Administering an estate is the process of winding up someone’s affairs immediately after they have died.
Probate has become an umbrella term for estate administration, but in fact it means obtaining a Grant of Probate and administering the estate where there the deceased left a will. Where there is no will, the same process is called obtaining Letters of Administration.
Both are the legal processes that you have to go through in order to gather in, sell or pass on someone’s property, possessions and money. Administering the estate includes dealing with all the tax consequences of this, and passing the estate to the beneficiaries.
The Executors of the will can apply for Probate but as the Executors are often relatives of the deceased and in a period of grieving. Where there is no will, family or friends are often appointed as Administrators (the same as Executors where there is no will).
The basic steps of Estate Administration are as follows:
If there is a will:
An Executor of the will can apply for Probate or the Executors can appoint a solicitor with specialist knowledge or a person licensed to provide Probate services.
Before applying for Probate the Executors must first estimate the value of the estate as inheritance tax may be payable.
At this stage it is also a good idea to communicate the death of the deceased to utility companies, banks, insurance companies etc so that they do not start sending reminder letters if bills have not been paid on time. If an insurance policy is about to expire, say buildings insurance, the Executors may need to apply for a new policy to ensure that an ‘all risks’ insurance policy is in place until the property is sold or passed to a beneficiary. If you ask a solicitor to help, they will do all this for you and ensure that any third parties correspond with them, so it is a good idea to seek professional advice before carrying this out.
At this stage and without a proper valuation it may be difficult to determine the true value of the estate, but based upon the estimate some inheritance tax may be payable before you are able to obtain Probate. You can be refunded by the estate or the beneficiaries if you pay inheritance tax out of your personal funds, and there are other ways of paying tax if you cannot personally. This can be complex and it is advisable to seek professional help.
Your solicitor will do this for you as part of the Estate Administration process.
A copy of the Grant of Probate is sent to the organisations that hold the assets, for example the bank or building society, National Savings and Investments, pension providers and estate agents if property is to be sold.
Money in a joint bank account automatically passes to the other account holder.
If the deceased held property with another as a ‘joint tenancy’, ownership passes to the other owner. Otherwise, their share goes to the beneficiary named in the Will.
Once the Executors have obtained access to bank accounts and realised the sale of assets they will be able to pay all outstanding debts including utility companies, mortgages, HMRC, online accounts etc.
They can also pay any overpaid pensions, attendance allowance, and settle any income tax or capital gains tax for the last period of the deceased’s life or for the administration period (both these taxes still apply to the estate and the Executors are liable to ensure they are paid from the estate).
It may be necessary to place an advert in the Gazette to notify creditors so that they have a chance of claiming any sums owed.
The Executors will need to keep a record called ‘estate accounts’, which record the amount of money that has been realized from the assets, the amount of the debts paid and how any money, property or possessions are being split between the beneficiaries. The accounts should be signed by the Executors and in some cases, the beneficiaries.
Once the estate accounts are agreed, the Executors must distribute all the assets to the beneficiaries in accordance with the instructions in the will.
If there is no will the law of intestacy dictates how the assets shall be distributed.
If there is no will:
Normally, family members or the Executors (often both the same people) will know where to locate the Will because they should have been told where to find it by the deceased. However, if it cannot be found after a search of the home of the deceased then you should try and locate their solicitor as it may have been deposited with them for safekeeping. Alternatively, it may have been deposited with the London Probate Department.
If the will still cannot be found, there are various other steps that can be done to ensure there really is no Will, and you should seek professional advice on these.
Once the Will has been found it should be checked to ensure it is the most up-to-date version.
Executors are the people empowered by the will to undertake the Estate Administration. They are called Administrators where there is no will.
They only receive assets of the deceased if they have been named in the Will as a beneficiary.
Depending upon the number of Executors appointed, up to four may apply for Probate. Each Executor applying for Probate will need to legally declare that the information in the Probate application is true.
The local Probate Registry may be able to help if it is difficult to locate the other Executors.
An Executor cannot apply for Probate if they do not have mental capacity.
