A Step-by-Step Guide to Navigating Estate Administration

Administering an estate following the death of a loved one can be an overwhelming task, especially when combined with the emotional toll of the loss experienced. When someone dies, there are several steps that need to be taken in order to be able to deal with the assets in the estate, which may include dealing with the deceased bank accounts, shares, insurance policies and property. As experienced solicitors specialising in estate administration, RDC has put together a step-by-step guide to help you navigate this process with confidence and clarity.

Understanding the Basics: Probate vs. Letters of Administration

Before diving into the procedural steps, it's essential to distinguish between a Grant of Probate and a Grant of Letters of Administration. A Grant of Probate is issued when the deceased left a valid Will. The executors named in the Will apply for this grant to have the authority to manage and distribute the estate according to the deceased's wishes. A Grant of Letters of Administration, however, is issued when the deceased did not leave a valid Will (intestate). This grant is applied for by the next of kin, who then becomes the administrator of the estate. Both grants serve the same purpose though, which is to provide legal authority to the executor or administrator to handle the deceased’s assets and debts.

Initial Steps After Death

The first legal requirement after a death is to register it. This must be done within five days in England, Wales, and Northern Ireland, or within eight days in Scotland. Upon doing so, you will receive a death certificate, which is necessary for probate and other administrative tasks. If there is a Will, it should appoint executors who are responsible for administering the estate. If there is no Will, the next of kin will typically take on this role.

Assessing the Estate

The next step is to compile a comprehensive list of the deceased’s assets and liabilities. This includes bank accounts to establish balances and any ongoing transactions, identifying the value of any stocks, shares, or other investments, as well as locating life insurance policies and notifying insurers. In addition, it is necessary to obtain valuations for property and personal possessions. Any outstanding debts, including mortgages, loans, credit card balances, and utility bills, should also be compiled.

With the above information, it will be possible to determine the total value of the estate, taking into account all assets and liabilities, which is crucial for inheritance tax purposes.

Applying for Probate or Letters of Administration

The first step to take when applying for Probate or Letters of Administration is to ensure the completion of the relevant forms. If there is a Will, you will need to complete Form PA1P (Probate Application Form) and you may need an IHT400, depending on the estate’s value and complexity. If there is no Will, you will need to complete Form PA1A and the appropriate Inheritance Tax Form. You must then send the completed forms, the original Will (if there was one), the death certificate, and the probate application fee to the local Probate Registry and HMRC. Alternatively, the process can be done online.

Paying Inheritance Tax

Before the grant can be issued, any inheritance tax due must be paid. The tax is payable on estates valued above the threshold (£325,000 as of 2024), though bear in mind that there are various allowances and exemptions that may apply. The tax must be paid within six months of the date of death, with interest accruing on unpaid amounts after that timeframe.

Administering the Estate

Once the Probate Registry has processed your application, they will issue the Grant of Probate or Letters of Administration. This document is crucial as it provides the legal authority to manage the deceased’s assets. The grant must then be presented to institutions holding the deceased’s assets (which may include banks, investment companies, insurance providers, etc.) to collect and consolidate funds. Bank accounts must then be closed, and the funds transferred to an estate account.

It is also necessary to pay off any outstanding debts and liabilities from the estate funds. This includes settling utility bills, credit cards, loans, and any other outstanding obligations. The remaining assets must then be distributed according to the Will or the rules of intestacy. This process is complex and involves transferring property, liquidating and distributing funds, and ensuring that all beneficiaries receive their entitled share.

Finalising the Estate

The next step in finalising the estate involves compiling detailed estate accounts showing all assets, liabilities, income, and distributions. These accounts should be approved by the beneficiaries to ensure transparency and accuracy. The final tax return can then be submitted to HMRC, which must cover the period from the start of the tax year to the date of death, and from the date of death to the completion of the estate administration.

Seeking Professional Help

As you can see, administering an estate is a meticulous process requiring attention to detail and adherence to legal requirements. RDC always recommend seeking professional advice if you encounter complexities or uncertainties during the process.

To learn more about our comprehensive estate administration services, call us today on Bradford 01274 735511, Ilkley 01943 601173 or Bingley 01274 723858.