Wills and Probate - A guide for executors and bereaved families

This guide is intended to help the family and anyone who is a personal representative (PR) of a person who has died.

At the end of this guide there is a glossary of some of the words and phrases used in it. If you are not sure what a word in bold means, please look in the glossary.

The guide covers the first steps you may need to take. It also outlines the main responsibilities and liabilities of PR’s and addresses issues that they face in a typical case.

We hope it will be helpful, but it is not an exhaustive guide and it is not a substitute for legal advice.

First Steps

The priority is registration of the death and the arrangement of the funeral.

The death can be registered by a relative, a person present at the death, or anyone who is making the funeral arrangements. The funeral arrangements are often carried out by the family, but must be done by the PR’s if there is no family able or willing to organise it.

In some cases the deceased may have carried a donor card or left specific instructions regarding the use of their body or organs. Before registering the death the family member or PR’s should check the deceased’s Will to see if it contains specific instructions for the funeral. Sometimes separate funeral instructions are left with the Will.

In order to arrange the funeral the death must have been registered with the local Registrar of Birth Deaths and Marriages (and this must take place within 5 days of the death). The Registry Office may operate an appointment system, so we suggest you telephone them to check. The Registrar will ask for:

• the doctor’s certificate of death;
• the date and place of death;
• full name of the person who has died (and maiden name if the deceased was a married woman);
• his/her date and place of birth;
• the occupation of the person (and if the deceased was not working the occupation of their spouse or civil partner);
• the deceased’s usual address;
• if the deceased was married, the date of birth of their surviving spouse or civil partner;
• they will also ask whether the deceased was receiving a pension from public funds, and ideally you would return the deceased’s medical card to them;
• they will want to know whether the deceased is to be buried or cremated.

Death Certificates must be purchased from the Registrar. These may be required for the purpose of notifying banks or building societies, insurance companies, pension providers etc. The number of copies required will depend upon the deceased’s circumstances. It is usually best to obtain number of copies at the outset, as they are more expensive if they are ordered at a later date. The Registrar’s office will be able to tell you the cost over the telephone.

The Registrar will also issue:

a White Form for completion and return to the Department of Work and Pensions (DWP). An alternative way of notifying DWP is to use the ‘Tell us Once’ service. They will then notify all government agencies such as the pensions department of the death.

a Green Form (which needs to be passed to the Funeral Director and authorises disposal of the body). These are free.

The Funeral Director will only be able to organise matters once they are in possession of the Green Form. However, you may wish to make initial contact with them before visiting the Registrar to ascertain available dates for the funeral. Funeral Directors normally require payment on account of expenses when the funeral is arranged. However, they will usually agree to await payment of the balance of their fees until funds can be released from the deceased’s accounts. Banks and building societies will generally release funds on production of the original Funeral Director’s invoice, even before the Grant of Representation is available. It is unlikely that the bank or building society will be willing to release funds for any other purpose (except to pay any Inheritance Tax) until the Grant can be produced.

It is important that insurers are notified promptly of a death in order to ensure cover remains valid.

What is a personal representative?

A personal representative (PR) is any person who deals with (administers) the estate of a person who has died. There may be one or more PR. An executor is a type of PR, one actually appointed in the Will. Any other PR is called an administrator.

Once a PR assumes responsibility for dealing with the estate following the death he can never retire. He should avoid taking any action in the estate until he is satisfied that he is willing to act. The task can be a thankless one, it can take a long time and it is unpaid (except in the case of a professional PR).

There is a distinction between acting as a PR and acting as a trustee, but the wording used in Wills may be confusing because the expressions are often used interchangeably. The same people may act as executors and trustees, but ‘wearing different hats’. Professional advice is often required to understand if there is a difference between the two roles in any given estate and the implications.

What is a Grant of Probate? Is it always needed?

The executors will usually have to obtain a formal document from the High Court to confirm that they have the legal authority to collect in and deal with the assets of the deceased person. This document is known as the grant of probate. The process of obtaining the grant is commonly known as “proving the Will”.

There are a number of other terms used. For example grant of representation covers any form of grant authorising PR’s to deal with the estate of the deceased person, whether or not it is made to executors. The grant of letters of administration refers to a grant where there are no executors, for example if the deceased died intestate, and in these circumstances there is a strict order of entitlement to apply for the grant with the closest relatives having priority.

