Pensions are notoriously complex and different rules can apply to different pensions held by different companies.
After someone’s death, the benefit of their pension may be payable to the person they nominated when the scheme was set up.
Workplace and private pensions
Sometimes a workplace or private pension scheme will provide a lump sum and/or income to your beneficiaries after you die. This will be paid to the nominated person, but it is possible for a dependant to make a claim on the funds if they have been excluded.
When you reach retirement age, you may choose to remove a lump sum of 25 percent of the value of the fund from your pension. If this is still in your estate at the time of your death, then Inheritance Tax may be payable on it, depending on the size of your estate.
You can gift this during your lifetime if you choose, but if you were to die within seven years of making a cash gift, then all or part of its value will be taken into account when Inheritance Tax is calculated.
Leaving pension funds to a beneficiary
Where a joint annuity is held, payments, usually to a spouse or partner, can continue after the death of the pension holder.
If the pension guaranteed annuity payments for a certain period of time, then these will continue to be made to a beneficiary for that period of time.
The pension may entitle beneficiaries to receive a lump sum payment. If the deceased left children under the age of 18 or a dependent partner or relative, then the pension trustees may make the decision to award a payment to them.
Payment of Inheritance Tax
Pension funds are paid at the discretion of the pension trustees and do not usually form part of the deceased’s estate, in which case Inheritance Tax is not payable on their value.
However if the pension trustees are not able to make a decision as to who the pension funds should be paid to, they may make the payment into the estate, in which case the money would be included in the Inheritance Tax calculation.
Following someone’s death, you should speak to their pension provider to find out how and to whom any payments will be made.
Because pensions are such a complex area, it is advisable to take independent advice when writing a Will, dealing with pension funds or administering an estate.
If you would like to discuss your Will or a probate matter with one of our expert team, ring us on 01243 216900 or email us at email@example.com.
As well as naming the people who are to receive money from your estate, a Will can make various appointments, including those of Executor and Trustee.
When you make a Will you need to consider who you would like to administer your estate and be responsible for any money that is to be held in trust. These can be onerous roles and you should be aware what they involve so that you can discuss them with the people you would like to act on your behalf.
The role of Executor
An Executor is responsible for the administration of an estate in accordance with the terms of the Will. Duties are likely to include making funeral arrangements, valuing assets, collecting them in, arranging for their sale, calculating tax payable, drawing up estate accounts and distributing the estate to the named beneficiaries.
The job can be extremely time consuming, particularly if the deceased held a variety of assets with various stakeholders. Each will need to be notified and will have their own requirements for releasing funds. If there is a property, it will need to be insured, valued, cleared and a sale arranged.
Debts will need to be paid, including Inheritance Tax, which the Executor will be responsible for calculating, based on the value of the estate.
Because the job of Executor can be difficult and they will be personally liable for any errors they may make, you should discuss it first with anyone you might wish to appoint. If you do not have anyone who is willing and able to act, you can choose to appoint a professional executor. This is someone such as a probate solicitor who is experienced in the winding-up of estates and who will be able to prepare the necessary tax returns and estate accounts.
The role of Trustee
If your Will creates a trust, then you also need to appoint Trustees to administer it. You may want to leave money to children under the age of 18 or leave a life interest in a property or a sum of money to a spouse or partner.
A Trustee’s role can include dealing with the investment of money as well as taking decisions as to where it should be spent. For example, a child’s guardian may ask for a contribution towards maintenance or education and the Trustee will need to consider whether the request is reasonable and in accordance with the intentions of the deceased.
As well as looking after the assets included in the trust, a Trustee will also need to keep clear records and prepare accurate trust accounts.
The role of both Executor and Trustee can be demanding, with consequences for inadequate performance, so it is essential that your chosen appointees understand the job they are taking on and believe they are capable of carrying it out.
If you would like to talk to one of our expert probate lawyers on on 01243 216900 or email us at firstname.lastname@example.org.
If Premium Bonds form part of someone’s estate, they must be dealt with in accordance with the National Savings & Investments (NS&I) rules.
Many people hold Premium Bonds among their financial assets. They are issued by NS&I, a Treasury-backed government savings scheme.
The minimum investment is currently £25, although older Bonds may be for smaller sums. Each £1 unit has a unique number and is entered into a monthly prize draw, with a chance of winning an amount of £25, £50, £100, £500, £1,000, £5,000, £10,000, £25,000, £50,000, £100,000 or £1,000,000. There are usually two prizes of the highest sum, around 6 x £100,000, and increasing numbers of lower prize winners, depending on the amount of bonds in any particular draw.
No interest is paid on the Bonds, and the chance of any £1 unit winning is 1:24,500. A maximum holding of £50,000 is allowed.
