Insight

Administering an estate – what’s involved?

The administration or winding up of a deceased person’s estate is usually straightforward but can be a lengthy process nevertheless.

It can also be a highly emotional experience for the family who are likely to be faced with sifting through a lifetime’s possessions and often clearing and selling a much loved family home full of memories.

Our advice is usually to not rush things, and to deal with the funeral and initial grieving process before starting to look at the practical aspects of winding up the estate.

If you need lawyers or legal advice for estate administration our lawyers provide, experienced, practical and flexible advice and services. Please do get in contact.

Who has legal authority to administer an estate?

Where there is a Will there will be an Executor or Executors appointed and where there is no Will the intestacy rules determine who can apply to the court to be appointed as Administrator. The general term for both Executors and Administrators is Personal Representative (PR).

First steps 

The starting point is to establish the assets and liabilities of the estate and their value. Naturally, this can vary considerably, from a few hundred pounds in a building society to multi-million pound international estates comprising properties and business interests in several countries.

How can lawyers help?

Whatever the extent of the estate, however, our role is the same: to ensure that the administration process is as efficient and seamless as possible in order that the PRs and the beneficiaries can feel confident that matters are being progressed on their behalf in a timely and proactive manner.

Inheritance tax

If inheritance tax is payable then it is likely that a proportion of the sum due will require to be paid in advance before the Grant of Representation can be issued. To get around this chicken and egg situation, however, where there are bank deposits or investments these can often be accessed ahead of the Grant being issued, to pay IHT (or funeral expenses).

Negotiations with HMRC

Where sufficient funds are not available to make the initial payment of inheritance tax, bespoke negotiations may be entered into with HMRC to find an alternative way forward.

Gathering in the estate

Once the Grant of Representation has been obtained bank accounts, shareholdings and similar assets can be encashed or transferred, any properties can be sold, and debts can begin to be paid off.

Income tax

It will often be necessary to finalise the estate’s income tax position which will involve calculating the due tax from the start of the tax year to the date of death. If income continues to arise during the administration process then further income tax reporting may also be necessary.

Interim distributions

Where the administration is ongoing the PR’s may decide to make interim distributions to beneficiaries as and when funds are available.

Protection from unknown creditors

An important safeguard for PRs is the procedure known as “advertising for creditors”. This involves placing a notice in certain publications as a result of which the PR’s will be protected from claims made by creditors after the expiry of a period of time and can then distribute funds without worrying about an unknown creditor coming forward at a later date.

Estate accounts

Before making final distributions to the residuary beneficiaries the PR’s ought to prepare final estate accounts for their approval, providing them with an opportunity to raise any queries they may have. This is also a useful expedient for the PR’s because it discourages frivolous or capricious quibbles from beneficiaries who are often all too keen to simply approve the accounts so that they can  receive their share of the money at the earliest opportunity.

Get in touch