In a few cases a grant is not required to administer an estate. This is usually only the position in very small estates or where all property owned by the deceased is held jointly and by law it passes to the surviving joint owner e.g. a bank account in joint names.

What other financial help is available?

Widows, widowers or surviving civil partners may be able to claim bereavement payments. Generally payments may be available where they or their deceased partner was under the state pension age at the date of death, but also sometimes where the deceased was over state pension age and not in receipt of the basic state pension. Widowed Parent’s Allowance may also be available to this group where child benefit was in payment prior to death or to sometimes to pregnant women.

Fitzhugh Gates does not provide advice on these benefits but more detailed guidance can be obtained from the government website www.gov.uk. Time limits apply so it is worth investigating promptly.

How long does it take to administer an estate?

The majority of work involved in administering an estate often does not start until the grant is available. Obtaining the grant is only one step in administering an estate. It is important that everyone, including the beneficiaries, understand that the issue of the grant is not the end of the process rather a first step in the administration of the estate.

The majority of estates have reached the point of extracting a grant of representation within six months (often sooner) and the administration is usually finished within a year. However each case is different. Factors that may delay the administration, and therefore the distribution of funds, include:

• Difficulty in raising funds to pay Inheritance Tax.
• A slow housing market.
• Disputes - often between family members.
• The need to ensure there are no ‘hidden liabilities’ (see below).
• Existence of assets overseas.

What responsibilities do I have as a personal representative?

All PR’s are responsible to a number of people/bodies. They may be categorised as follows:

• HM Revenue & Customs (previously known as Inland Revenue).
• High Court.
• Creditors.
• Beneficiaries.

Brief details about each are set out below.

Responsibilities to HM Revenue & Customs (HMRC)

Increased prosperity and high property values have contributed to a much greater number of estates suffering Inheritance Tax now than was the case when death duties were originally introduced.

There is usually no Inheritance Tax where everything is left to the surviving spouse or civil partner. There is also usually no Inheritance Tax on gifts to charity and other worthy causes e.g. museums. Otherwise Inheritance Tax is payable on the value of a person’s estate at a flat rate, currently 40%, on the value of assets above the nil-rate band (£325,000). Recently the Inheritance Tax rules have become more complicated as:

a reduced rate of 36% can apply where sufficient of the estate has been left to charity;

it is sometimes possible to claim an enhanced nil-rate band where a spouse or civil partner died first;

a new property nil-rate band introduced in 2017.

Some exemptions also apply to business assets. Applying the right rate of tax and claiming the maximum of available exemptions present pitfalls for the layman that can be avoided with the right professional advice.

One of the duties of PR’s is to collate details of the deceased’s estate and file an account declaring the size of it to HMRC. They can normally file a short-form account where the value of the estate is less than the value of the nil-rate band, provided that there are no other complicating factors in the estate. Where they are obliged to file a full account they must do so within twelve months of the end of the month of death. In practice, whichever account is required, it is often filed before the deadline either because Inheritance Tax may be due before then or because the application for a grant of representation can not be made until this has been done.

HMRC has become much more demanding of PR’s in recent years and shown a willingness to impose penalties on PR’s where the information returned on the Inheritance Tax form is not of a sufficiently high standard. PR’s are advised to obtain professional assistance in identifying the correct form to use, obtaining valuations and completing the form.

It is the responsibility of the PR’s to raise sufficient funds to pay the Inheritance Tax due at the time of filing the account. This has traditionally caused a “chicken and egg” problem because the PR’s have been unable to release cash, for example money held in the bank, until they have obtained the Grant of Probate. In turn, they have been unable to obtain Probate until the Inheritance Tax has been paid. The banks have now adopted a more helpful code of practice, but the PR’s may still be left having to borrow funds to bridge any shortfall. This can be daunting, especially if they have to borrow a large amount, because PR’s will be personally liable for making repayment, although they do have a right of recovery from the estate. It is usually possible to pay Inheritance Tax on property and some other assets by instalments.