When a Premium Bond owner dies
NS&I have a death claims form available via their website which will need to be completed by the executor or administrator of the estate and returned to them together with a Registrar’s copy of the death certificate and a certified copy of any Will.
Premium Bonds cannot be transferred to a new owner. On death, there is the option of leaving them in the draw for up to a year following the date of death, or they can be encashed.
If they are left in the draw, then any prizes are either paid to a beneficiary, if one has been named, or accrue to the estate.
If the beneficiary of the funds wants to invest in Premium Bonds, they would have to buy them in their own name. It is not possible to own Premium Bonds jointly with anyone else.
A Grant of Probate or Letters of Administration is required by NS&I if the amount the deceased held with them exceeds £5,000. This includes other NS&I assets such as Savings Certificates.
If the amount held is below £5,000, then NS&I will not need to be provided with a Grant of Probate or Letters of Administration, but it may still be needed for other assets held by the deceased, depending on their value.
Is tax payable on Premium Bonds?
No Income Tax or Capital Gains Tax is payable on Premium Bond winnings, however the value of any Bonds held by someone is included in their estate for Inheritance Tax purposes.
If you would like to discuss Wills or probate with one of our expert team, ring us on 01243 216900 or email us at email@example.com.
When someone has died and their Will can’t be located, although you are certain there is one, there are several courses of action you can take to try and locate it.
If you make a Will, you should ensure that your loved ones know where it is being stored. Otherwise, there is a risk that they won’t know whether you had a valid Will in place or where it is located.
When you have a Will professionally drafted, your solicitor is likely to be willing to store the document for safekeeping for you. You will be given a receipt with their details on it, which you should keep with your important papers.
Searching for a lost Will
When a Will can’t be located, you should first search the deceased’s property and go through their paperwork. Even if you don’t find the Will itself, you may find some information about their solicitor, a receipt for the Will or even a copy of the document.
It is possible that the firm of solicitors that originally held the Will no longer exists, in which case you can contact the Solicitors Regulation Authority Intervention Archives department who store all documents held by firms which they close down.
The London Principal Probate Registry also store Wills that can no longer be held by the original law firm involved.
Finally, a firm called Certainty have a register of a certain number of Wills and will search that for you for a fee.
If you are acting as executor or administrator, it is important that you make an attempt to find a valid Will. By undertaking these searches, you will be able to show that you did everything reasonable to locate any Will, which could be important if potential beneficiaries raise any queries about your actions.
Using a copy of the Will
It may be that a signed copy of the Will is found. Application for grant of probate can be made to the Probate Registry using the copy, but it will need to be accompanied by a sworn affidavit detailing the attempts you have made to locate the original.
You will also need to explain the circumstances under which the Will has been lost and also provide information regarding anyone who would inherit under the rules of intestacy but not under the terms of the copy Will.
When the Will can’t be found
If neither the original Will nor a copy can be located then it will be necessary to proceed with administration of the estate under the rules of intestacy. These provide a strict order in which close relatives of the deceased will inherit, starting with any spouse, who will be entitled to the majority of the estate, and followed by any children.
If you would like to speak to one of our expert Will experts, call us on 01243 216900 or email us at firstname.lastname@example.org.
When you’re writing your Will, you will need to choose the right person to be your executor. We look at what being an executor entails and whether that person can also be a beneficiary.
It is important when writing your Will that the executor you name is someone you trust to deal with your affairs after you’ve gone. Estate administration can be a long and sometimes complicated matter and you need to be sure that the person you have chosen is willing to act and capable of doing so.
It is perfectly acceptable for your executor to be a beneficiary as well, in fact this is often the case.
The role of executor
Your executor will be responsible for all administrative matters, starting with funeral arrangements and registering the death with the appropriate authorities. You can choose more than one executor should you wish.
They need to notify all asset holders and other organisations and then collect in and value the assets.
Other ancillary jobs such as putting vacant property insurance in place and making arrangements to check on any property regularly also fall to the executor.
Once the estate has been valued, tax needs to be calculated and paid. This includes Inheritance Tax, Income Tax and in some instances Capital Gains Tax.
Once the estate is in funds, outstanding debts need to be paid and estate accounts prepared.
The final job is to distribute the estate to the beneficiaries. This may involve transfer of assets and gifts of personal possessions as well as cash payments.
The role of beneficiary
A beneficiary will be notified that they have been left something in the Will, but won’t necessarily be regularly updated on the probate process unless there are delays. As well as receiving their named gift, they are also entitled to see the estate accounts.
If no valid Will exists
Where the deceased didn’t leave a Will, their estate passes under the Rules of Intestacy, which state that assets pass to close family members in a strict order. The spouse is at the top of the list, with children next. The person heading the list is entitled to act as executor if they choose. If they do not wish to take on the role, then the next person has the option of doing it.
