounting firm, with a long and close relationship with their client, whereby as the executors of the estate they were ultimately accused of overstepping the mark of an executor in relation to running the estates ongoing businesses.

Top three questions

The three main questions accountants need to consider before administering an estate are:

  1. will your professional indemnity insurance cover this?
  2. can you recover your time?
  3. can you charge for your work?

Top three risks

The main causes of difficulty for accountants when administering an estate include:

  1. failing to seek advice
  2. seeking advice from a non-specialist, resulting in flawed advice
  3. drafting wills for clients either directly or indirectly, such as through an online service (this is a costly risk to reputation and the hip pocket for non-legally qualified professionals).

Ensure you understand your personal liability, exposure and responsibilities in this area.

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