estate administration

What is the 'administration of an estate'?

When someone dies, their money, investments, property etc (the assets) less their debts (the liabilities), make up what is called their 'estate'.

If the estate is small or all the assets were held jointly in the name of the person who has died and a surviving owner, then administration may not be needed.

However, often the assets and liabilities must be sorted out in order to wind up the person's affairs. This is what is known in legal terms as 'administration'.

Who administers the estate?

If the person died leaving a will, the person or people named as executors in the will have the responsibility of administering the estate.

If there was no will, the intestacy rules apply. These rigid rules determine who is entitled to apply to administer the estate and once they have been appointed, they are called administrators.

Executors and administrators are collectively known as 'personal representatives’.

How does the process work?

You can think of the administration of an estate as a three-stage process:

  1. Valuing the estate;
  2. Obtaining the grant; and
  3. Winding up the estate.

However, before the assets and liabilities can be sorted out, the personal representatives must prove that they are entitled to deal with the estate.

If there is a will, the executors do this by obtaining a grant of probate. If the person died intestate, the administrators apply for a grant of letters of administration.

What happens when the estate is valued?

In order to apply for a grant of probate or a grant of letters of administration (both called 'the Grant'), the personal representatives must value the estate.

The estate has to be valued in order to:

  • Correctly complete the form (know as ‘the oath’) which will enable the probate registry to issue the grant; and
  • work out if there is any inheritance tax to pay and if so, calculate the tax liability.

What is a Grant?

It is a legal document which gives the executors or administrators legal authority according to the will (grant of probate), or the intestacy rules (grant of letters of administration) to administer the estate and distribute assets to the people who are entitled to inherit them.

How do you apply for the Grant?

In order to get the Grant, the personal representatives have to swear an oath (see below) which is a written statement in which they confirm: the details of the person who has died; their own details as well as their entitlement to the Grant; and the financial position of the person who has died. It must be sworn in front of a solicitor or a commissioner of oaths. The paperwork is then sent off to the probate registry which will then issue the Grant.

How long does it usually take to get a Grant?

Generally, it takes between 2 and 4 months from the time we first receive details of the assets and liabilities in the estate.  However, the timescale will depend on individual circumstances and how quickly all the information can be gathered together.

Why does it take so long to get a Grant?

In order to be in a position to apply for the Grant, it is necessary to value the estate and then deal with any inheritance tax issues that arise.  This means that we have to write to all the institutions that have an interest in the person’s assets or liabilities and obtain valuations of the house(s), cars, personal belongings etc.  We are therefore only able to complete the valuation process once the slowest of the people we have to correspond with have completed their job.

Having finished the valuation process, we can then draft the inheritance tax papers and the oath and send these to you for approval.  Only once they have been signed are we then able to send the Grant application to the probate registry.

What happens once the Grant has been obtained?

The personal representatives use the Grant to distribute any specific items of property detailed in the will to the named beneficiaries and then sell whatever assets they need to raise the cash to pay any gifts of money or settle any debts.

The personal representatives are also responsible for finalising the person's tax affairs which can involve income tax, capital gains tax and inheritance tax.

The personal representatives must also obtain a signed receipt from the beneficiaries so they are released from any further legal obligation to them.

When all this has been done, what's left over (called the 'residue') is either divided up between the residuary beneficiaries named in the will or the persons entitled to inherit under the intestacy rules.

A set of estate accounts are also drawn up detailing the assets received and the liabilities paid.  The beneficiaries are entitled to a copy of these accounts.

When all this has been done, the administration is complete.

Source: Crown Copyright Direct.gov.uk