By ensuring that you have a valid Will in place, you have the chance to appoint your choice of executor as well as ensuring that your assets are left to those you wish to benefit.
If you would like to talk to one of our expert Will writers, ring us on on 01243 216900 or email us at email@example.com.
After someone dies, their assets need to be collected in and distributed to their beneficiaries. We look at the deadlines for completing this work.
The person who deals with the administration of an estate is known as the executor or, where there was no Will, the administrator. It is their job to value the estate, apply for probate if needed, work out any tax liability, discharge debts, liquidate assets, prepare estate accounts and arrange for distribution of the money and personal items in accordance with the Will or the rules of intestacy.
The time limit for administration
One year is allowed for completing the administration, with Inheritance Tax due by the end of the sixth month after the person’s death.
If the deceased had assets in many different places, for example different bank accounts, shareholdings and assurance policies, then it can take a considerable amount of time to even work out how much is in the estate.
For this reason, it is advisable to start work on the administration as soon as possible and make sure there are no avoidable delays.
If there is a property, this will need to be sold. Again, this can take a considerable amount of time, so the wheels need to be set in motion early on. This may involve valuing items, selling contents and arranging for clearance as well as the actual property sale itself.
When the work can’t be completed in a year
It is not unusual for administration to take longer than a year, for example if it takes a long time to find a buyer for the house or if there is an issue with a government department such as the Department for Work and Pensions.
Where the executor or administrator can show that they have acted in the best interests of the estate and that the delay is justifiable, then more time is usually permitted.
If the delay continues, interim accounts can be prepared and interim payments made to the beneficiaries. Beneficiaries will be entitled to interest on payments that remain outstanding after the one year period has come to an end.
Deed of variation deadline
If a beneficiary wants to change the share they receive, for example to include another family member or for Inheritance Tax reasons, they can execute a deed of variation to redirect part of their legacy to someone else. The deadline for signing a deed of variation is two years from the date of death.
If you are concerned about the time limits for completing an estate administration, you can engage a professional to deal with the work on your behalf.
If you would like to speak to an experienced probate lawyer, ring us on 01243 216900 or email us at firstname.lastname@example.org.
More people than ever are leaving assets in foreign countries when they die, making administration of their estate more complex. We look at some of the main considerations.
One of the first questions to be answered is which country was the permanent home or country of domicile of the deceased.
If you are domiciled in the UK, Inheritance Tax is payable on your assets wherever they are located. If you are domiciled elsewhere then you may be liable for Inheritance Tax on your UK assets as well as tax payable in other countries.
All of the assets in the estate need to be valued. At this stage, approaches can be made to foreign asset holders to ask what they need from the executor, such as a certified copy of the death certificate or Grant of Probate.
Foreign property ownership
A Will made in the UK may specifically refer to foreign property, or alternatively there may be a Will made in the country where the property is located.
If there isn’t a Will at all, then the property would pass under the rules of succession that apply in the country where the property is.
Other assets held abroad
Other countries may require to see the UK Grant of Probate which would sometimes be resealed in that country. Alternatively, it may be a requirement that probate is also obtained in the country where the asset is held.
Why you need expert advice for foreign assets
Administering an estate which includes foreign assets can be lengthy and complicated. The best way to ensure things go as smoothly as possible is for anyone with foreign holdings to seek legal advice in drawing up the relevant Wills to cover all of their assets.
Some countries may have laws which clash with those of the UK, for example in France and Spain, where property may pass to specific heirs regardless of the terms of any Will.
Finding out the situation well in advance and undertaking estate planning in the light of the different laws can make a huge difference to the executor or administrator of a Will.
When it comes to dealing with the administration of an estate containing foreign assets, it is advisable to take advice from lawyers in the country where the assets are held to ensure that their laws and tax requirements are not breached.
If you would like to speak to one of our expert Will and tax lawyers, call us on 01243 216900 or email us at email@example.com.
When the owner of a business dies, probate can be lengthy and complicated as their business assets have to be valued and transferred.
Whether business assets are sold or transferred depends on the way in which the business was owned and operated as well as the wishes of the deceased.
The estate’s executor or administrator will need to obtain a Grant of Probate or Letters of Administration enabling them to deal with the business.
Sole trading and probate
If the deceased was a sole trader, then their finances and assets are simply treated as part of the estate.
Business partnerships and probate
Where the deceased was in a partnership, there would normally be a partnership agreement giving details of each partner’s contributions and liabilities. It should also set out what is to happen in the event of the death of a partner.
The deceased’s estate will be liable for any debts or a share of partnership profits. Separating the estate from the partnership may well be complex and an executor or administrator should take independent legal advice on behalf of the estate.
Companies and probate
Where the deceased owned shares in a company, the company’s Articles of Association will govern how shares can be sold and/or transferred, for example if first refusal must be given to company directors.
