Probate & Estate Administration
The Executor of a Will is personally responsible for the process of dealing with administration of the deceased’s estate.
The responsibilities and duties of an Executor following a death can be complex and time onsuming, especially if there is a need to obtain a Grant of Probate or pay Inheritance Tax. Where a person dies without a Will they are said to die intestate and in these circumstances the law provides who is entitled to administer the estate.
In broad terms the Executor of a Will or, where someone dies intestate, an Administrator, is required to carry out a number of duties, some of which will be practical duties such as ensuring funeral wishes are carried out, securing and insuring the property, advertising the death and so on.
In addition to these practicalities, the law imposes personal liability on Executors to carry out the administration in accordance with the law. This may include:
Obtaining a Grant of Probate
In some cases it will not be necessary to apply for a Grant of Probate. However, where the estate includes property, shares, or savings that exceed a certain threshold, a Grant of Probate will be required.
Paying Inheritance Tax
Whether Inheritance Tax will be payable or not depends if the value of the estate exceeds the Inheritance Tax threshold at the date of death. The current threshold is £325,000. The value of assets in excess of the threshold incur a tax of 40%. In cases where a widow or widower has died having inherited the estate of their deceased spouse, the Inheritance Tax threshold is effectively doubled to £650,000.
Administration Period Tax
The Administration Period describes the period from date of death to when the administration is finished. During this time Income Tax attributable to income received from estate assets, and Capital Gains Tax attributable to an increase in the value of estate assets, may arise and must be paid to the Inland Revenue. Occasionally these taxes can be reduced and in certain circumstances avoided altogether.
Varying the Estate
Occasionally it may be desirable to vary the terms of a Will as a means of avoiding Inheritance Tax or even care fees. This is achieved through a Deed of Variation and must be completed within 2 years of death.
Setting up a Will Trust
In certain circumstances Wills include a Will Trust. Most trusts are set up as a means of estate planning. This may include providing for young children, Property Trusts for a spouse, and protection against depletion of assets by such things as tax, care fees, and spendthrift beneficiaries. Even if a Will doesn’t include a trust, it can be written into the Will after death through a Deed of Variation, provided all the relevant beneficiaries give their consent.
There are many pitfalls to becoming an executor of an estate and we strongly advise that you seek legal advice in order to avoid the common mistakes and even a financial penalty. Read more about your personal liabilities here.
Our Solicitors have compiled a guide for personal representatives.