Dealing with legal and administrative affairs after losing a loved one is exceptionally hard. Being faced with a list of tasks to deal with at such a difficult time can be overwhelming, specially when it follows a painful bereavement. Dealing with matters one step at a time can help. Our estate administration guide below aims to help you understand the issues that need your attention so that you can start planning what you need to do. If you need to speak to Bereavement Solicitors or you have any questions, please feel free to call us.
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Winding up an estate after someone’s death is a job for their executors. If the deceased did not leave a Will, then someone entitled to inherit their estate will usually take on the role. They are known as the estate administrator.
The estate administration process can be complex and time-consuming, particularly if the deceased had many different assets or holdings. As an executor or administrator, you must wind up the estate within a year. You also need to make sure that you pay Inheritance Tax by the deadline or the estate will be charged a penalty and interest on the outstanding payment.
You will be personally liable for any errors that cause a loss to the estate, such as penalties on late tax payments. This means that you need to be very careful to avoid mistakes. You also need to ensure that you identify and pay all of the deceased’s debts. Again, you miss any, you could be personally liable.
If you are not confident that you have the necessary time to devote to the estate administration, you can ask bereavement solicitors, also referred to as probate solicitors, to deal with this on your behalf. And if you’re struggling with grief following your bereavement, then organisations like the charity, Cruse Bereavement Support are there to help
Click here to read more about the executor’s role
Probate for clients throughout England and Wales and for Expats
In addition to handling probate for clients locally to us in Wiltshire and Dorset, we also regularly cover estate administration for clients throughout England or Wales, as well as for expats who have lost loved ones in the UK and need experienced probate solicitors here to assist them through the probate process.
Click here to find out read more about how our team can help Executors of a UK Will Living Abroad
Obtaining the death certificate
Following a bereavement, this is one of the first jobs and you should do it within five days of the death. You will need to speak in person to a Registrar of Births, Deaths and Marriages. They are sometimes available at a local hospital or they may offer a telephone service.
Your local health authority will provide the Registrar with a cause of death for the certificate. Details that the Registrar will need from you include the deceased’s name, address, occupation or former occupation and the date and place of death. They will also need your name and address and relationship to the deceased.
The Registrar will register the death within the next few days. You can buy copies of the death certificate for £11 each. Buying several can speed up the process of notifying banks and other asset holders, as they will all need to see a copy. They will note it for their records and then return it to you, so you don’t need a separate copy for everyone.
The funeral is usually arranged by the deceased’s next of kin. While the executor has the legal right to do this, if they are not the next of kin they would usually let a relative arrange matters. The person making the funeral arrangements will be liable for paying the funeral director, but the estate should reimburse them when money is available.
You can usually ask the deceased’s bank to use money from the deceased’s account to pay for the funeral. The bank will have a form to fill in and will send the money to the funeral director.
Notifying others of the death
After your bereavement, you must notify all interested parties of the death. This includes government departments, asset holders such as banks and pension providers and creditors such as mortgage lenders and credit card companies.
You should give them all the details you have, such as account numbers, as well as the deceased’s full name, their address and the date of death. You must send an official copy of the death certificate with each letter.
The government operates a really helpful ‘Tell Us Once’ system, which is well worth using. If you write to tell them of the death, a range of government departments are notified. This includes HM Revenue & Customs (HMRC), the Department for Work and Pensions, the Passport Office, the Driver and Vehicle Licensing Agency and the local authority.
Here’s the link:
Securing and valuing the estate assets
As the executor, you are responsible for keeping the deceased’s assets safe. This includes making sure that their home is adequately insured, particularly if it is empty, and ensuring their car is in a safe place and also insured.
The next step is to value the estate. When you write to advise third parties of the death, you should also ask for a valuation of the amount held in the deceased’s account or owed by the deceased.
You will also need to value physical items such as their car, their home, furniture, jewellery and art. You can obtain a professional valuation if you are not sure of the amount. That’s particularly sensible if you think that there is any likelihood of a beneficiary disputing the figures. Sadly claims against executors and trustees, and inheritance claims against the estate are increasingly common – another reason why many people, following bereavement, prefer for solicitors to handle the probate.
Calculating Inheritance Tax
Once you have valuation figures, you need to subtract the total liabilities from the total assets to establish the estate’s net value. This will indicate whether Inheritance Tax is payable.
You also need to take into account gifts of value made by the deceased in the seven years before their death.
Calculating Inheritance Tax is complex and because of the risk of personal liabilities for mistakes, you may feel more comfortable asking a professional for help. Our bereavement solicitors and handle the calculation for you and provide advice on how to pay the tax.
