Estate administration overview
As a personal representative of the estate, it is important that you are aware of the work that is involved in administering an estate. This guide is designed to give you an overview of the estate administration process.
In general terms, if there is a will the personal representatives are known as executors, and if there is no will the personal representatives are known as administrators. For the purposes of this guide, the term “executor” is used in all cases unless the distinction is important.
1. Obtaining the grant
Certain assets require the production of a grant of representation before they can be dealt with. There are a number of different types of grant of representation; however, the most common are: a grant of probate (if there is a will); and a grant of letters of administration (if there is no will). The grant is a formal document which confirms your legal authority to deal with the assets and liabilities of the estate. A grant is used in this guide to cover all cases unless the distinction is important.
A grant is required in order to deal with certain assets – typically a property held in the deceased’s sole name, or a property owned by the deceased as tenants in common. Additionally, certain liquid assets, such as bank accounts and shares, cannot be sold or transferred without a grant.
We can deal with the work required to obtain a grant, regardless of the size or complexity of the estate. We can also deal with the whole of the administration of an estate. We offer a ‘grant only’ service or a full estate administration service – further details and costs are displayed on the private wealth team section of our website.
2. Recommended searches
There are certain searches and notices which can be placed in order to protect the executor’s and the estate’s position. These are detailed below:
Certainty will search
It is important to be certain that the will that has been found is the last known will of the deceased. In order to help protect executors from any personal liability we recommend that a will search is carried out with a company called Certainty. This is an online company that searches the National Will Register and also nationally for any possible will that the deceased may have made.
Landmark financial asset search
If there is very little in the way of paperwork relating to assets in the deceased’s property, or you believe there may be some financial assets for which you have no details, a landmark financial asset search can be carried out in order to assist in tracing any assets that may have been lost or forgotten.
Trustee act notices
It is recommended that executors advertise for any potential claims against the estate (being individuals or organisations to whom money is owed by the deceased) before proceeding to distribute the estate, in order to protect themselves from any personal liability. Typically, a notice is placed in the London Gazette and a newspaper in the locality that the deceased lived.
2. Bankruptcy search
It is recommended that bankruptcy searches are carried out against every person entitled to benefit from the estate. If a payment is made to an undischarged bankrupt, the executors can be subject to personal liability.
The above searches and notices are not a requirement. However, we strongly recommend that all of these be carried out as a matter of course in order to take all steps to protect the executors.
3. Following receipt of the grant
Once a grant has been issued, we can deal with the encashment or transfer the assets depending on the executors’ instructions on the same and then deal with distribution to the beneficiaries.
An estate liable to inheritance tax will normally take several more months to administer than a non-taxable one. This is because where HMRC are involved, it can take them many months to consider the inheritance tax return and then correspond with us about aspects of it.
Any legacies payable under the will can be settled once the estate is in funds. Interim payments can also be made to the residuary beneficiaries at that stage.
However, where the estate is subject to inheritance tax, it is preferable to wait until formal inheritance tax clearance has been received from HMRC before issuing such payments.
4. Income and capital gains tax
Income tax and capital gains tax returns sometimes need to be dealt with as part of the administration of the estate. If this is required, we can deal with finalising the deceased’s tax affairs to the date of death unless this is dealt with by professional advisers who acted for the deceased prior to death. In some cases, however, it may be preferable, and more cost effective, to instruct an accountant/tax advisor to deal with this and we will liaise with you to advise you what is best in the circumstances.
5. Deeds of variation
In some cases, a beneficiary of an estate may not wish to receive some or all of their entitlement from an estate and may wish for some or all of their share to pass to someone else instead. In these situations, the beneficiary in question can, within 2 years of the deceased’s death, sign a deed of variation varying the will so that their share of the estate is read for inheritance tax and capital gains tax purposes, as having always been left by the deceased to the person or persons the beneficiary specifies within that deed.
If you require support with a deed of variation, or administering an estate, we’re here to help – get in touch