The executor or administrator will need to contact the company secretary and arrange for valuation of the deceased’s shareholding.
It may be that the business will need to be sold or shut down. If there are redundancies, there may be liability to make payments.
If it is advantageous to keep the business running while a buyer is sought, then someone needs to be appointed to do that. If there are other owners or partners, then liaising with them will be essential.
As well as dealing with probate, the executor or administrator may also find themselves having to deal with questions of employment law, company law, property law and insolvency.
For this reason, it is highly recommended that when the deceased owned a business, professional legal help is sought.
If errors are made during the administration of an estate, executors or administrators may be held personally liable.
If you would like expert help in dealing with a probate matter, call us on 01243 216900 or email us at firstname.lastname@example.org.
When someone dies leaving a Will that creates a Trust, it can have implications for the person dealing with the administration of the estate.
A Will may leave property or assets to a Trust so that an individual may benefit from them during their lifetime without actually owning them. For example, the deceased may have wanted their partner to be able to continue to live in their home, but might want it to pass eventually to children. Or they may want to leave money to children for their maintenance and education.
Estate administration and Will Trusts
The need to set up a Will Trust doesn’t alter the need for an executor to obtain probate. In some cases, where the assets fall below a certain threshold, probate might not be required.
Setting up a Will Trust
The executor is responsible for creating the Will Trust. They will ensure that assets are properly transferred to the trust and that the trustees named in the Will have access to them and are aware of their obligations under the terms of the Will.
Once the assets have been transferred, the trustees will be responsible for looking after them and distributing them to the beneficiaries as specified.
Types of Will Trust
A Life Interest Trust gives a beneficiary the right to benefit from an asset during their lifetime. This could include maintenance payments or living in a property. Once the beneficiary has died, the assets pass in accordance with the terms of the original Will.
A Discretionary Trust gives the trustees the right to distribute funds to named beneficiaries as they see fit. For example, there may be a request to fund education or provide a lump sum towards the purchase of a home.
Money held in Trust for a Minor will be looked after by the trustees until the child reaches the age specified in the Will. This doesn’t have to be 18 – it may be 21 or 25 or even older if the deceased wished.
A Nil Rate Band Trust may have been included in a Will as part of Inheritance Tax (IHT) planning. While it is no longer a requirement, older Wills may still contain this type of trust, which transfers assets amounting to the maximum sum the deceased could give under a Will without being liable for IHT.
Help with Will drafting and administration
Creating a valid Will that does exactly what you want and makes the best use of assets in the light of IHT and other considerations can be complicated.
Dealing with the administration of a Will and setting up of a Will Trust may also have tax implications. Obtaining professional advice means that you can be sure that assets are maximised.
To speak to one of our expert probate lawyers at legalmatters, call us on 01243 216900 or email us at email@example.com.
A funeral is usually arranged by close family members of the deceased, but what happens if they disagree, or if someone else has the legal right to arrange the funeral?
If the deceased has left a valid Will, then the named Executors have the right to organise the funeral and either a burial or cremation. If there is no valid Will, then the Rules of Intestacy govern the appointment of an Administrator to deal with the deceased’s affairs, including funeral arrangements.
An Administrator will always be a family member, but it is possible that an Executor won’t be, for example if the deceased appointed a friend.
In that case, the Executor can choose to step aside and let the family arrange the funeral that they want.
When disagreements arise
If the Executor has different wishes to the family and a dispute arises, it is the Executor who has the right to make the arrangements.
If people have differing views on what should happen, it can be very upsetting at a time that is already difficult. The best way to proceed is to keep communicating and compromise if you can, to try as far as possible to avoid conflict.
If the parties involved cannot agree on funeral arrangements, then an application can be made to the Court, who may decide in favour of the legally appointed Executor or Administrator provided they have acted reasonably.
Where the disagreement is between two or more appointees, the Court will decide the matter on the facts. If the deceased has expressed any wishes in the Will, these are taken into account, although these wishes are not in themselves legally binding.
The importance of leaving a Will
Leaving a valid Will that includes an expression of funeral and burial or cremation wishes may help to avoid expensive and upsetting disagreements after death.
It is possible to request a professional Executor in a Will, such as a solicitor, who will act in accordance with the deceased’s wishes as far as possible. This can also help to avoid disagreement between relatives.
If an unmarried person dies without making a valid Will, then their partner can be left with no say in the funeral decisions as well as receiving nothing from the deceased’s estate, as the Rules of Intestacy do not include those not directly related.
A Will can be a record of what the deceased wants to happen after their death, as well as ensuring that their estate is distributed to chosen family and friends.
To speak to one of our expert probate solicitors, call legalmatters on 01243 216900 or email us at firstname.lastname@example.org.