Category Archives: Estate Administration

Can you leave someone a legacy in your Will and also name them as your Executor?

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 info@legalmatters.co.uk.

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Estate administration deadlines…

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 info@legalmatters.co.uk.

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Foreign assets in a Will

How to deal with foreign assets left in a Will…

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 info@legalmatters.co.uk.

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Dealing with business assets during Probate

Dealing with business assets during Probate…

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.

Complications

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 info@legalmatters.co.uk.

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Help with will writing or administration

Administering an estate when the Will creates a trust…

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 info@legalmatters.co.uk.

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Funeral arrangements

Who has the legal right to organise a funeral?

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 info@legalmatters.co.uk.

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Client Testimonial

Client Testimonial…

When you lose someone you love it is always a difficult time. Having to deal with the paperwork involved in administering an estate after a death – and when you’re grieving – can be extremely upsetting.

That’s why at legalmatters we will always try to make the process as pain-free as possible for you – and why we’re always delighted to hear from a client when we’ve helped a family or an individual through such a stressful time. So thank you Jane for your kind words.

“Thank you and Megan, and all in the office staff for making my journey – sorting my dad’s estate through yourself and legalmatters – a professional, reassuring and stress free time. It’s been a pleasure and I would highly recommend you to friends.”

Disagreements during Probate

Dealing with disagreement between executors in the administration of probate

The administration of the estate of a loved one can be a difficult job.

There are many decisions to be made at a time when people may be feeling overwhelmed and fraught. It is not uncommon for executors to fall out during this time, which is the last thing the deceased would have wanted.

People may feel that the other executor(s) are not acting in the most beneficial way, or that they are taking over or not sharing information.

Some of the administration tasks and problems that can arise

One of the main jobs after someone’s death is often to clear their property, dispose of their personal effects and put the house up for sale. Selling a home frequently causes friction, even in ordinary circumstances, and when it closely follows a death then emotions can run high.

There are also choices to be made over payments of expenses, who should be allowed to buy assets such as property or valuables, agreeing on valuations and closing or moving bank accounts. One executor may want to hold on to any property until the market improves, while another may want to sell straight away.

The process itself always takes a long time, which can be a source of frustration.

Maintaining a good relationship between executors

One of the key ways to maintain a good relationship between executors is to communicate as much as possible. If something has caused a delay, make sure everyone knows why and that it is unavoidable. If different valuations have been received, make sure the situation is talked through and try and take everyone’s point of view into account.

Stepping aside as an executor

If an executor does not want to act, it is possible to stand down before administration begins. They can either renounce the role permanently or ask for their power to be reserved, which could allow them to apply to court to become an executor at a later date.

If the relationship between executors breaks down completely, it is possible for one of them to apply to the court to have another removed, which the court might do if it believes this is in the best interests of the estate. There is then the option for a new appointment to be made.

Avoiding conflict in estate administration

It is possible to request a professional executor when drawing up your Will. This means that an expert probate lawyer will act as your executor. The advantage of this is that they are experienced in dealing with probate and will also act impartially. It can minimise delay and reassure everyone involved that the estate’s best interests are being observed.

To talk to one of our probate specialists, call legalmatters on 01243 216900 or email us at info@legalmatters.co.uk.

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Is probate necessary if the deceased left a Will?

On some occasions it may be possible to deal with someone’s estate without needing to apply for probate.

When someone dies, the person named as executor in their Will is responsible for collecting in, valuing and distributing their assets.

Whether or not that person needs to apply for probate depends on the value of the estate and how any assets were held.

Small estates

If an estate only has a modest amount of money, it may be classed as a small estate and probate might not be necessary.

There is no exact definition of a small estate, although as a rough guide estates worth less than £5,000 may qualify.

Each bank has its own different threshold under which it will close an account and release funds without requiring a Grant of Probate, ranging from around £5,000 to £50,000.

The same applies to share registrars, life assurance companies and pensions administrators. Where the estate is fairly small, then it is worth enquiring of the asset holders what documentation they will need.

Property

Where the deceased owned a property in their sole name then probate will be needed to deal with the sale or transfer.

Similarly, if the property was owned as tenants in common with others, probate is required.

However, if a property was held by the deceased as a joint tenant, then it will automatically pass to the other owner(s).

Jointly held assets

Similarly, joint bank accounts and other jointly held assets will pass automatically on death to the survivor(s).

It is therefore always worth checking whether probate is necessary. If most of the deceased’s property passes automatically, then it may be possible to avoid the time and expense involved in applying for a Grant of Probate.

What documents will asset holders need?

If probate is not needed, asset holders will need to see a copy of the death certificate and may require the executor to complete a form called a ‘Small Estates Declaration’.

They may also ask to see a copy of the Will and identification, such as birth or marriage certificates.

To speak to one of our probate experts, ring us on 01243 216900 or email us at info@legalmatters.co.uk.

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Is Capital Gains Tax payable on an estate?

When someone dies and their assets are sold at a profit, their executor will need to calculate whether Capital Gains Tax is payable.

When an executor or administrator is dealing with the administration of an estate, part of their job is to account to HM Revenue & Customs for any tax which may be due. This includes Inheritance Tax, Income Tax and Capital Gains Tax.

Capital gains or losses during the tax year leading up to death will be taken into account when making the tax calculation, as well as any capital gains made on assets from the date of death until their sale.

This means that if for example the deceased leaves a property that is subject to Capital Gains Tax, ie a second property and not their main residence, then if the value of that property increases between death and sale, tax will be payable on the increase if the amount exceeds the Capital Gains Tax allowance.

Expenses can be deducted from the gain, for example estate agents’ or solicitors’ fees, or in the case of shares or valuables, stock broking or auction house fees.

Capital Gains Tax allowance 2019

An executor is given a Capital Gains Tax allowance of £12,000 per annum for the three tax years following death.

Once this allowance has been used up, Capital Gains Tax is payable at the rate of 28% in respect of residential property and 20% for other assets.

Beneficiaries’ liability for Capital Gains Tax

Where a beneficiary inherits a valuable asset and then proceeds to sell it, they may become personally liable for Capital Gains Tax.

They can use their Capital Gains Tax allowance and may only be liable to pay the tax at a lower rate if they are a lower rate tax payer. This means they would pay 18% on gains from a property sale rather than 28%, and 10% on gains from other assets rather than 20%.

Where a beneficiary occupied the property as their principal private residence and is entitled to at least 75% of the net proceeds of sale, the executor may use principal private residence relief to avoid the need to pay Capital Gains Tax on any increase in value.

Valuing inherited property

The value of an asset to be passed on to a beneficiary is the full market value as at the date of death.

Where the asset in question is a property, it is preferable for the executor to obtain a proper ‘red book’ valuation from a member of the Royal Institute of Chartered Surveyors, rather than simply an estate agent’s quote.

For advice on Capital Gains Tax and the most effective way of passing on assets, speak to one of our team at legalmatters on 01243 216900 or email us at info@legalmatters.co.uk.

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