If the net estate is worth more than £325,000, then Inheritance Tax is payable on the portion of the estate over this sum. The rate is generally 40%, although there is a reduction to 36% if the deceased left at least 10% of the estate to charity.
And that £325,000 nil rate tax band is set to remain at that level until at least 2028, as confirmed in the Chancellor’s March 2023 budget.
There are some reliefs and exemptions available which can complicate matters. If the deceased’s spouse or civil partner predeceased them and any of their £325,000 allowance remains, then this is transferred to the deceased’s estate.
There is a further relief of £175,000 for each spouse if the deceased leaves a property to their children or grandchildren.
There is relief on a sliding scale for gifts of value made in the seven years before death. For example, the tax rate on gifts made between five and six years before death is 16%. This applies to gifts over the annual gift allowance, usually £3,000.
If Inheritance Tax is payable, you need to apply to HMRC for an Inheritance Tax reference number.
Paying Inheritance Tax
Inheritance Tax is payable no later than six months from the end of the month in which the deceased died. For example, if they died on 15th April, Inheritance Tax would be payable six months after 30th April, i.e. by 31st October.
The estate’s executor or administrator is responsible for making the payment. It is common to use money held by the deceased in a bank, building society or National Savings account. You will need to fill in form IHT423 and send it to the account holder. Use the Inheritance Tax reference number provided by HMRC when you fill in the form.
The bank will pay the tax directly to HMRC.
If insufficient money is available, then you can ask HMRC if you can pay the tax in instalments. Interest will be payable on the outstanding balance. The first instalment is payable by the deadline.
As well as sending the payment to HMRC, you must fill in a range of Inheritance Tax forms. There is a separate form for each type of asset and liability, as well as a summary.
Click here to find out more about how our Specialist Inheritance Tax Planning Solicitors can help you.
Applying for a Grant of Probate or a Grant of Letters of Administration
Around two to three weeks after you have sent the Inheritance Tax forms to HMRC and the bank has sent the payment, you can apply for a Grant of Probate or a Grant of Letters of Administration. This document gives you legal authority to deal with the deceased’s estate, including collecting in the assets and paying the debts.
If the deceased left a Will, the named executor should apply for a Grant of Probate. If there is no Will, someone entitled to inherit the estate, known as the estate administrator, should apply for a Grant of Letters of Administration. The Rules of Intestacy set out who inherits when there is no Will.
Make the application by filling in form PA1P or if there is no Will, form PA1A, and sending it to the Probate Registry. You must include the original Will, any codicils, an official copy of the death certificate and a cheque for the fee of £273. You can pay for extra copies of the grant for £1.50 each. Each asset holder will need to see a copy, but they will usually return it to you once they have seen it.
Dealing with the estate’s assets and liabilities
The Probate Registry may take two to three months to issue a grant. Once you have this, you should send a copy to all asset holders and estate creditors. Ask the asset holders to close the accounts and send you a cheque for the balance and ask the creditors for a figure to settle the amount owed in full.
You can also complete the property sale once you have a grant.
If you are acting as an executor yourself, to reduce the risk of personal liability, you may need to run advertisements asking for unknown creditors and unknown beneficiaries to come forward. These are put in the Gazette and in the local newspaper for the area where the deceased lived.
Preparing estate accounts
Once all assets are received and you have settled the estate’s debts in full, you must prepare detailed estate accounts. The residual beneficiaries have a right to see these. These are the beneficiaries who will share in the remainder of the estate after gift distribution.
The accounts must include all income, assets, liabilities and expenses and show the amount payable to each beneficiary.
Distributing the estate
The final task is to distribute the estate in accordance with the Will or the Rules of Intestacy. If the Will left money or other assets in trust, you will need to set up the trust. If necessary, you can ask our probate and trust solicitors to deal with this.
Click here to read more about how our highly specialist Trust Solicitors can help you
It’s always sensible to ask all of the beneficiaries to sign a receipt confirming they have received their legacy.
Professional help from our Bereavement Solicitors
Dealing with estate administration can be a big undertaking, especially following the death of a loved one. If you are unsure whether you have the time or the expertise to take it on, you may prefer to instruct our experienced bereavement solicitors to deal with it on your behalf.
As well as ensuring that the administration is dealt with promptly and efficiently, this will also mean that you do not make any mistakes for which you are personally liable. And our 12 strong private client team are happy to do as much or as little of the work on estate administration as you wish.