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The executor of a will By Faith Glasgow
The role of executor of a will can be complex and daunting - particularly as executors are often the closest relatives of the deceased and have their own grief to deal with. Broadly, the executor's It's usually necessary for executors to obtain from the courts a 'grant of probate' or 'letters of administration' if there is no will. Sometimes a grant of probate is not required. If the whole estate was held jointly, for example, the assets should pass automatically to the surviving husband or wife on production of a death certificate. Additionally, for small estates a grant may not be required. But probate is the usual route and it will always be required if you need to sell or transfer a property owned solely by the dead person or as a 'tenant in common' with their spouse/partner. (A solicitor can do much of it for you.) First things first Julian Washington, private client partner at law firm, Forsters, says it pays to move swiftly as there are tasks that need to be completed shortly after the death: First find the latest version of the will: "The will may set out what form the funeral is to take," Washington says. It will also confirm the names of the executors. Register the death: Make several copies of the death certificate, as they need to be sent to banks and other financial institutions and photocopies cannot be used. Notify financial institutions: Banks and building societies automatically freeze all accounts when they receive a copy of the death certificate. However, surviving spouses with joint accounts should be able to continue to use those accounts on production of the death certificate. Let the buildings and contents insurance companies know that the policyholder has died and that the executors are now responsible, and ensure appropriate insurance is in place. Inform organisations such as former employers, the Department for Work & Pensions and HM Revenue & Customs (HMRC). Information gathering Before the executors can get the grant of probate that allows them to gather in the deceased's assets for distribution to the beneficiaries, they have to deal with HMRC's requirements. This means getting a valuation of the entire estate as at the date of death which can be time-consuming. Valuations are required for all accounts, bonds, stocks and shares, funds, the house, car, furniture and other belongings - and also for any loans, mortgages, credit card balances and other domestic or business debts.
Financial institutions will require a copy of the death certificate and they may want other documents too. Requirements vary. Probate is not always required for the executors to be able to access accounts. For small sums (up to £5,000), a Statutory Declaration form signed by a solicitor, will be accepted. To whom money is owed The executors have a responsibility to identify everyone to whom money is owed - and not all of those may be on record. If overlooked or unknown creditors emerge at a later date and make a claim against the estate, the executors will be personally liable; but they can protect themselves by taking out a Section 27 notice. This is a notice placed in various papers to advertise the death, inviting creditors and unknown beneficiaries (for example, illegitimate children) to come forward. Claimants have two months in which to make themselves known. Once you have all the asset and debt valuations, it's time for you or your solicitor to fill in an inheritance tax (IHT) return. For estates worth less than the IHT nil rate band (currently £285,000) you'll need form IHT205. In all other cases (even if you don't expect to pay IHT - for example, because the entire estate is passing to the surviving spouse), it's IHT200. Any tax due should be paid when the form is submitted. Frozen monies Probate cannot be granted until the court sees evidence that IHT has been paid. The exception to this is for funeral invoices, which can be settled by the bank directly from the frozen account. Some banks will also now release funds for the purposes of IHT settlements direct from the deceased's accounts. IHT due on property, land or business assets can be paid in annual instalments over 10 years. Interest is payable on the debt outstanding, but it's charged at a relatively low rate, currently around 4%. "It's something to bear in mind if the alternative is the forced sale of the family house," says Liz Lyle, a partner at law firm Payne Hicks Beach. Once the executors receive a tax receipt from HMRC, they are in a position finally to apply for the grant of probate. The executors swear an oath in the presence of a solicitor that this is the true will; they can then submit their application to the probate court. This will include the original will and any later amendments, plus the oath and the IHT receipt. The grant should be sent within two or three weeks and it's worth asking for several official copies to send to all the financial institutions. Distribution of assets On receipt of the grant, the banks and other account holders will release the assets to the executors. If necessary, the executors can request that investments such as shares are sold to release cash so that they can settle all debts (including any loan for IHT), which are always the first payments to be made from the estate.
When the debts are cleared, the executors can distribute the rest of the estate to the beneficiaries. Legacies - fixed sums or specific items - are paid first, and what's left is paid to the 'residuary beneficiaries', usually the closest relatives. But the executors need to put money aside for any tax owed to HMRC that may have arisen. For instance, there could be capital gains tax to pay on a house sale if it has gained in value since the date of death. What about disputes over the will? There may be bad feeling if someone who expected to be included has been cut out of a will - and they may have the right to make a claim against the estate. The time limit for claims is six months after probate is granted. The importance of a will Anyone who has not made a will dies 'intestate'. The procedure in such cases is not that different from that where there is a will, but the person winding up the estate (usually the main beneficiary) is known as the administrator rather than the executor. Because the deceased person has left no instructions as to who should receive what, the estate must be divided up according to the law of Intestacy. "The trouble is that the end result is not always what the deceased would have wanted," Liz Lyle points out. It's important therefore to make a will and keep it up to date.
Where to go for advice and information Probate and Inheritance Tax Helpline: 0845 30 20 900, theprobateservice.gov.uk A guide to the Probate Service, including a list of local probate registries, is also available from hmcourts-service.gov.uk Information about IHT is available on the HM Revenue & Customs website: hmrc.gov.uk Meanwhile, lawontheweb.co.uk offers a telephone advice line for wills and probate law, staffed by specialist solicitors.
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