Losing a loved one is extremely difficult to cope with, without having to also navigate through the legal procedure and complex terminology, all the while avoiding the potential problems which can come with administering an estate. This is a brief summary of the steps involved in the legal process.
The Government’s Tell Us Once Service
It can be a good idea to use the government’s Tell Us Once service, which can be accessed using this link This service will notify HM Revenue & Customs, the Department for Work and Pensions, the Passport Office, the Driver and Vehicle Licensing Agency (DVLA), the local council, Veterans UK and Social Security Scotland as well as some public sector pension schemes. Further details can be found here.
Find the Will
Any Will your loved one may have made will need to be located. This will show who they chose as their executor(s) and therefore who they wanted to be responsible for administering their estate, as well as their chosen beneficiaries, so who they chose to inherit it. You should consider the age of the Will and whether the deceased may have made a later one. You should contact the solicitor who drew up the Will (if applicable) to determine whether they hold a more recent version and consider making a search using the National Will Register.
Of course, the deceased may not have made a Will at all. In this case, the law provides a clear list of those entitled to administer and receive the deceased’s estate, and this depends on the relatives they left behind.
Details of the estate
The next step is for details of the deceased’s assets and liabilities need to be collated. These will include things such as property, bank accounts, shares and vehicles as well as credit cards and any income tax liability. All banks and building societies and any other relevant institutions should be notified of the death as soon as possible in order that all accounts in the deceased’s sole name can be frozen. If the deceased owned property which will no longer be occupied, the buildings insurance company should be notified immediately.
The deceased may also have held a pension, life policy and/or have death in service benefit.
Valuations of the assets and liabilities as at the date the deceased passed away then need to be obtained. This can be the longest part of the process as it is likely all institutions will need to be contacted to ensure the figures are accurate.
It is also important to ascertain whether the deceased made any gifts in the seven years preceding their death as these may be subject to inheritance tax.
Paying Inheritance Tax
If the deceased was domiciled in the UK inheritance tax will be payable on his/her worldwide assets.
The executors or administrators must account to HMRC with details of the valuations referred to above, calculate and pay any inheritance tax payable. In some cases, it may be possible to pay the inheritance tax in instalments.
In calculating any inheritance tax due, consideration must be given to whether any transferrable nil rate band and/or residential nil rate band is available, as well as whether any exemptions and reliefs apply.
Applying for a Grant
The next step will be to apply for a grant of representation. This may be a grant of probate (if the deceased made a valid Will), a grant of letters of administration (if the deceased did not make a Will) or a grant of letters of administration with will annexed (where the deceased made a Will but did not appoint executors, or all the executors are unable or unwilling to act).
Collecting in the funds and settling any debts
Once the grant of representation has been issued, this can be used to collect in the assets, sell any property and use the funds to settle any debts. The executors or administrators should consider advertising for any unknown creditors to come forward to ensure all debts are settled. If an advertisement is not made in accordance with the provisions of the Trustee Act 1925 and an unknown creditor comes to light at a later date, the executors or administrators will be personally liability to settle the debt.
The remainder of the estate can then be distributed to the deceased’s chosen beneficiaries or in accordance with the intestacy rules if the deceased did not make a Will. If the deceased left any specific gifts or sums of money to beneficiaries, these should be distributed first. The remainder of the estate will then be divided between the residuary beneficiaries, who should also receive a copy of the estate accounts showing the various valuations, details of the sums received and sent out and how the remainder has been distributed, together with a copy of the Will if applicable.
We can help!
Administering an estate can be very complex. We can assist by taking care of all of the above for you.
If you need help, please contact Abrahams Dresden using the details below:
Abrahams Dresden articles and guidance notes are for general information purposes only and generally state the law as at the date of publication. The information may not be relied upon as legal advice. We are of course always happy to advise directly on specific issues arising.