If you have been asked to administer an Estate, the task can be both daunting and challenging. Even if you are well prepared for the steps to be undertaken, such a position brings with it a duty of responsibility to do the best for those who will inherit the Estate, ensuring no procedural errors are made, which may not only delay the process but impact the value of the assets to be disbursed.
The steps contained in this article provide only a very basic outline of the complete process of administering an Estate. Due to the complexities which can be encountered at each stage, it is recommended that a specialist Probate Solicitor is engaged from the outset. This will ensure no steps are missed and the maximum Estate value is realised for the beneficiaries.
Despite the offerings of DIY Probate that abound on the Internet, it would be very unusual for an inexperienced person to have the time and knowledge required to administer an Estate and successfully apply for Probate without legal advice.
What is Probate?
Probate refers to the process of properly managing the assets of someone who has died – a process you will need to carefully follow if you have been named as an Executor in a Will. The following are the key steps an Executor must carry out on behalf of the deceased:
Step 1: Certificate of Death
The first step is to ensure the death is registered with the local registry within five days of the person dying. You will need to provide the medical certificate certifying the death (and the NHS medical card if available). Most local authorities will then register the death with the main governmental agencies.
Step 2: Review the Will
Once the death is formally registered, the Will should be located and reviewed, to determining the wishes of the deceased regarding the distribution of their Estate, and who they wished to be their Executor. If there is no Will, the Estate will be distributed according to the rules of intestacy; a predefined order by which assets are handed down on death.
Step 3: Making arrangements for the funeral
Typically, funeral arrangements are made by an immediate family member of the deceased. The Will may contain specific wishes regarding funeral arrangements and wishes for donation of body parts.
Step 4: Identifying assets and liabilities
The person handling the Probate, known as the personal representative (PR) is required to identify all assets and liabilities, and send preliminary letters notifying to anyone holding assets, claiming debts, or pertinent knowledge of the affairs of the deceased. The letter should advise them of the death, and include a copy of the death certificate, and request further information as needed. E.g. for a bank, you would ask for a current balance, standing order and direct debits to be cancelled, a cheque to pay for funeral costs, the account address to be changed etc. Similarly, for life insurance policies, you would ask for details of the policy, and value at death etc.
Step 5: Applying for a grant of Probate
The person identified on the Will as the Executor will need to apply for a grant of Probate, which will enable them to legally carry out the management of the Estate on behalf of the deceased. To do this, the first step is to complete a PA1 form.
At this time, you will need to determine the likely inheritance tax liability by completing the relevant IHT form (depending on the value of the Estate). Currently, there is no inheritance tax due on Estates less worth £325,000 or less. In addition to this, where the family home is to be passed to direct descendants, the new ‘residence nil-rate band’ increases the value of the Estate before which tax is payable (currently this is £125,000) in certain circumstances. Therefore, it may be that no inheritance tax is payable if the Estate is worth £450,000 or less.
Once you have submitted the PA1 form, the required inheritance tax form, a copy of the death certificate, Will, and fee, you will be required to swear an oath at your local Probate office.
If inheritance is payable, this will need to be paid before a grant of Probate can be issued, using the money in the bank account of the deceased; or if insufficient, you may need to apply for a loan from the bank to cover the shortfall.
Mistakes made at this point of the process can be highly damaging.
Step 6: Payment of outstanding debts
Before distributing the assets of the Estate, it is necessary to pay any outstanding debts off including loans, mortgages, and funeral costs. It may be necessary to sell the home of the deceased to clear the mortgage. It is not uncommon for Executors to run into problems during this phase of Estate administration, perhaps because the funds are insufficient to pay all of the debts, therefore seeking the advice of a Probate solicitor is highly recommended.
Step 7: Determine the value of the remaining Estate
Determining the final value of the Estate can take some time as all of the various facets of the Estate need to be added together to determine its remaining value, before being distributed. This may include the property/s, money, investments, personal effects, businesses, property contents, life insurance, pensions.
Step 7: Distribution of the Estate
Having been given the grant of Probate, the next step is to distribute the assets of the deceased in accordance with their wishes. To enable the necessary payments to be made, you will need to provide a certified copy of the grant of Probate to the relevant financial entities (e.g. banks, building societies, pension providers, or life insurers), who will then make the necessary payments to a separate Executor’s account. Payments can then be made to the respective Estate beneficiaries.
Please note, this article does not constitute legal advice.
Hart Reade Solicitors have offices in Eastbourne, Hailsham, Polegate and Meads. We hold a Lexcel Accreditation from the Law Society of England and Wales and are members of Resolution. To make an appointment with one of our private client solicitors, please phone our office on 01323 727 321.