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A useful guide on what you should do when a loved one passes away and how to handle the administration of their estate.
Following the death of a loved one it may seem unbearable to begin dealing with their affairs, but some matters must be dealt with in a set time frame.
When someone dies, the 'executor' (if there's a will) or 'administrator' (if there isn't a will) is responsible for dealing with their finances and then distributing what is left to the beneficiaries according to the Will or the laws of an intestacy. To do this they will need to obtain a Grant of Representation (the 'Grant'). This is an order of the High Court that allows the executor(s) or administrator(s) to deal with the deceased's assets.
After registering the death (see our Factsheet What to do when someone dies) the first thing to do is establish whether the person had a valid will. This may detail their funeral wishes and will state who is to be executor and how the estate is to be distributed.
If there is a valid will, you should contact the executor if it isn't you. The executor receives authority to deal with the deceased's estate from the will, but to dispose of the deceased's assets the executor will need to apply for a Grant. Where there is a will, the Grant is known as a Grant of Probate.
Many people find it easier to instruct a solicitor to administer the estate of a deceased person from start to finish as it's time consuming and can be quite complex, but it's not the only option.
Personal applications are accepted at the Probate Registry, or a solicitor can be instructed to simply make the Grant application. The executor will then deal with the other aspects of the administration of the estate.
If the deceased did not have a valid will at the date of death, they're said to have died 'intestate', meaning those entitled to obtain the Grant will be determined by the rules of intestacy. Where there's no will, the Grant is known as the Grant of Letters of Administration.
There is a strict order of priority of those entitled to obtain the Grant.
For example, if the deceased died without a spouse or children, the person(s) entitled to obtain the Grant would be the deceased's parent(s).
The intestacy provisions are complex. Where you believe the deceased died without making a will, we'd recommend that you contact us to discuss the administration of the estate.
Once it's been established who should deal with the administration of the estate, the executor or administrator will need to notify a number of organisations about the death, including the Department of Work & Pensions (DWP), and HM Revenue & Customs (HMRC). Valuations will need to be obtained for any properties or other assets owned by the deceased, their personal belongings, and all balances at financial institutions.
As a starting point, you should try to locate the following key documents:
The following will need to be notified of the death (the list is not exhaustive and some may not apply):
If the deceased left a property which, as a result of their death, is empty, it's crucially important to contact the insurance company as soon as possible, as it may have specific conditions that will need to be implemented to ensure cover continues after death. For example, it may require the plumbing system to be drained down or the property to be checked regularly.
To obtain the Grant, the executor or administrator needs to submit an Oath and an Inheritance Tax Return to the Probate Registry. Whether a small or complex Inheritance Tax Return needs to be submitted will depend on the value of the deceased's estate.
As the valuations will have been obtained, it'll be clear whether the estate is subject to inheritance tax, which is charged on all estates at a rate of 40% where the total value of the assets is more than the applicable Nil Rate Band. The value of the Nil Rate Band is currently £325,000.
Therefore, if the value of the estate is more than £325,000, the estate will be taxable and a detailed HMRC inheritance tax form will need to be completed and approved by the Capital Taxes Office. Inheritance tax must be paid prior to the application for the Grant.
For estates with assets totalling less than £325,000, or that are exempt from inheritance tax (if the entire estate passes tax free to a spouse or charity), a more straightforward HMRC inheritance tax form must be submitted.
There are penalties if the HMRC form is completed incorrectly, or if the information given is false. A corrective account will need to be submitted on a taxable estate if valuations change during the administration, for example, if the property sells for a lower or higher amount than stated. There are various exemptions that can be applied to reduce the inheritance tax on which we can advise.
Once the HMRC form is complete, an Oath will also have to be sworn by the personal representative(s). The Oath identifies the personal representative and gives sufficient details about the estate for the Probate Registry to know that the executor or administrator is entitled to deal with the estate.
The Oath and HMRC forms will need to be submitted to the Probate Registry, together with a fee. The Grant is usually issued within two to three weeks of making the application.
Once the Grant has been issued, all assets are collected in, any liabilities are paid, and the estate is distributed to the beneficiaries either: (a) named in the will or (b) as determined by the rules of intestacy.
If the deceased left a will, it will specify who is to receive the estate following the payment of any debts and other liabilities.
The order of distributions is strict:
Where the deceased died intestate, the rules of intestacy determine who will inherit the estate, which often results in the estate being distributed in a way that the deceased would not have expected or wanted.
The surviving spouse or civil partner has priority but what he or she is entitled to depends on whether the deceased left:
For example, for a married person with children the distribution would be:
For a married person with no children, the distribution would be:
The intestacy rules are complex, and we'd recommend that you speak to a solicitor about them.
This is a very difficult question to answer. A number of factors will determine how long the administration of an estate will take:
Some estates can take as little as three months, others can last a number of years. As a general rule, we'd suggest that the average estate takes between six months to one year to administer properly.
A solicitor will be able to advise you on all aspects of the administration process.
Appointing a solicitor relieves the personal representatives of a lot of the responsibility of dealing with the estate administration. If a personal representative fails to carry out his duty, he may incur personal liability for any loss suffered by the estate or a beneficiary.
There is a lot of work in administering most estates. Access Legal from Shoosmiths is aware that dealing with the death of a family member can be a very distressing time, and has a specialised team that is sympathetic, friendly, and helpful, and which will assist you in completing all aspects of the administration.
We'll agree with you what aspects of the administration you wish us to cover, or, if you prefer, we can take over all of the tasks involved. To assist you in making a decision, we'll discuss the options open to you and the likely costs involved.
Fees are often based on the anticipated time involved, but we can also offer a fee based on a percentage of the value of the estate, or, where appropriate, a fixed fee can be agreed.
All documents should be read and used in accordance with the terms and conditions. This document is for your general information only and is not a detailed statement of the law. It is provided to you free of charge and should not be used as a substitute for specific legal advice. If you require specific legal advice please contact our client services team on 03700 868 686.