When you die, any possessions, cash, property or other assets you owned are known as your ‘estate’. In most cases, your estate will need to be administered to comply with legal requirements in terms of carrying out your wishes in your will, making sure the beneficiaries receive what has been left to them, as well as paying any inheritance tax due to HMRC. The question is, do you need a solicitor to help with estate administration or is it something your spouse or family can deal with on their own?
What is estate administration?
Estate administration is the process of probate which includes closing your accounts, paying off any debts, paying any taxes due to HMRC and distributing your property and possessions to your heirs. In many cases, this is handled by probate and estate administration solicitors but that can be an expensive route which may well impact the beneficiaries.
If you have written a will, you will have specified who has the responsibility of administering your estate upon your death, which is usually the executor of the will. However, if there isn’t a will, your estate will be handled in accordance with state law and an estate administrator will be appointed by the court, which is usually a living spouse or the next closest relative.
What is the role of an estate administrator?
Depending on the size of the estate, administration can be a simple or a complex process. If the estate is large, there will usually be an estate plan in which the estate administrator will be named. But, if there is no will, the court will decide who the estate administrator should be. The typical duties of an estate administrator include:
• Collate the assets, financial accounts and possessions of the deceased.
• List any outstanding bills and/or debts.
• File an inventory of all debts and assets with the court.
• Issue a Notice to Debtors and Creditors.
• Request details appertaining to any life insurance policies owed to the estate.
• Settle any debts and bills, and collect any monies that are owed to the deceased.
• File relevant tax returns for the estate, including any gift tax returns required.
• Liaise with the beneficiaries and heirs of the estate.
• Distribute property, possessions and assets in accordance with the deceased’s will/estate plan, or per state law.
What is the difference between estate administration and probate?
The estate administrator is not an executor of the deceased’s will; the two roles, albeit similar, are different. An estate administrator will be appointed by the probate court if there is no will and sometimes this will be probate and estate administration solicitors. The main difference between the two is that an executor will have more power over the handling of a deceased’s estate, while an estate administrator is guided more by state law.
An estate administrator usually takes on more responsibilities than an executor will do, such as:
• Getting assets valued.
• Transferring or cancelling utilities.
• Registering or de-registering properties.
• Organising postal redirections.
Can you handle estate administration yourself?
There are some circumstances where the executor of a will also handle the estate administration process. However, the role of an estate administrator can be complex, take time and be stressful. Before you take on the role of an estate administrator, make sure you can dedicate the time required to deal with the different aspects of handling a deceased’s estate.
While not using probate and estate administration solicitors will save you money, there is a lot of legal and tax paperwork that needs to be completed and filed with the probate court, or with HMRC respectively. All the paperwork needs to be accurate and filed correctly to avoid any delays. You will become legally responsible for any will disputes, dealing with all legitimate claims, paying any tax bills and debts, and any other estate matters. If any one of these activities are not completed in full, or correctly, you could be personally sued by one or more of the deceased’s beneficiaries.
In many situations, if there is a will, it is likely the deceased will have left a small remuneration or possession as payment for administration services rendered. However, administrators not appointed by the court, i.e. if a will has been left by the deceased, will need to apply to the probate court for permission to be paid for their services.
Benefits of using probate and estate administration solicitors
If the estate is fairly simple and below the legal tax threshold, handling the administration of the estate should be quite simple, although you may need to seek advice in terms of completing the relevant legal paperwork. However, if the deceased’s estate is large or complex, or both, then it is advisable to get the help of probate and estate administration solicitors. Examples of situations where a professional estate administrator is beneficial include:
• If the value of the estate exceeds the legal inheritance tax threshold, currently at £325,000 per annum, or £650,000 for a married couple.
• If the estate receives a regular income from assets and complex taxes are due.
• The deceased died without a will, or there are doubts that the will is valid.
• If the estate is large and complicated.
• If any dependents were left out of the deceased’s will and make a legitimate claim on the estate.
• There are complex arrangements in the deceased’s will/estate plan, such as assets held in a trust or gifted before the seven-year regulation.
• The estate is insolvent or bankrupt.
• The estate includes any assets or property overseas, or the deceased’s main residence was abroad for tax purposes.
Most probate and estate administration solicitors charge a percentage of the value of the entire estate, usually between 1% and 5%, although some charge an hourly fee plus a percentage.
If you are handling a deceased’s estate and are not sure what your next step should be, are facing a company liquidation, or you have a solvent company that you would like to close, the first step is to seek professional advice. Our highly experienced professionals at Leading UK are on hand to help and advise you on the process.