When a close relative or friend dies they will leave behind an awful lot of paperwork. Getting a medical certificate, registering the death and arranging a funeral is only the start of it; the next step is to go through probate the process of unlocking all the assets in the deceased’s estate and sharing them out among the beneficiaries.
Probate is a lengthy and sometimes fraught process, at what can be a distressing time. One day the job may fall to you, so what do you need to know
An executor, or personal representative, is the person responsible for sorting out probate. They are usually a close family member and typically a beneficiary of the will, such as a husband, wife, child or close friend. An estate can have more than one executor.
Being an executor is quite a responsibility. You may be flattered if somebody asks you to look after their affairs, but make sure you fully understand your responsibilities before accepting.
The executor’s role
The executor has to gather details of all the dead person’s assets, such as property, savings accounts and shares, and all their liabilities such as mortgages and other debts, to work out how much the estate is worth.
“You will need to trawl through tax returns, bank statements, share certificates and other financial records to get the correct valuation of all the assets on the date of their death,” says Peter Goodman, partner at accountancy firm Wilkins Kennedy LLP.
In the UK, you also have to examine all the gifts worth more than 3,000 the person made in the seven years before they died, and any other transfers such as putting money into a trust, because they may be subject to inheritance tax (IHT). IHT is due on any estate worth more than 325,000, except when it is left to a spouse or civil partner. Even if no tax is due you will also need to complete a range of forms.
Goodman says: “Once you have all the information you must submit it to your nearest Probate Registry along with a copy of the will if there is one and death certificate.”
Grant of probate
Once the courts have issued a grant of probate you can gather all the assets, sell the property, clear the debts, pay any IHT and distribute what is left. “This must be done according to the terms of the will, or if there is no will the laws of intestacy,” says Gillian Coverley, a wills, trust and probate specialist at law firm Irwin Mitchell.
All this takes time. “It can take six to nine months to administer the typical estate, depending on what assets the deceased held and how quickly a buyer is found for any property,” Coverley says.
There will also be a number of costs to pay, such as funeral expenses, court fees, state agency charges and any legal costs. “These can be deducted from the estate’s funds before the money is distributed to beneficiaries,” Coverley says.
The executor’s responsibilities
Dealing with somebody’s estate is a big responsibility. You have a duty to administer the estate quickly and fairly, and to be fully accountable for your actions. Worryingly, in the UK, you are financially liable for any errors. If you handed a chunk of the estate to the wrong person, divvied it up in the wrong proportions or missed a beneficiary altogether, you would have to put right that loss from your own pocket.
As an executor you are taking on an onerous duty, says Janet Pell, head of legal services at The AA. “There can be severe personal risks if things aren’t done correctly.”
With a lot of money at stake, things can turn nasty. Deciding whether to sell a property or when to sell stocks and shares in a volatile market can cause conflict between executors.
Getting help
There are lots of places you can go if you and the other executors decide you need help to administer the estate, but there are some things you should bear in mind.
Think twice before appointing a will writer or bank to carry out probate on your behalf. Some can charge fees of between 2% and 5% of the value of the estate. On an estate worth 300,000 this could be anything up to 15,000, with VAT on top. “Some bogus will writers have even been known to run off with all the money,” Pell says.
Always ask for a fixed-fee quote upfront, says Karen Brenchley, head of Saga Legal Solutions. “Never agree a percentage fee or hourly rate the costs could run into thousands of pounds. And never sign a power of attorney with an unregulated provider, which can make it almost impossible to get control of the estate if you’re unhappy with their service.”
For simple estates you could use an “assisted” service, which costs from about 500, or a fixed-fee full probate service starting at 1,000. For more complicated estates you might want to turn to a solicitor.
Make sure any legal professional you do involve is regulated. “Avoid using an unregulated provider you have little or no protection against negligence or fraud,” Brenchley says.
Above all, do not rush into probate. The death of someone close can come as a shock, so wait a week or two before making any major decisions.
Guardian News and Media 2013