Tag Archives: Administration of an estate

Unresponsive...

When an Executor fails to deal with the administration of a Will

If the administration of an estate is delayed because an Executor stops responding, it can be frustrating for everyone.

A Will may name one or more Executors whose job it is to deal with the winding-up of the deceased’s affairs and the distribution of assets.

Before the administration begins, each Executor must decide whether they are willing and able to act. It is important to think this through carefully as it is difficult to withdraw partway through the administration.

Deciding not to act

If a joint Executor does not wish to take on the task, then they can renounce the role or alternatively request that power to be reserved to them, which means they can ask to act later if they choose. These decisions must be made before any action is taken in administering the estate.

Stepping down partway through administration

If an Executor wishes to cease acting during the administration it can be difficult to have themselves removed. There is a rule that once someone has ‘intermeddled’ in an estate, they cannot retire from the position of Executor.

For this reason, it is important to understand exactly what is required of an Executor before taking on the role. They are required to collect in and value all of the deceased’s assets, arrange for payment of any debts, calculate and pay any tax liabilities, prepare estate accounts and distribute the net estate to the beneficiaries named in the Will. There can be personal liability for failure to act correctly in the administration.

When writing a Will and choosing Executors it is important to ensure they know what the role entails and that they believe they will have the time and capacity to take on the job.

If you do not have anyone who is willing to act as your Executor, you can appoint a professional to act on behalf of your estate.

Dealing with an unresponsive Executor

When an Executor stops responding to communications partway through an administration, it can be very problematic. There is a time limit for completion of estate administration and any other Executors will be mindful of facing accusations of failing to carry out their duties, as well as the potential for penalties arising from late payment of tax and other debts. Beneficiaries will also be keen for the administration to be finalised.

It is important to try everything to attempt to re-establish contact with an unresponsive Executor and see if an agreement can be reached with them to conclude the process. Failing that, it may be necessary to apply to the court to have the Executor removed. The court will take into account the best interests of the estate and any beneficiaries when reaching a decision.

If you would like to speak to one of our expert Wills and Probate solicitors, ring us on 01243 216900 or email us at info@legalmatters.co.uk.

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Homeowner mortgage

What happens when a homeowner with a mortgage dies

When someone who has a mortgage dies, it is important to notify the lender as soon as possible. If the property has been left to you in a Will, you should ask them about the options for taking on some or all of the mortgage if it cannot be repaid.

After a death, notifications need to be sent to all of the organisations where the deceased held an account. This includes any mortgage lender.

What happens next

The monthly payments will still need to be made while the estate is administered. If the mortgage was in the sole name of the deceased, then the mortgage company has the right to ask for the repayment of the amount owed in full.

If the property is passed to someone else and they are able to meet the mortgage payments, then the mortgage company may consent to transferring the mortgage debt to that person.

It is important to speak to the lender early on after the death, so that they can set out the options.

If the property is sold, then the mortgage will be repaid from the proceeds of sale.

Where there is a joint mortgage

When a property is held with someone else as joint tenants, then the property and the mortgage will automatically pass to that other person on the death of the other owner.

This means that they will be responsible for making the mortgage payments. If this is not possible, then the property may have to be sold to repay the debt.

If the property is held as tenants in common, then the situation can be more complicated as the deceased’s share of the property becomes part of their estate and will pass in accordance with the terms of their Will or the rules of intestacy.

If the remaining owner does not inherit the rest of the property, there may be an option for them to purchase it.

To prevent a tenant in common being forced to leave the property, it is possible for property owners to leave each other a life interest in their share of the home. This means that the surviving spouse or partner would be able to continue to live in the property after death of the other. Following the survivor’s death, the share of the property owned by the first to die would still pass in accordance with their Will.

It is particularly important to think about what you would like to happen to your property after your death if you have a mortgage over it. You need to consider whether others would be able to afford to take on the debt and, if not, how you can secure their future, for example, by leaving them a bequest or taking out a life insurance policy.

If you would like to talk to one of our Wills or property experts, ring us on 01243 216900 or email us at info@legalmatters.co.uk.

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Executor vs Trustee

The different roles of an Executor and a Trustee in probate

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 info@legalmatters.co.uk.

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Premium Bonds

What happens to Premium Bonds after someone dies?

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 info@legalmatters.co.uk.

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Lost Will

What happens after a death when you can’t find the deceased’s Will?

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 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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