What to do when someone dies
The death of a relative or close friend is a very difficult time. Most people will never have been involved with an “Estate” previously and will not have dealt with the many legal terms and procedural matters which can arise when someone dies. No two Estates are the same and so the explanations given in this article may not be applicable in every case. The advice given in this article only applies to England and Wales.
Examining the will
When someone dies, their death must be registered with the Registrar of Deaths. The funeral will be arranged. If there is a Will, it needs to be examined for any specific wishes of the person who has died in relation to their funeral. The Will may be lodged with the Deceased’s Solicitor, Bank or other professional advisor or it may be with the Deceased’s own papers. It is important to establish that it is the last Will. The Will should appoint one or more persons to act as Executors. The Executors will be responsible for putting into effect the wishes of the Deceased as expressed in their Will. If there is no Will, then Administrators are appointed by the Probate Court to deal with the Estate. The Administrators are usually the persons entitled to the Estate under a set of rules laid down by the law (these rules are known as “Rules of Intestacy”). If there is a Will and the appointed Executor has died or is unwilling or unable to act, then Administrators are appointed by the Probate Court to carry out the terms of the Will in place of the named Executors.
The Deceased’s personal papers need to be examined to find out what they own (their “assets”). Unless the Estate is very small, the Executors or Administrators will not be able to gain access to the assets of the Deceased without producing a Grant of Probate or Letters of Administration to the investment companies in question. The Grant of Probate or Letters of Administration is the legal confirmation issued by the Probate Registry of the validity of the Will and the right of the persons to whom it is granted to deal with the Estate. Bodies will then act as the sole authority to that “personal representative” shown in the Grant.
The Executors or Administrators will need to find out the value of each asset owned by the Deceased such as Bank and Building Society Accounts; Stocks and Shares; their house etc. The Executors/Administrators also need to find out what financial transactions were made during the Deceased’s lifetime because, if the financial transactions were in the nature of gifts, they might need to be disclosed for Inheritance Tax purposes. Similarly, the Executors or Administrators need to find out details of any jointly held assets or any other property in which the Deceased had a financial interest (such as a partnership or trust) as these may need to be included when Inheritance Tax is assessed.
If the Deceased owed household bills, mortgages, loans etc, then these liabilities are all allowable as deductions against Inheritance Tax. The funeral expenses are also allowable as deductions against Inheritance Tax. Banks will usually arrange for the funeral account to be paid from the Deceased’s Bank Account before Probate. The Bank will usually require sight of the funeral bill itself.
If the Deceased has died leaving their house unoccupied, then the Executors/Administrators should take steps to ensure that the house is securely locked etc and the insurance position should be checked with the insurance company.
Applying for grant
Once the assets and liabilities of the Estate have been established, then the application for the Grant of Probate or the Grant of Letters of Administration can proceed. At this point, Inheritance Tax has to be paid (except for any Inheritance Tax on land and certain other assets which may be deferred). Banks and other financial institutions are usually prepared to release the Deceased’s own funds for this purpose although it may sometimes be necessary for the Executors or Administrators to arrange a loan.
Issue of grant
When the Probate Court receives confirmation that the Inheritance Tax (if any) has been paid, the issue of the Grant will proceed. Any Wills or Codicils sent to the Probate Court are retained by the Court. These documents will be come a matter of public record.
Administering the estate
Once the Grant of Probate or Grant of Letters of Administration has been issued, it has to be registered with the holders of the assets such as the Banks and Share Company Registrars. Once the assets have been released, the liabilities of the Estate can be paid.
If the Deceased owned a house, then the house can be sold. There is no reason why the house could not be placed on the open market for sale prior to the issue of the Grant of Probate/Grant of Letters of Administration although the buyer’s solicitors will need to see the Grant of Probate/Grant of Letters of Administration before completion of the sale of the house can take place.
Once the Executors or Administrators have gained control of the assets of the Deceased they must pay the liabilities of the Deceased. At that stage, they can consider distributing to the beneficiaries (the people entitled to share in the Estate either in accordance with the terms of the Will or under the Rules of Intestacy). It is usual for the Executors or Administrators to discharge any cash gifts made under the Will and any specific items referred to in the Will before making payments to the residuary beneficiaries.
The Executors/Administrators should ensure that the Deceased’s Income Tax affairs are completed.
Tax and payments
Once all the assets and liabilities have been established and the Income Tax position has been finalised, a final Return can be made to the Inheritance Tax Authorities. Once all of the Inheritance Tax has been paid, a formal letter or Certificate of Clearance will be issued by the Inland Revenue Capital Taxes Office. The distribution of the Estate can then be finalised and final payment made to the residuary beneficiaries. The Executors or Administrators should then prepare a full Statement of Account showing how they have dealt with the Estate. The residuary beneficiaries are entitled to a copy of this.
What we can do
I hope that this article has provided you with some useful information as to what to do when somebody dies. Our Probate Department at Foster Harrington is here to help. If you have any comments or queries regarding anything contained within this article or if you would like us to provide you with advice and assistance relating to an Estate, or indeed Wills or Trusts, then please do not hesitate to contact us.