Rothley Law

Acting as a personal representative (executor/administrator) is not a small task, and there are duties and responsibilities that personal representatives need to be aware of when dealing with an estate.

Personal representatives are accountable to the beneficiaries, but they also have other duties and responsibilities in law towards other parties, such as tax reporting to HM Revenue and Customs (HMRC). Importantly, personal representatives should be aware that they have personal liability.

If you decide to act as a personal representative, we recommend that you instruct a solicitor to assist you with the administration of the estate and advise you on your duties and responsibilities. If you have any questions or would like to find out how we can help you, please contact our Private Wealth team on 0330 016 9200 or email us at PWnewenquiries@rothleylaw.com .

SUMMARY OF STEPS TO TAKE TO ENSURE THAT YOU ARE FULFILLING YOUR DUTIES AND RESPONSIBILITIES AS PERSONAL REPRESENTATIVE

• Register the death. In England and Wales, a death must be registered within five days.

• Arrange the funeral, taking into account any of the deceased’s wishes that they may have set out in their Will and/or a separate letter or note.

• Secure any property and valuations. If the deceased owned a property which is now empty, make sure that you have secured it. Do you know the key-holders? Do the locks need to be changed? Are the windows locked? Is the garden secure? Should you be making the property looked ‘lived in’? etc.

• Ensure that any real property and assets (such as jewellery and household contents) are adequately insured and that any existing insurance is updated to be in the names of the personal representatives.

• Find out if there is a Will and, if there is one, locate it and obtain the original. Make sure that you understand the terms of the Will. You need to follow it.

• If there is no Will, the deceased would have died ‘intestate’. The law specifies who can administer the estate (i.e. act as personal representative), who inherits and in what amounts. You will need to identify who is entitled to benefit from the estate under these intestacy rules.

• Notify relevant authorities of the death. You can use the ‘Tell Us Once Service’ which informs various public bodies of the death, including HMRC, the Department for Work and Pensions and the local council. You must use this service within 28 days of the reference being issued by the Registrar when the death is registered.

• Stop any pension payments and find out if there is anything now due to the estate, owed back to the pension provider or if the pension will continue to be paid to someone else.

• Identify all of the deceased’s assets and liabilities. Notify the relevant organisations of the death and obtain the information needed to apply for the Grant. Do not forget to consider any digital assets. This can be a complex area and you may wish to obtain legal advice on dealing with digital assets if relevant.

• Find out if the deceased made any lifetime gifts or set up any trusts in the 7 years prior to their death which may need to be reported to HMRC; speak to family members, contact the deceased’s professional advisors and review bank statements.

• Keep any real property in good repair. If you allow the property to fall into a state of disrepair, you could be responsible for causing financial loss to the estate if the value of the property reduces as a result.

• If required, submit an inheritance tax return and pay any inheritance tax due. For some assets (e.g. real property), you can choose to pay in instalments. The first instalment and the inheritance tax that cannot be paid in instalments, must be paid by the end of the 6th month after the person died. Interest is payable on late payments and on the instalments. If an inheritance tax return is required, it must be submitted within 12 months of the date of death.

• Apply for the Grant of Probate (where there is a Will) or the Grant of Letters of Administration (where there is no Will).

• If any claims are made against the estate (e.g. against the validity of the Will or a claim by someone who thinks that they have not been left reasonable financial provision), you need to stay neutral. Seek legal advice if any claims are made.

• Locate the beneficiaries and make sure that you pay them what they are entitled to.

• Collect in all of the assets; close the accounts, sell or transfer shares and other investments, sell or transfer any real property and sell or distribute personal possessions.

• Pay all of the debts. If there are insufficient funds to pay the debts, the law sets out the order that these need to be repaid and in what proportions. If you do not follow this order, you could be personally liable.

• Deal with any tax reporting to HMRC. In addition to inheritance tax, you may also need to report income and capital gains to HMRC and pay any tax due.

• Keep full records of assets, liabilities and expenses and properly account to the beneficiaries. You should prepare estate accounts and send them to the residuary beneficiaries before making any distributions, giving them the opportunity to raise any queries before the funds are paid out.

STEPS TO CONSIDER TAKING TO REDUCE YOUR PERSONAL LIABILITY

• Instruct a solicitor to assist with you the estate administration.

• Instruct an accountant to prepare the estate self-assessment tax returns.

• Arrange for statutory advertisements to be placed. These are published in the London Gazette and a paper local to where the deceased lived and to where they owned property. These are not death notifications but are specific notices that mean that, should any unknown creditors or unknown beneficiaries come forward after the date set out in the notice, you will not be personally liable as a personal representative if you no longer have estate funds.

• There are companies that provide asset searches to look for dormant assets which you may be unaware of.

• If you do not know if the Will you hold is the most recent Will, or if there is no Will, contact law firms and Will writers local to where the deceased lived, or who they had other dealings with, to find out if they hold a Will. You should also consider carrying out a formal Will search; there are companies who can do this for you.

• If the deceased died intestate, unless you are 100% certain of the deceased’s relatives who are entitled to the estate, it is recommended that you arrange for a family tree to be prepared by a genealogist specialising in insolvent estates.

• Wait at least 6 months (ideally 9 months) from date of the issue of the Grant of Probate before making any payments to beneficiaries. This is the timeframe for most claims against the estate. For example, certain persons who think that they were not left reasonable financial provision could make a claim under the Inheritance (Provision for Family and Dependants) Act 1975.

• If you cannot trace a beneficiary, consider using a tracing agent to locate them.

• Carry out bankruptcy searches before making any payments to beneficiaries. You can carry out a UK bankruptcy search through the HM Land Registry service.

• Do not pay out all of the funds until you have tax clearances from HMRC where inheritance tax, income tax and/or capital gains tax was payable. For example, if you do not pay all of the inheritance tax due, and you have released all of the funds to the beneficiaries, you will need to personally pay the outstanding tax due.