Dealing with the death of a loved one is often extremely difficult and stressful. Ensuring that a valid Will that has been executed correctly is in place before they pass away can help alleviate such difficulties and enable a smoother estate administration.
Topics to be answered in this article
What is an executor or administrator?
An Executor is someone named in a Will and is responsible for legally administering the estate. The Executor’s main objective is to carry out the deceased’s wishes as set out in their Will. As an Executor you may have to apply to the Court to deal with the estate, which is known as a Grant of Probate.
An Administrator is someone who administers an estate when the deceased has not left a will, also known as dying intestate. They are appointed by the Court with a particular order of who is entitled to apply for a Letter of Administration. An Administrator must follow the rules under intestacy law as there is no Will to guide them.
You may also have heard the term Personal Representative. This refers to both Executors and Administrators of an estate and is often used interchangeably.
What does the executor or administrator do?
There are several matters an Executor, and an Administrator must do. There are two distinct phases of estate administration. Here is a non-exhaustive list of their duties under each phase:
Before Grant of Probate
- Finding out what assets the deceased held;
- Finding out if the deceased had any liabilities;
- Finding out if the deceased owed or was owed any money;
- Keeping detailed records of these assets and liabilities;
- Working out how much, if any, inheritance tax is payable;
- Notifying the beneficiaries;
- Notifying HMRC and any other government organisations that apply; and
- Apply for the relevant Grant of Representation, if required.
Once the Grant of Representation is received
- Calling in monies to the estate, such as from the deceased’s bank accounts and investments;
- Selling any properties the deceased may have held at the date of death;
- Settling any debts; and
- Distributing what is left over in the estate to the relevant beneficiaries in accordance with the Will or under the intestacy rules.
When a deceased has not left a Will, the beneficiaries can be harder to determine. In this case, one of the main roles of an Administrator is to find out who are the entitled beneficiaries. This may include extensive tracing as an intestacy has a strict order of priority of who is entitled to be the beneficiaries. This can mean that the process may be complicated and drawn out for the Administrator.
Probate and letters of administration
Unfortunately, in some cases, it is needed for a property to be sold to cover Inheritance Tax as the deceased may not have left sufficient liquid assets to cover the tax. Capital Gains Tax (CGT) is also another crucial factor that a Personal Representative must be aware of.
Managing and selling assets
Unfortunately, in some cases, it is needed for a property to be sold to cover Inheritance Tax as the deceased may not have left sufficient liquid assets to cover the tax. Capital Gains Tax (CGT) is also another crucial factor that a Personal Representative must be aware of.
Dealing with debts
When someone dies, debts of the deceased are paid out of their estate money and property that they leave behind. If there are not enough assets in the estate to pay off the debts, the debts would be paid in a priority order until all liquid funds have run out. If there are remaining debts, these are likely to be written off. The PR is responsible for locating all creditors. It is extremely important that a Personal Representative places a Section 27 Notice in a local paper and in the London Gazette. This confirms that the PR has made an effort to locate creditors before distributing an estate. It provides the PR with protection from being liable for any unidentified creditors in the future.
Paying taxes
Inheritance Tax (IHT) is a tax applied on your estate and is payable within 6 months from the date of death to avoid paying interest or fines. Capital Gains Tax is a tax on the profit of the gain when you sell or dispose of something that has increased in value. In some cases, if there are not enough liquid funds to pay tax, the Executors/Administrators or the beneficiaries, may have to temporarily meet the inheritance tax liability by way of a loan to the estate or apply for a bank loan to cover the tax due. It is imperative that effective estate planning is put in place.
For more information on IHT and CGT, please read our ‘What do I do if a larger estate is taxable?’ article.
Do you need a solicitor?
You do not need a solicitor to administer an estate, but there are advantages to having one. Our specialist lawyers have the expertise to deal with all the procedural requirements involved in administering estates. A solicitor has daily experience of probate and can help take the timely burden from the Executor/Administrator. When an Executor/Administrator has assistance from a solicitor, the solicitors fees can be taken from funds in the estate. The Executor/Administrator is not liable for this as it is classed as an administrative cost.
How can Goughs help?
You do not need a solicitor to administer an estate, but there are advantages to having one. Our specialist lawyers have the expertise to deal with all the procedural requirements involved in administering estates. A solicitor has daily experience of probate and can help take the timely burden from the Executor/Administrator. When an Executor/Administrator has assistance from a solicitor, the solicitors fees can be taken from funds in the estate. The Executor/Administrator is not liable for this as it is classed as an administrative cost.
