Administration of Estates (Probate)

When a person dies having made a valid Will that appoints an executor(s), that executor(s) has immediate authority to administer the estate and the right to apply for a grant of probate in the deceased person’s estate of required. The grant of probate is the document that the various Financial Authorities and institutions will accept as proof of the executor’s authority to collect in and deal with the assets. e.g., most bank accounts or investments worth over £50,000 require a grant to close them It is also required for a sale or transfer of a property.

When a person dies without a valid Will or the executor who is appointed under a valid Will cannot act for any reason, a grant of letters of administration is required to appoint an administrator of the estate. In practise this is very similar to a grant of probate, but the key differences are that only certain people related to the deceased can apply, and the appointed administrator only has authority to act in the administration of the estate once the grant of letters of administration is issued.

Prior to the application, the estate needs to be valued and, if applicable, an Inheritance Tax (IHT) account submitted to HMRC. How long this takes depends on the complexity of the estate and the information available at the outset. Once the IHT position of the estate is established and either an initial instalment or the full amount is paid to HMRC, the application for probate or letters of administration can be made. This can take between 2-4 months

Both applications for probate and letters of administration are made to the Probate Registry. Following recent reforms, some of these applications can be made online but some still need to be made via a paper postal application. In the wake of the pandemic there have been severe delays with the Probate Registry and, whilst the situation is improving, we are still seeing some applications taking well over the official estimates. Where we are able to make an application online, we are finding that grants are usually received in 6-8 weeks. Where a postal application is made, we are finding wait times closer to 8 to 16 weeks. With all this in mind there are still cases that are delayed for various reasons, and we are required to communicate extensively with the Probate Registry to resolve any issues.

Having a solicitor act for you in the application can be very useful when it is delayed as we are familiar with the procedures and can often speed up the process considerably. We are also able to reduce the likelihood of delays by ensuring all of the required information is submitted to the Probate Registry at the outset in the correct way.

Once the grant is obtained, the executor or administrator is able to proceed to administer the estate. This will involve gathering in the assets and settling any debts of the estate. If only a first instalment of IHT was paid pending the sale of a property, then once that property is sold the remaining IHT bill will need to be settled immediately.

The executor or administrator of the estate will also need to consider the Income Tax and Capital Gains Tax position of the estate during the administration period. If there is income such as rental income or interest on savings, then an account may need to be submitted to HMRC. Similarly, if there is an asset that sells for more than the value submitted for probate, then an account will need to be submitted to HMRC

Once the tax position of the estate is settled, all debts are paid, and all of the assets have been collected then the executor or administrator will need to distribute the estate either along the terms of the Will or the rules of intestacy if there is no Will.

It is usually advisable to advertise for creditors and wait until the deadline for disappointed beneficiaries to make a claim has passed before the estate is distributed. Executors and administrators also have the right to ask for Estate Accounts to be prepared and signed off by the beneficiaries before any distribution is made. This gives a layer of protection to executors and administrators if a dispute arises as to the estate administration.

Executors /Administrators need to remain neutral in any disputes and depending on the nature of the dispute should limit their activities to collecting in and preserving the estate, but not distributing it to any beneficiaries, pending resolution of the dispute. It is for the parties to the dispute to agree reach between them an outcome of the dispute, that should be recorded in an appropriate document, if the Executors / Administrators are to distribute the estate in any way other than set out under the terms of the Will or intestacy. If the dispute resolution changes the tax position of the estate the Executors/Administrators will need to account to HMRC prior to distribution. The parties to the dispute should take independent legal advice in how to resolve the dispute.

If the beneficiaries agree that they wish for the distribution of the estate to be different to that set out in the Will or under the Intestacy, they can do this by agreement and record the changes in a Deed of Variation. The effect is to write back the changes as though a Will was written in the first place with those changes incorporated. This can be done for many reasons, including resolving disputes, as part of tax planning for any individual, as part of making the distribution of the estte more tax efficient, or simply as a way of passing on inheritance to another person e.g. a beneficiary of the estate may want their legacy from the estate to go to another person than themselves. It is always important to take legal advice as this may have tax implications, and the Deed must be executed by all relevant persons within 2 years of the date of death.