A guide to Estate Administration

When a loved one dies it can be a very difficult time for family and friends. Our guide is designed to provide you with the initial steps to be taken and an explanation of the roles and responsibilities of a personal representative.

1. Register the death and notify the government of the death.

Once you have obtained the medical death certificate, you will need to formally register the death with the registrar.

When the death is registered you will receive a unique reference number to access the Tell Us Once service. This service allows you to inform all the relevant government departments when somebody dies.

2. Organise the funeral.

The funeral should be organised by the Personal Representatives of the deceased. Funeral costs are an expense of the estate and can be paid from the deceased’s bank account before a Grant of representation has been obtained.

3. Find out if there is a Will.

A Will is a legal document that sets out an individual’s wishes and expressions regarding the distribution of their property and estate when they pass away.

If they left a will, there will be executors appointed to distribute the estate in accordance with the terms of the Will.  The Will should specify how they want their assets to be distributed.

If you cannot find a will in their home, you can contact their solicitor, accountant, or bank to see if they hold a copy. There is also a national will register which you can pay for a search of registered documents.

If there is no Will, the personal representatives will require a Grant of Letters of Administration to distribute the estate in accordance with the intestacy rules.

4. Is a Grant of Representation required?

A grant of representation is a legal document that gives the personal representatives authority to administer the estate. A grant or representation is commonly known as ‘Probate’ or ‘Letters of administration’.

In some estates, it may not be necessary to obtain a Grant of Representation, commonly on the death of a spouse and all the assets are due to pass to the surviving spouse.

Where there are joint assets such as jointly held bank accounts and property held jointly, these will normally pass by survivorship to the surviving joint owner and a grant of probate is not usually required.

When someone dies leaving assets in their sole name, even if the person had a Will, without a court-sealed grant of representation any property or money held cannot be accessed.

5. Valuation of the estate assets

To ascertain whether there will be an inheritance tax liability, you will first need to understand what assets are included in the estate and their values.

You will need to obtain date of death balances for funds held in accounts and with financial institutions, information on stocks and shares held, valuation of any property, life insurance and pensions, business assets and any investments.

Once you have an estimate of the estate’s value, you will be able to find out if Inheritance Tax is payable.

The estate will not have to pay inheritance tax as long as one of the following applies:

• It all passes to the spouse or civil partner of the person who died.
• It all passes to a charity or a comminute amateur sports club.
• It has a value below the inheritance tax threshold of £325,000. If the person who died was widowed or is giving away their home to their children, the tax threshold can be higher.

6. Inheritance tax

If Inheritance tax is due, you must complete and report to HM Revenue and Customs (HMRC) by completing the relevant tax forms. You must submit the form within 12 months of the person dying. If you miss the deadline, you may have to pay a penalty.

You must pay the inheritance tax due within 6 months from the date of death. There is an option to pay the tax due on some items in yearly installments, e.g. a house.

Once you have completed and sent the forms to HMRC you will need to wait 20 working days before you can apply for a grant of representation.

7. Apply for a Grant of Representation

You can apply for a grant yourself online or by post. You can also appoint a representative such as a solicitor to apply for a grant on your behalf.

The personal representative will need to sign a Legal Statement confirming that they are the correct person and the person applying for a grant.

You may need to pay a fee to apply for a grant. The fee is dependent on the value of the estate.

• If the estate is £5,000 or less there is no fee
• If the estate value is over £5,000, the application fee is £273

8. Estate administration and distribution

Once the Grant of representation has been issued, the personal representatives can use the grant to close accounts, sell or transfer shares and investments, and sell or transfer property.

During the administration, the personal representative will need to deal with the following:

• Settle outstanding debts and taxes. Personal representatives can also place a notice in the gazette giving unknown creditors 2 months to claim anything they are owed. This provides the personal representative with security that they will not be personally liable for unknown creditors if they wait to distribute the assets for 2 months.
• The personal representative may need to sell shares, investments or property of the estate. They will need to consider the tax consequences, as the estate may have to pay Capital Gains Tax on them if the value has gone up in value since the person died.
• Report to HMRC on any income received during the administration period.
• Distribute the estate to the beneficiaries. Once the debts and taxes have been paid, the estate can be distributed in accordance with the terms of the Will or intestacy. The executor should prepare final estate accounts to show the assets and liabilities of the estate and how they were distributed.