WHAT DO EXECUTORS DO?
INTRODUCTION TO PERSONAL REPRESENTATIVES
Personal Representatives are the people who deal with the administration of a deceased persons estate. If there is a will then the Personal Representatives are called Executors. If there is no will the Personal Representatives are called Administrators. Personal Representatives (Executor or Administrator) have several responsibilities. These include the following:
1. Ascertain the Value of the Estate
2. Obtain a Grant of Representation
3. Collect in the Assets and Pay Any Debts
4. Distribute the Estate to the Beneficiaries
ASCERTAIN THE VALUE OF THE DECEASED’S ESTATE
The Personal Representatives (Executor or Administrator) have to ascertain the value of the estate which includes obtaining valuations of all of the deceased’s assets and liabilities. This will include bank and building society accounts, shares, cars, houses, jewellery and furniture. Everything that the deceased owned needs to be included. Certain assets that are jointly owned can pass automatically to others on death; such as a house that is jointly owned by a husband and wife, provided they are beneficial joint tenants. Information will usually only be released by organisations to the executor if a certified copy of the death certificate is produced.
OBTAINING AUTHORITY FROM THE PROBATE REGISTRY
Unless the estate is very small, and under £5,000.00, organisations will not actually hand over the deceased’s assets to the Personal Representative (Executor or Administrator) without an official document from the Probate Registry of the High Court, which confirms that the Personal Representative is entitled to handle the deceased’s affairs. This is usually referred to as a Grant of Probate, if there is a will, or a Grant of Letters of Administration, if there is no will. In order to obtain a Grant or Representation, the Court will normally want to see three documents;
1. The original will (if there is one).
2. A sworn document (the Oath), signed by the Personal Representative, (Executor or Administrator) which explains how they are entitled to act, and gives a valuation of the estate.
3. An account for the Inland Revenue is needed and a receipted invoice from the Inland Revenue that Inheritance Tax has been paid by the Personal Representative. This must be obtained beforehand by the executor from the Inland Revenue, who will issue it on being sent the Inland Revenue account and any tax due being paid.
COLLECT IN THE ASSETS AND PAY ANY DEBTS
Once the Grant of Representation has been obtained then the Personal Representative (Executor or Administrator) can then collect in all the assets and then pay off the debts including the funeral account and any Inheritance tax.
Inheritance tax is a simple, if not well liked, concept – on death that the first £325,000 (as at April 2012) is free from tax. After that tax is payable at 40% on the remaining balance. Certain categories of beneficiaries do not have to pay inheritance tax, such as spouses and charities. The Personal Representative must ensure that the correct amount of inheritance tax is paid on the deceased’s estate.
However, any gifts made by the deceased seven years prior to their death can give rise to an increase in their estate’s liability for inheritance tax. If inheritance tax is payable, then some, or possibly all of it, must be paid before the court will issue the necessary Grant. This means that the Personal Representative will possible have to borrow the money. Preferential rates can often be obtained by arranging this through solicitors such as ourselves.
DISTRIBUTE THE ESTATE TO THE BENEFICIARIES
Once the Grant has been obtained then the Personal Representative (Executor or Administrator) can proceed with gathering together all of the deceased’s assets, paying any outstanding bills, and then distributing the balance in accordance with the deceased’s will, if there was one, or in accordance with the law of intestacy if there was not a will.
The Personal Representative (Executor or Administrator) need to keep a formal account of all the money they have received, paid out and passed on, including interest on any money held since the deceased’s death. All the beneficiaries are entitled to see this account. A Personal Representative does not have to deal with matters without assistance. They can always turn to a firm of solicitors (such as ourselves) for help and assistance, whose fees will be paid by the estate. Often solicitors themselves will be named as the sole or joint executor in a person’s Will, so ensuring that the estate is wound up efficiently and effectively, with the minimum of delay.
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