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Lester Aldridge Life Matters for Lymington: Administration of estate

What needs to happen when someone dies?

The first two important things to be done when someone dies are to organise the funeral and to register the death with the registrar in the area where the deceased died.

From there the administration of an estate can be simple, but often assets in the name of the deceased require a grant of representation and some estates are required to file an Inheritance Tax return to HMRC. If at this stage you're already wondering what all that means...

Take advantage of a free consultation with the Lester Aldridge Estate Administration Team! 

 

Dealing with administration of estate, solicitor with Lester Aldridge

Is there a valid Will?

If someone dies with a valid Will in place, they die ‘Testate’.  If someone dies without a Will, they die ‘Intestate’.  If there is a will, the Executors – those responsible for dealing with the administration of the estate – should seek to obtain a copy of the Will as soon as possible in order to establish whether any specific funeral wishes were declared.

When someone dies Testate, their executors will usually apply for a ‘grant of probate’.  If a person dies Intestate, their Personal Representatives will be called ‘Administrators’ and the grant of representation is called a ‘grant of letters of administration’.  If someone dies with a will but there’s an issue and a grant of probate cannot be issued, then the grant of representation is called a ‘grant of letters of letters of administration with Will annexed’.

Assets

On death, assets in the sole name of the deceased are usually ‘frozen’ pending issue of a grant of representation.

Assets owned jointly with another who survives, will usually pass automatically and immediately into the name of the surviving co-owner. A good example is a joint bank account or a property owned as ‘Joint Tenants’. In this case, one usually only needs to produce a death certificate to the bank or Land Registry to have the deceased’s name removed. No grant of representation is required.

Some banks and financial institutions do not always require a grant of representation if the sums held in the deceased’s name are relatively modest. They may ask to see the deceased’s Will and identification of the person to whom the estate may pass – a surviving spouse for example. Each financial institution may have its own thresholds above which they’ll request a grant of representation.

It is the responsibility of the personal representatives to ascertain the assets and liabilities of the deceased and the value of those assets and liabilities as at the date of death. They will usually do this by writing to every type of financial institution with whom the deceased held assets as well as obtain or instruct valuations to be prepared for other types of assets – land, property, business interests and personal possessions. Personal Representatives need to know the value of the estate to know whether an inheritance tax (IHT) form is required or not. This is also important when it comes to distributing the estate to beneficiaries.

Inheritance Tax

Most estates are exempt from inheritance tax and as from the 1 January this year for deaths occurring after this date, no short IHT tax form is required to be prepared. The personal representatives need only prepare an application for a grant of representation.

If an IHT400 tax return form is required, the Personal Representatives must complete the form with the asset and liability valuations before applying for the grant of representation. IHT, if payable, must also be paid at this point before the grant can be applied for. HMRC send a receipt for the form and tax paid (called an IHT421) to the Probate Registry. The personal representatives can then apply to the Probate Registry for the grant of representation. In all cases, the personal representatives must complete and submit a ‘Statement of Truth’ to the Probate Registry.

Administration of the Estate

Once the grant has been issued, the personal representatives can begin to collect in or transfer the assets and settle liabilities. Normally this involves the personal representatives sending a court issued grant to the financial institution or other entity with instructions signed by the personal representatives as to whether the assets should be closed, cashed in, sold or transferred into a beneficiary’s name.

It is important for the personal representatives to keep accurate records during the period of administration of all income received and expenses incurred as income may need to be reported to HMRC for income tax and capital gains tax purposes. The personal representatives may also be required to prepare ‘Estate Accounts’.

Estate Accounts are usually broken down into various sections. The ‘Capital Account’ details the assets and liabilities as at the date of death. The ‘Administration Account’ details the income received and expenses incurred during the period of administration. Finally, the ‘Distribution Account’ details the division of the estate amongst one or more beneficiaries in accordance with the terms of the Will or, if the deceased died Intestate, in accordance with the law of intestacy.

Deed of Variation

Beneficiaries have two years to potentially vary an estate via a ‘Deed of Variation’.

Beneficiaries’ can do this unilaterally provided a variation does not increase the IHT liability, in which case the permission of the Personal Representatives will also be required.

Distributing the Estate or Assets

The final act of the personal representatives is to distribute the estate or assets to wind the estate up.

Personal representatives should be careful acting in such a role as it carries with it personal liability for losses caused by neglect or negligence.

Although many people choose to deal with the administration of an estate themselves, a solicitor is able to guide you through the process with their knowledge and experience which can speed up process and take away the stress and anxiety at what is often a difficult time.

Kurt Lee, Solicitor and Chartered Tax Advisor who specialises in wills, probate, estate and tax planning.

Article by By Kurt Lee, Partner at Lester Aldridge

Kurt Lee is a Solicitor and Chartered Tax Advisor who specialises in wills, probate, estate and tax planning.

If you would like more information, please contact the Lester Aldridge probate & estate administration solicitors by emailing This email address is being protected from spambots. You need JavaScript enabled to view it. or calling 01202 702630. And don't forget you can also

Take advantage of a free consultation with Lester Aldridge Estate Administration Team 

 

About Lester Aldridge Solicitors

Lester Aldridge Solicitors are based in London, Southampton and Bournemouth - where the office covering the New Forest is situated conveniently close to the main Bournemouth train station. Their specialist teams in the various fields of law will be happy to advise and assist you, starting with a completely free initial consultation during which you can decide whether you feel able to trust them with your confidential information. Consultations are also available via virtual meetings : advice is available through phone, email, Skype and Zoom.

Take advantage of a free consultation with Lester Aldridge, on any legal matter, at any time  - click here

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Life Matters is a regular monthly feature on Lymington.com, which covers a wide range of legal subjects and is always written by one of the Lester Aldridge team.

You can see a list of all published articles by clicking to the Lester Aldridge Solicitors webpage on Lymington.com here.

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