In some estates, for example where the value of the deceased’s assets (such as an interest in a family business) may be difficult to assess it may take several months to agree the Inheritance Tax liability with HMRC.

High Court

The Court oversees the proper administration of estates. Often their only involvement will be to process the application for a grant. However PR’s make various promises to the Court to carry out their duties properly, and at any stage the Court may ask for evidence that this is being done. They may also intervene in the administration of an estate or order the PR’s to do something. They may require the PR’s to file an account of the administration of an estate and how it has been distributed. It is important that PR’s take steps to ensure that they are always in a position to honour their promises to the Court and respond promptly to any request or order made by the Court.

Creditors

It is common for the DWP to make a claim on the estate for overpaid means-tested state benefits such as Pension Credit. PR’s must satisfy themselves that the deceased was entitled to all such benefits or they must arrange repayment of any overpaid benefit if they are to avoid being held personally liable.

The estate can only be distributed to the beneficiaries when the PR’s are satisfied that they have paid all the debts. This includes any debts of the deceased of which they may not be aware. The only way to protect themselves from “unknown debts” is for the PR’s to advertise the death in accordance with rules laid down by statute. Failure to do this and to await responses leaves PR’s personally liable for the deceased’s debts. This process takes a minimum of two months and often PR’s do not wish to advertise until any property has been sold.

Where the debts of the estate exceed the assets it is very important that PR’s seek professional advice.

The PR’s must also be satisfied that there will not be any challenges to the Will from family or other people, such as dependants of the deceased. They may wish to wait for a period of at least six months from the date of the Grant of Representation before distributing so as to protect themselves against any late challenges. In exceptional circumstances, for example if the deceased has left little or nothing to their spouse and the spouse is severely ill, they may have to wait longer than this before satisfying themselves that they are in a position to distribute the estate.

The risk of PR’s getting something wrong through lack of knowledge or failure to follow correct procedure is a good reason to seek professional advice.

Beneficiaries

Once the Grant has issued it is the duty of the PR’s to collect in the assets, settle the liabilities of the estate and distribute the remainder in accordance with the terms of the Will. Understandably, beneficiaries often want to know the size of their inheritance as soon as possible and they will push for prompt payment. The PR’s must manage their expectations very carefully, as distribution to the beneficiaries is the final stage in the administration of the estate. It may be possible to make interim distributions to them but this can only be done where the PR’s are confident that they have reserved sufficient funds to meet all the obligations of the estate.

At the end of the administration the PR’s must produce a full account to the beneficiaries of the Residuary Estate showing the estate assets and liabilities, administration income and expenses and how the estate has been distributed.

How can Fitzhugh Gates help with my responsibilities?

Acting as a PR brings with it exposure to new tasks that are often daunting and stressful, as well as the risk of personal financial liability. It can be a thankless task.

Fitzhugh Gates can offer PR’s expert assistance at a difficult time:

• Guidance: The PR’s retain the responsibility for the administration of the estate and remain in charge of how it is carried out. We work for the PR’s and the PR’s can set the scope of our role. In some cases PR’s may just require our guidance on individual aspects of the administration, but usually they will instruct us to run the entire administration of the estate on their behalf.
• Experience: We have in-depth experience of handling estates, with compassion and technical expertise. Many PR’s have never acted in that capacity before and they require the help that an experienced professional can bring to the table. We often pre-empt potential difficulties, that the lay PR’s may not have foreseen, whether they be within the family or with, say, HMRC.
• Inheritance Tax mitigation: It is often possible for us to save significant amounts of Inheritance tax, using a post-death deed to amend the way the estate is distributed, ensuring that ultimately the beneficiaries inherit more.
• Protection: The PR’s can shield behind our professional advice if things become difficult. As you would expect we also have professional indemnity cover.
• Reduced workload: Instructing Fitzhugh Gates removes the need for the PR’s to open and operate a bank account on behalf of the estate. We can prepare all the correspondence and paperwork on their behalf and they only need to sign and return the various forms sent to them.
• Compliance: At the end of the estate, we will ensure that a proper estate and administration account is prepared. The Court reserves the right to demand a full inventory of the estate and its administration, so this is an important document if everything is to be correct and wrapped up tidily.

GLOSSARY OF TERMS