Those Executors that do not want to carry out the work of the Executor may:
Everything owned by a person who has died is known as their estate. The estate may be made up of:
If the person who died owes money to other people, for example, on a credit card, for fuel, for rent or a mortgage, this comes out of the estate.
The estate of the person who has died is usually passed to surviving relatives and friends, either according to instructions in the will, or if the person dies without leaving a will, according to certain legal rules called the rules of intestacy.
For information about the rules of intestacy, see Who can inherit if there is no will – the rules of intestacy.
The person dealing with the estate of the person who has died is called an Executor or an Administrator. An Executor is someone who is named in the will as responsible for dealing with the estate. An Executor may have to apply for a special legal authority before they can deal with the estate. This is called Probate.
An Administrator is someone who is responsible for dealing with an estate under certain circumstances, for example, if there is no will or the named Executors aren’t willing to act. An Administrator has to apply for Letters of Administration before they can deal with an estate.
Although there are some exceptions, it is usually against the law for you to start sharing out the estate or to get money from the estate, until you have Probate or letters of administration.
The Executor or Administrator (also called the personal representative) takes responsibility for dealing with all of the estate. This involves:
If it appears that there are not enough assets in the estate to cover outstanding tax, expenses, bills and other liabilities, you should seek the advice of a solicitor. Administering an insolvent estate can be complicated.
When someone dies, it’s important to sort out their benefits, tax and National Insurance as soon as possible. There may be tax to pay, or their estate might be owed some tax back.
You need to tell the tax office, and each government office that was paying benefits to the person who has died, about their death. You need to do this as soon as possible after the death.
Depending where the person who has died was living, you may be able to tell several government services about the death in one contact by using the Tell Us Once Service. For more information about this service, see What to do after a death.
If you need to report the death to the Department for Work and Pensions (DWP), you can telephone the DWP Bereavement Service. They can deal with all the DWP benefits that were being paid to the person who died. They can also check whether the next of kin is entitled to any benefits. For more information about this service, see What to do after a death.
The person who has died may have left debts, for example, an overdraft on their account or a credit agreement that has not been paid off.
When someone dies you should try to contact all their creditors. You should place a notice in The Gazette on their website, the official public record of legal notices in the UK. This will tell creditors they can make a claim against the estate to pay off the debt. If you don’t place a notice and creditors come forward after you’ve paid out the estate, you might have to pay off the rest of the debt with your own money.
In general, if there is not enough money in the estate of the person who has died to pay their debts their creditors cannot recover the amount still owed from anyone else, including that person’s surviving relatives. You should check whether that person had any kind of insurance policy that would pay off any of their debts on their death, for example, a payment protection insurance policy taken out at the same time as a loan.
In some cases the debt may have been a joint one, for example, an overdraft on a joint account or an amount owed on a credit agreement taken out in joint names. If this is the case, the debt can still be recovered from the surviving person. In addition, if you lived with someone who has died you may still be liable for debts that relate to the property, such as council tax or water bills.
If you are named in someone’s will as an Executor, you may have to apply for Probate. This is a legal document which gives you the authority to share out the estate of the person who has died according to the instructions in the will. You do not always need Probate to be able to deal with the estate.
If you have been named in a will as an Executor, you don’t have to act if you don’t want to.
Letters of administration
In some circumstances, someone who wants to deal with the estate of someone who has died will have to apply for letters of administration, rather than Probate. This person is called an Administrator. You have to apply for letters of administration if:
There are strict rules about who can be an Administrator. If there is a valid will, you can apply for letters of administration if:
If there is no valid will, and you are the next-of-kin, you can apply to be an Administrator in the following order of priority:
You do not always need Letters of Administration to be able to deal with the estate of someone who has died.
You usually need Probate or Letters of Administration to deal with an estate if it includes property such as a flat or a house. Otherwise, you may not need Probate or Letters of Administration if:
Couples may jointly own their home. There are two different ways of jointly owning a home. These are beneficial joint tenancies and tenancies in common.
If the partners were beneficial joint tenants at the time of the death, the surviving partner will automatically inherit the other partner’s share of the property. There is no need for Probate or letters of administration unless there are other assets that are not jointly owned. The property might have a mortgage.
