When a relative dies, you will usually have to apply for a Grant of Probate if there is a Will, or for Letters of Administration if there is no Will.
Probate is the procedure by which the last Will of a person who has died is formally recognised as legally valid. It involves applying to the court for a “grant of probate”. The grant of probate authenticates the right of the executors named in the Will (who are responsible for dealing with the estate) to carry out their duties.
Probate is sometimes confused with all the tasks which have to be completed following a death, but it actually only refers to the process of obtaining the grant to enable you to carry out these tasks.
If there is no Will, unless the estate is very small, it will usually be necessary to apply to the Probate Registry for Letters of Administration. Letters of Administration allow the estate to be administered in accordance with established Rules. The estate will pass in accordance with intestacy laws.
Estate administration is the process of handling a deceased’s legal and tax affairs after they have died. In essence, it is the task of identifying all assets and liabilities, valuing them, selling them (where appropriate), paying the liabilities, identifying and paying taxes and then distributing the remaining assets in accordance with the terms of the Will or intestacy.
When an estate has been administered, the whole or part of the assets may be held in an ongoing trust and issues of trust and trust administration will arise.
If you have been appointed as an executor, it can seem straightforward to administer an estate. However, it can in fact be very complex and time consuming. Executors often underestimate the amount of time and paperwork involved and how onerous administering an estate can be. They are often unaware that they may be held personally responsible if they make a mistake.
If you appoint a solicitor, they will ensure that the estate is properly administered so as to avoid the pitfalls which executors can fall into. Crucially, your solicitor will be able to advise about inheritance tax and how this can be minimised, for example by means of a Deed of Variation.
Your solicitor will also be able to check that the Will is valid and explain the terms. Terminology in Wills is not always clear and the legal effect may not always be as it seems at first glance. A non-lawyer executor may not be aware of when a statutory provision will apply to a Will so as to alter the distribution from what appears on the face of a Will. If a Will does not name executors or they don’t want to act, we can advise you on who should apply for a grant.
Executors are personally liable for correctly administering an estate. This means they can be sued if they make mistakes such as not looking after assets properly, or managing investments unwisely, or misinterpreting the Will, overpaying one beneficiary at the expense of others, or distributing money to beneficiaries without ensuring that anyone owed money has been paid in full.
Executors can often find themselves being put under pressure to distribute money early, which is potentially disastrous if there are debts that the executor doesn’t at that stage know about or if a claim is subsequently made by someone disputing the Will.
For these reasons, you are always safer, as an executor, instructing a specialist probate solicitor who will ensure that you are protected against being sued personally for negligence.
Where there are foreign assets, it is normally necessary to for us to liaise with foreign lawyers and ascertain if there is a foreign Will. The interaction between succession and taxation in each jurisdiction has to be considered. It may be necessary to re-seal English Grants over seas or re-seal Commonwealth Grants here.
It is not enough simply to identify the assets and liabilities. You must ensure that all income tax and capital gains tax arising during the period of administration is identified and paid.
You will also need to ensure that you obtain the full tax exemptions to inheritance tax. Issues may arise concerning the disposal of a business interest or creation of a trust. It is of vital importance to get good initial advice on the Revenue rules relating to valuations to avoid penalties and the over payment of tax. We can also advise you as to when a Deed of Variation could be used to reduce the tax payable.
Why Dawson Cornwell
As executor you are entitled to appoint a solicitor of your own choosing to carry out the administration of the estate for you. The legal fees will be settled out of the assets of the estate. We are happy to act in smaller as well as high net worth estates.
It may be that you feel able to take an active role as executor. We are happy to work with you, and will advise you as to how you can get involved, so as to keep costs down. We will also advise you where it can be more cost effective for us to handle aspects of the estate. Others prefer a full service and ask us to handle the whole matter to save them time or because they don’t feel confident about doing it themselves.