When a friend or relative dies, you may need to act as their executor or administrator – taking responsibility for collecting their assets, paying off any debts and distributing what’s left to the beneficiaries. This can be a complex, time-consuming and sometimes stressful role. This briefing guides you through the legal and practical issues you need to take into account.
If the deceased left a will, it is likely to name one or more executors who would normally take responsibility for sorting out the deceased’s financial affairs, provided they are willing and capable. There can be between one and four executors, though two is most common.
Executors must be over 18 and of sound mind. They are usually trusted friends and/or relatives, although a professional person may have been named. An executor is often also a beneficiary under the will.
Where there is more than one executor, the executors are jointly responsible for administering the estate (the deceased’s property and possessions), but it is normal practice to agree that one executor will take a leading role. The executors may also decide to appoint a solicitor to give them advice and handle the paperwork involved.
If the will does not name any executors, or none of the named individuals agrees to act as the executor, then a beneficiary can apply to administer the estate. If there is no will, a relative can administer the estate. If the relatives cannot agree among themselves who should act as administrator, priority is given to the closest adult relative – starting with the spouse (or registered civil partner).
Most executors and administrators use solicitors to advise them on dealing with the estate – helping with formalities, advising on tax, helping to sell the assets and pay off the debts, dealing with distributions to beneficiaries, and preparing estate accounts. It is strongly advisable to do so if:
Wills usually authorise a professional to charge their professional fees to the estate, but not other executors (who can only reclaim their expenses). Ask for an estimate of fees before instructing your solicitor.
First steps following an individual’s death include obtaining a medical certificate showing the cause of death, registering the death and making funeral arrangements. Normally a close relative or an executor will take responsibility for organising these. See our guidance on what to do when a relative dies.
As an executor, you should check the will (and any other documents) to see whether the deceased left any funeral instructions – though these are not binding. You should also check whether the deceased had made any arrangements for dealing with funeral expenses (eg a pre-paid funeral plan). Whoever arranges the funeral will be responsible for paying for it, but reasonable funeral expenses can be reclaimed from the deceased’s estate.
In practice, you may want to get in touch with any close relatives and other major beneficiaries. Keeping them informed can help minimise any tensions or potential disputes.
Unless the deceased’s estate was small and straightforward, dealing with the finances can be a complicated and drawn out process. To start with, you need to identify all the different financial affairs that need to be dealt with.
1. Contact the deceased’s bank(s) as soon as possible. They can freeze any bank accounts and will also be able to provide you with a list of any direct debits or standing orders related to the account. (You can also check through past bank statements.)
2. Make sure you have a supply of copies of the death certificate. Almost everyone you deal with will want to see a copy of the death certificate; in most cases, this will need to be an official copy (provided by the Registrar of Births, Marriages and Deaths) rather than a photocopy.
3. Check through any paperwork to help identify organisations you need to contact. These may include:
4. Consider advertising for unknown creditors or beneficiaries. You may want to advertise the death locally and in the London Gazette, giving unidentified creditors and beneficiaries two months to make themselves known. This helps protect you against future claims.
5. Start building a file to keep track of what needs to be done about each different organisation.
6. Make arrangements to ensure that property and other assets are properly looked after until they can be sold or distributed. Practical points include ensuring that:
7. You will probably want to open a new bank account to handle all the money relating to the estate. This helps you keep the estate finances separate from your own personal affairs and maintain a record of everything.
8. Monitor the post and keep following it up.
Once you have got to grips with the finances, you should be in a position to deal with inheritance tax (IHT).
The first step is to value the estate. Different assets may need to be valued in different ways:
All valuations should be the values at the date of death. (If assets are subsequently sold for less than the value on which IHT was calculated, you may be able to claim a reduction in the IHT payable.)
Once the estate has been valued, you need to submit the appropriate forms to HM Revenue & Customs (HMRC). You should normally do this within twelve months from the end of the month in which the death occurred – otherwise a penalty may be payable.
IHT will only be payable if the value of the estate is over the IHT threshold (£325,000 until April 2015). If the deceased was pre-deceased by a spouse (or registered civil partner), this threshold may be increased if the full value of their IHT allowance was not used up when they died.
If IHT is payable, it becomes due six months from the end of the month in which the death occurred. Interest is generally charged on any outstanding balance from that date. The IHT due on houses, land and some other assets can be paid in instalments over 10 years (plus interest). The full amount of IHT becomes immediately payable if the asset is sold.
Until HMRC is satisfied that the IHT (excluding any instalments that have been agreed) has been paid, the executors cannot obtain probate. This means that the executors will not be able to sell off assets such as a house and distribute the estate to the beneficiaries. In some cases, this may mean that the executors need to arrange a loan in order to meet the immediate IHT liability before being able to access the remaining assets.
Unless the estate is small, you normally need to apply to the probate registry for a ‘grant of probate’ (if you are an executor) or ‘letters of administration’ (if there was no will, or the will was invalid, or the will did not appoint executors). This gives you the legal authority to deal with the estate, and will be accepted by organisations such as banks as proof that you have the authority to collect money and other assets. Both a grant of probate and letters of administration are known collectively as a ‘grant of representation’.
Normally, one or more of the executors named in the will applies for the grant of probate. Otherwise (if the person died without a will or the will did not appoint executors) a beneficiary or relative can be the administrator and can apply for letters of administration.
Where the executors are applying for probate, they can decide whether they all wish to do so jointly:
Applying for the grant requires completing the appropriate form and sending it with the will (and any ‘codicils’ altering the terms of the will), death certificate, inheritance tax paperwork and a small fee. You can apply yourself or through your solicitor. You then need to swear an oath confirming the information you have given, either at a commissioner for oaths (eg a solicitor) or a probate registry. You may be asked to attend an interview at the probate registry if they have any queries.
Once probate has been granted, the executors (or administrators) have the authority to deal with the estate. Typically, this involves:
The executors should ensure that they pay any debts and taxes before distributing the estate. A negligent executor could become personally liable for unpaid debts and taxes.
The executors must distribute the estate in accordance with the terms of the will. If there is no will, the estate is distributed according to the rules of intestacy. The shares depend on the amount of the estate, whether the deceased was married (or in a civil partnership) and whether there were any children.
If all the beneficiaries agree, the terms of a will (or intestacy) can be varied for up to two years following the death. This may have advantages (eg reducing likely tax liabilities) but legal advice should be taken.
The executors should keep clear records of what they have done, so that they can answer any future questions or challenges over their administration of the estate.
For further information on what to do when a relative dies, see:
Note: This guidance applies to England and Wales only. Different rules and procedures apply in Scotland and Northern Ireland.