However, if the partners are tenants in common, the surviving partner does not automatically inherit the other person’s share. Probate or letters of administration will be needed so the personal representative can pass it whoever will inherit the share of the property, according to the will or the rules of intestacy. The property might have a mortgage.
For more information about beneficial joint tenancies and tenancies in common, see Buying with someone else in Buying a home. For more information about the rules of intestacy, see Who can inherit if there is no will – the rules of intestacy.
If the property is to be inherited by someone and there is still an outstanding mortgage on it, the mortgage company will either require the mortgage to be paid immediately, or ask the person who inherits the property to take over the mortgage.
If there is a mortgage on the property, there might be a life insurance policy, an endowment policy, or mortgage protection policy which will pay the outstanding mortgage if the person with the mortgage dies. In this case, you should write to the company, asking for a final statement.
If the property is to be sold, the mortgage will be paid out of the sale of the property.
Couples may also have joint bank or building society accounts. If one dies, all the money will go to the surviving partner without the need for Probate or Letters of Administration. The bank may need the see the death certificate in order to transfer the money to the other joint owner.
Probate or Letters of Administration may still be needed if there are other assets that are not jointly owned.
The estate may be made up of a relatively small amount of money held:
If, after the funeral expenses have been paid, the amount of money held by the organisation is under a certain amount, they might be prepared to release it to you without you having to apply for Probate or letters of administration. This amount may vary from one organisation to another, so you will need to check with each one.
Some banks and building societies will release quite large amounts without the need for Probate or letters of administration. Also some banks and building societies will release money needed to pay for a funeral, Probate fees and inheritance tax but nothing else until you have been granted Probate or letters of administration.
This depends entirely on the policy of the organisation in question. They do not have to release anything, however small the amount of money. If the organisation refuses to release money without Probate or letters of administration, you must apply for Probate or letters of administration even if it is not otherwise needed.
If the estate is complicated, it is best to get legal advice. You should always get legal advice if, for example:
The legal fees can be paid for from the estate.
If there are any problems with the way that Executors or Administrators deal with the estate, for example, if there is unreasonable delay or if the Executors or Administrators misuse their legal powers, you will need legal advice.
The time it takes to get Probate or Letters of Administration varies according to the circumstances. It may only take three to five weeks if there are no complications, inheritance tax is not payable, the estate is straightforward and all forms are filled in properly. However, in more complicated cases, it may take much longer.
Whether or not Probate or letters of administration is needed, you have to inform HM Revenue and Customs (HMRC) of the death, in case inheritance tax is payable.
Inheritance tax may have to be paid if the estate is valued at more than £325,000. There are some exceptions to this rule, for example, if the husband, wife or civil partner inherits the estate.
If inheritance tax has to be paid, some of the tax must be paid before Probate or letters of administration is granted. Once Probate or letters of administration has been granted, the final tax bill will be sorted out.
See GOV.UK for more about inheritance tax.
You’ll get a letter saying how much inheritance tax is still left to pay.
Once this has been paid, Probate or Letters of Administration will be sent to you in the post. It includes details of the gross and net estate, that is, the value of the estate before and after debts have been deducted. A photocopy of the will, stamped to prove it is an official copy, is also sent. Both the Probate/Letters of Administration and the Will are public documents and can be examined by anyone who wants to see them.
Once you have got Probate or Letters of Administration, you can begin to deal with the estate and share out the property. You can find out what to do after you get Probate (also called a grant of representation) on GOV.UK.
Even if you have been named as an Executor in someone’s will, you may not wish to, or be able to, act. You can appoint someone else to apply for Probate on your behalf. Fill in an Attorney Form and send it with the Probate application.
You may not want to appoint someone else to act for you. You can still refuse to act, as long as the person who made the will has died and you have not already started to deal with the estate. This is called renouncing.
To renounce, you fill in a form called a Form of Renunciation. The form will then need to be filed at a Probate registry, together with the Will. This means that someone else could then apply for Letters of Administration.