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HOW AN ESTATE IS ADMINISTERED
This note explains how an estate is administered. On receiving
instructions to act, Charles Russell will assume responsibility
for all aspects except those immediate matters which the family
may wish to deal with personally.
Immediate matters
The family will wish to deal with the following matters
as soon as possible after a death has occurred:
Doctor's certificate
The death must first be reported to a doctor who will
issue a Certificate of Death. This should be taken to the
local Registrar of Births, Deaths and Marriages to issue the
official Death Certificate. Please send the Death Certificate
to us with two extra copies.
The Funeral
Directions as to funeral arrangements will not necessarily
be included in the Will. These are the Executors’ responsibility
in consultation with the family. The family doctor or vicar
can normally recommend a local funeral director. We may be
able to help with this.
Obituary Notice
The wording of an obituary notice for publication
in appropriate newspapers should be settled. Sometimes the
undertakers can take care of this.
Security
If the deceased’s residence is to be left unoccupied,
the family should consider the best way of protecting its
contents. The insurers of both the house and its contents
- who may not necessarily be the same - should be notified
of the death.
Bankers
The deceased’s bank or banks should be informed
immediately so as to cancel any standing orders or direct
debits. Accounts will be frozen until Probate has been granted.
Unpresented cheques should be stopped automatically but this
cannot be guaranteed.
The Role of the Executors
The Executors appointed by the Will will automatically
assume responsibility for the estate’s administration.
Their principal tasks will be to:
• Ascertain and value the assets and quantify the debts
of the estate.
• Apply for the Grant of Probate.
• Take control of the estate’s assets and transfer
them into their own names.
• Produce office copies of the Grant of Probate to banks,
company registrars and other relevant organisations.
• Sell or otherwise deal with the estate’s assets
on the advice of the stockbrokers, land agents or other advisers.
• Discharge debts, taxes and other liabilities.
• Deal with legacies and with the residuary estate as
provided by the Will.
• Produce estate accounts and tax returns.
• Obtain Inland Revenue tax clearances.
All decisions of principle must be agreed unanimously by
all the Executors.
Reserving Power and Renunciation
Not all the Executors appointed by the Will need necessarily
be involved in the estate’s administration. If an Executor
is living abroad, is ill, incapacitated or unwilling to act,
it may expedite the estate’s administration if the other
Executors act alone. An Executor who wishes to have no involvement
in the estate’s administration must renounce his office
at the latest before the Grant of Probate is obtained. An
Executor who has renounced must not interfere with the estate
or handle its assets. If an Executor does not wish to be involved
at the outset - but considers he may do so later - it is possible
for the other Executors to apply for Probate with "Power
Reserved" to the non proving Executor, who may apply
for a Grant of Probate separately at a later date.
Intestacy
A person who dies without having made a Will is said
to die "intestate". In such cases the next of kin
will have to decide who is to administer the estate. The appointment
of estate administrators (whose duties and functions are broadly
similar to those of Executors) will require the Court’s
confirmation. Click here for further
information.
Administering the Inland Revenue Account
As a first step, Executors and Administrators alike
(collectively "Personal Representatives") must submit
to the Inland Revenue a general account of the estate’s
assets and liabilities. At the outset, it may not be possible
to identify and value all assets and liabilities so that the
Inland Revenue Account may later require amendment by a corrective
affidavit. Inheritance Tax ("IHT") due in respect
of personal or movable property must be paid before either
the Grant of Probate or Letters of Administration (collectively
"Grants of Representation") issue. IHT payable by
instalments (i.e. relating to real property, business assets,
private company shares etc) becomes payable (the first instalment)
six months after the end of the month in which the deceased
died. The estate’s bankers will normally provide a temporary
loan to discharge any IHT liability. Alternatively, sometimes
bank or building society deposits may be used for this purpose.
Charles Russell will prepare the Inland Revenue Account assisted
by the family as needs be.
GRANTS OF REPRESENTATION:
Probate
Probate confirms the Executors’ legal title to
administer the estate in accordance with the provisions of
the Will. Generally, no estate assets can be sold, transferred
or dealt with (nor debts paid) until Probate has been granted.
To obtain a grant, the Executors must submit to either the
Principal Probate Registry or to one of several District Probate
Registries the original Will and the Oath. If the value of
the Estate is more than the "Excepted Estate" limit
(which is set from time to time) an Inland Revenue Account
must be forwarded direct to the Capital Taxes Office. The
Oath which must be sworn before a solicitor (not being a member
of the firm acting for the Executors) affirms that the Executors
will undertake to administer the estate, distribute assets
in accordance with the Will and account for any tax payable.
Letters of Administration
The Administrators’ powers commence from the
date when Letters of Administration are granted. Prior to
the grant, Administrators can only deal with essential matters
- e.g. making funeral arrangements and ascertaining the estate’s
assets and liabilities. The procedure for obtaining Letters
of Administration is broadly similar to that for obtaining
Probate. Grants of Representation will normally take approximately
four weeks to obtain after the Inland Revenue Account has
been completed.
ADMINISTRATION
Once a grant of Representation has been obtained,
the Personal Representatives can proceed with the estate’s
administration. Each estate will be different but typical
matters which may have to be dealt with include: notification
of death to credit card companies, the Passport Office, clubs
or societies; surrender of driving licences, shotgun or firearm
certificates; transfer of insurance policies covering house,
contents or motor cars into the names of the Personal Representatives
or beneficiaries and completion of tax returns relating to
liabilities arising prior to death (to be done either by the
deceased’s accountants or by Charles Russell). Tax returns
covering the period after the date of death will be the Executors’
responsibility. The Executors’ job will be finished and
the estate formally wound up after all legacies and debts
have been paid, the assets distributed, final accounts prepared
and circulated to the beneficiaries and Inland Revenue clearance
certificates issued.
Tax Planning
Tax savings can sometimes be achieved by the beneficiaries
executing a deed varying the provisions of the Will within
two years of the date of death. For example, the deceased’s
children may wish to pass part or the whole of their inheritance
to their children so as to skip a generation and thereby avoid
incurring additional tax liability. Charles Russell can provide
detailed advice about the use of such deeds and their taxation
consequences.
To read more on Tax Planning, please click
here
For further information, please contact:
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