When a person dies, someone has to deal with their affairs. This is called ‘administering the estate’.
If the person who has died leaves a will, it will usually name one or more people to act as the executors of the will – that is, to administer their estate.
If you are named as an executor of a will you may need to apply for a grant of probate.
A grant of probate is an official document which the executors may need to administer the estate. It is issued by a section of the court known as the Probate Registry.
If there is no will
If there is no will (known as dying ‘intestate’) the process is more complicated. The Administration of Estates Act 1925 sets out who can act as administrator – that is, who has the legal right to deal with the affairs of the person who has died. The administrator will usually be a close relative of the person who has died, if there is one. There may be more than one person who has an equal right to do this.
Anyone who has this right can apply to the probate registry for a grant of letters of administration. This is an official document, issued by the court, which allows administrators to administer the estate.
In some cases, for example, when the person who benefits is a child, the law says that more than one person must act as administrator.
When a grant of representation is needed
A grant of representation is not always needed, for example if the person who died:
In other cases, some financial organisations, such as banks, may agree to pay funds to a personal representative without a grant of representation if the estate is very small – it is always worth asking.
Usually, a grant of representation will be needed when the person who has died left:
Responsibilities of personal representatives
The PRs have a heavy responsibility. They must:
PRs have a legal duty to carry out these tasks with due diligence and we are here to guide you as to how the estate is to be administered correctly.
The PRs are also responsible for finding out if inheritance tax is due as a result of a person’s death. If it is, the personal representative has to make sure that it is paid to H M Revenue and Customs (the Capital Taxes Office).
Whether inheritance tax needs to be paid can depend on:
Inheritance Tax is payable when the grant of probate is applied for, but since all the assets are frozen as at the date of death, funds from the estate cannot always be used for this purpose. Some banks and building societies will release funds solely to pay inheritance tax, but if this is not possible, or the available cash is insufficient, then it may be necessary for the PRs to arrange a short-term loan from the deceased’s bank to cover the inheritance tax.
What happens next?
Once the grant of probate has been obtained, the executors or administrators are able to deal with:
For example, this might involve the following:
There are also a good many other matters connected with daily life:
The collection of some assets is more difficult than others. Advice may well be needed when dealing with shares in a private company, a family business or assets situated abroad.
Payment of debts
The PRs must pay all debts owed by the deceased before distributing the estate to the beneficiaries. The PRs may be personally liable for any debts if they distributed the estate without first making sure that the creditors have been paid. It is sensible to use the statutory notice procedure to advertise for creditors and we can advise you about this.
If the deceased person’s assets are insufficient to cover the debts, the estate is “insolvent” and special rules apply – again we can advise you further.
H M Revenue and Customs will examine the inheritance tax return that was filed by the PRs and agree the extent of any liability for inheritance tax. This may take many months if H M Revenue and Customs wish to negotiate with us over values. However, we will always do our best to keep things moving forward as quickly as possible. A clearance certificate is issued by H M Revenue and Customs once the inheritance tax liability is agreed and paid.
Any income earned by the assets of the estate during the administration period will need to be declared for income tax purposes. If any assets are sold, there may be capital gains tax to pay.
When all of the assets have been realised and the debts, administration expenses and tax have been paid, the remainder of the estate can be transferred to the beneficiaries. The PRs should produce estate accounts to the beneficiaries showing receipts, payments and the division of the estate. The PRs should also prepare certificates for the beneficiaries showing the income received during the administration period and the income tax deducted from it. If the beneficiary is a non-taxpayer this enables him to recover the whole or part of the tax paid by the PRs. If the beneficiary is a higher rate tax payer he will need to pay additional tax via his own tax return.
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"Suzanne Porter and Rachel Baseley have advised many of our employees on such delicate matters either at Wake Smith’s offices, Swann-Morton’s premises or in individuals’ homes, and have always been compassionate, understanding and patient in gaining an understanding of their requirements and wishes whilst delivering a solution in a professional manner. Their reaction has been very timely when required, which has helped to reassure the individuals and their families. We look forward to a continuing long-term and professional relationship not only with the Wills and Probate team but with Wake Smith as a whole."
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"Breda Cashell did a first class job in handling our late mothers estate, keeping us well informed throughout this sad time of ours. Nothing was too much trouble, she was very professional from the outset to completion. She answered all our questions at our first meeting, and subsequent meetings. Breda is a very caring lady, and our family would recommend her and your services as an excellent company to work with. Thanks for a brilliant service."
"We have been clients of Wake Smith over a period of some twenty-five years and the service we have received throughout this time has been excellent. The firm has always been prompt, efficient and thorough and we have always been treated with the utmost courtesy and kindness."
David and Elizabeth Marsden
"On our first appointment with Mr Shaun Talbot, he immediately put us at ease and explained everything clearly to us. The service we received was brilliant from start to finish, documents were quickly forwarded to us to check and we were promptly invited back into the office to add our signatures. We would definitely recommend Mr Talbot in the future and thank him for making this process stress free and easy to complete."
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‘’The service that my wife and I have received from Suzanne has been excellent, very thorough and above all else exceptionally professional. Suzanne took the time to find out what our objectives and priorities were and she articulated her recommendations that made us both feel completely at ease and confident that our wishes were being met. I would have no hesitation in recommending Suzanne and her team and look forward to working with Suzanne in the years to come."
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