The administration of an estate following a death is a heavy burden at a very difficult time. The process can take anything from a few months to several years to fully complete, and to do the job correctly requires specialist knowledge of law, tax, and accounting matters.
In addition, Executors may have many other demands placed on them; for example, mediating between beneficiaries, rehousing animals, deciding who gets what personal effects, the list goes on….
Unfortunately, it is often the case that these very real legal complexities and emotional strains are underestimated. Disputes between beneficiaries and Executors are commonplace, and the non-professional Executor can find this intimidating, especially as they can be held personally liable for mistakes made in the administration.
An Executor is routinely required to carry out the following tasks:
- Collect in and safeguarding all assets by ensuring adequate post death insurance is in place
- Establish whether or not an estate is solvent
- Establish & pay all debts & liabilities in accordance with the order set out in Schedule 1 to Administration of Estates Act 1925 (except where an asset is charged).
This may include the need to:
- Advertise for unknown creditors or beneficiaries in accordance with S.27 Trustee Act 1925
- Locate known creditors or beneficiaries
- Identify persons who may be entitled to bring a claim against the estate under Inheritance (Provision for Family and Dependants Act) 1975
- Obtain professional valuations of assets where necessary
- Instigate legal proceedings against 3rd parties where necessary – e.g. to recover assets
- Correctly interpret the Will and distribute the legacies in accordance with its terms
- Ascertain any tax liabilities & complete the necessary accounts, tax returns and computations to settle all Inheritance Tax, Capital Gains tax and Income Tax due from the estate
- Consider whether there is any Abatement of legacies. If all liabilities have been paid but there are insufficient funds to satisfy every legacy, some of the gifts will ‘abate’ – i.e. be cancelled - in part or in full in the order set out in Part II of the First Schedule to Administration of Estates Act 1925
- Complete the administration and distribution of the residuary estate. This is a complex process that involves carefully accounting for all of the assets, liabilities, administration expenses and income in the estate:
- Before finalising the estate Executors should check the Inheritance Tax position (preparing a Corrective Assessment if required) and submit Form 30 to apply for a Clearance Certificate from HMRC
- Estate accounts should be drawn up showing the Income Account, Balance Sheet, Distribution Accounts, and how the residuary estate has been ascertained. The Accounts should make clear how distributions have been made – e.g. in cash or transferred in kind
- The residuary beneficiaries should be asked to approve and sign off the final accounts so that Executors are released from any further liability
- If any property is transferred in kind the proper formalities should be observed (the correct formality depends on the type of asset)
- If assets are transferred in kind to beneficiaries (‘appropriated’) rather than them being sold and the cash paid to them, then they must be valued at the date of appropriation so as to establish how much additional cash (if any) must be added to the assets that have been appropriated. A scheme of distribution will need to be agreed where the appropriation values aren’t in exact accordance with the terms of the Will
Given the extensive duties and obligations involved in such work, appointing a professional Executor can provide peace of mind as well as an efficient and correct administration of an estate. At Sutton McGrath Hartley we are experts in dealing with Probate and sorting out the many issues which arise.
Some of the advantages of appointing us as professional Executor include:
- Immediate advice and assistance can be given to the family so there is no delay or confusion over where to turn for help
- We are an independent professional body should conflict arise between beneficiaries
- We are experts in the law and the processes involved in administering an estate
- We can submit any Inland Revenue Return that may be due, negotiate any disputed asset values and correctly register any trusts created in the Will
- The processes involved in administering the estate can be carried out more efficiently as the level of communication between parties is reduced
For example, if family members are appointed as Executors and they employ Sutton McGrath Hartley to act on their behalf, all communications have to pass between the Executors, ourselves and 3rd party institutions such as banks, HMRC, Land Registry etc.
If Sutton McGrath Hartley are appointed we can communicate directly to the 3rd party institutions cutting out a large amount of unnecessary correspondence and time. A professional Executor should therefore result in much lower costs of administration in any case except where the estate is very simple.
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