The process of administering an estate

Stage 1: Ascertaining the value of the Estate and any liabilities. This may involve obtaining probate valuations of assets held by the deceased (i.e. bank accounts, shares and other investments, land and property and other items such as motor vehicles, furniture etc) and determining what debts the deceased had.

Stage 2: Application for probate/letters of administration. When the value of the Estate is known we need to prepare and file the appropriate tax returns; pay any inheritance tax that is due; and make a formal application to the Court for an order (Grant of Probate or Letters of Administration) entitling the personal representatives to deal with the deceased’s assets.

Stage 3: Once the Grant is available.  The deceased’s assets have to be collected and/or transferred to the beneficiaries; all debts paid; and the Estate distributed according to the Will or, if there is no Will, the rules of intestacy.

 

Inheritance tax

Whether IHT has to be paid will depend upon how much the deceased’s Estate was worth and whether they made relevant gifts before they died. There are allowances that can be claimed against liability for IHT and we will advise on these. Any tax that is due will have to be paid before a Grant can be obtained. If this is the case we can advise on the options available to the Estate to do this.

 

Funeral arrangements

An executor named in a Will can proceed to make funeral arrangements. The funeral director should be advised that we have been instructed to act and asked to send the account to us. If there are funds available in the Estate (such as in a bank account) we can usually arrange for the bill to be settled straightaway. If funds are not immediately available we can liaise with the funeral director and arrange for the bill to be settled as soon as funds are available. You should appreciate that, if there are insufficient funds in the Estate, the executor will be personally liable for the funeral costs if they have made the arrangements.

 

Time constraints

Probate can be a lengthy process particularly because it may involve a substantial amount of research to ascertain the value of assets and liabilities.  There are a number of time periods which can have a bearing on the administration of an estate:

(a) Distribution

An executor cannot be compelled to distribute an estate until at least one year has elapsed from the date of death. This is to allow sufficient time for all assets and liabilities to be properly identified. Interest is usually payable on legacies if they are paid after this period.

(b) Tax clearance

It is normally necessary to wait at least 35 days after obtaining a Grant of Probate before distributing assets (and sometimes as long as 6 months). If an executor distributes the assets too early and the Inland Revenue then challenges any information provided for Inheritance Tax purposes the executor/administrator can be personally liable. We advise our clients of the relevant time limits as we proceed.

 

Our charges

Please refer to our standard Terms and Conditions for general conditions that apply to all matters in which we are instructed.

In probate matters our charges are calculated both by reference to the time spent by our staff in dealing with your affairs and by reference to the value of the Estate.

(a) Hourly Rate

The hourly charge for the lawyer(s) dealing with this matter will depend upon the seniority and experience of the person involved.  These rates change from time to time, please contact us for details of our current rates.
           

(b) Value Element

The hourly rates for probate matters are approximately 25% less than the standard hourly rates that apply on non probate matters. This is because we also charge an element based on the value of the Estate. The value is a reflection of the importance of the matter and, consequently, the responsibility assumed by the firm. The value element is calculated as follows:

 

Rate

A. Standard Rate  (Estates valued up to £1m)

1% of the gross value of the Estate (excluding any jointly owned residence or matrimonial home when the rate will be ½% of the value of the property)

B. On Estates valued from £1m to £4m

as in ‘A’ with excess over £1m at ½%

C. On Estates valued in excess of £4m

As in ‘B’ with excess over £5m at ¼%

D. Where a partner(s) is appointed as Executor under a Will an additional charge

Additional ½% of the gross value of the Estate (excluding any jointly owned residence or matrimonial home when the addition will be ¼% of the value of the property)

 

(c) Other Charges

If during the course of administering an Estate a property has to be sold a separate conveyancing fee will be charged on the sale price in accordance with our current scales.

Should it be necessary, for any reason, to be involved in any dispute or litigation in connection with the administration of the Estate or undertake work that is not normally part of the ‘probate’ process a separate charge will be made on the basis of our standard hourly rates.

(d) Interim Bills

We accept that Personal Representatives may not have access to funds to meet our costs until probate/letters of administration are granted. Consequently, where our costs are to be paid from the assets of an estate,  we will normally hold off delivering our initial interim bill until probate has been granted. We would expect that to be paid as soon as funds are available. If we stop acting for any reason before probate is granted we will deliver our final account to our client at that stage.

 

Who is the client?

In probate cases the person applying to be appointed as executor (the person named in the Will) or administrator (the person entitled to apply where the deceased died intestate, i.e. without leaving a Will) is our client.

Beneficiaries are not, strictly speaking, our clients. Their interest may not be the same as the executor/administrator although in the majority of cases this is not so and they may even be the same person. In reality, of course, a residuary beneficiary (i.e. a person who is entitled the whole or a share in the Estate once all taxes and specific gifts have been paid) will be interested in the process of the administration and the legal costs involved since these will be paid from the Estate before they receive their share of the residue.

Consequently we shall notify residuary beneficiaries of our involvement and the costs involved even though it is the executor/administrator who retains responsibility for instructing us and paying our charges.

Subject to our client’s instructions to the contrary we shall advise beneficiaries of their entitlement and respond to reasonable requests for information as to the progress of the administration. We try to discourage excessive communication with beneficiaries since this involves a legal cost to the Estate. We will, however, be guided by our client as to the frequency and extent of any communications with beneficiaries and shall advise them if we believe this is becoming excessive.

It is likely that we will need written authority to act for our client, for instance, when contacting banks and other institutions

 

Communications with clients

We keep our clients regularly informed of progress in the administration and let them know when any significant stage is reached. The process involved in administering an Estate can be lengthy, particularly if we have to deal with banks, insurance companies etc, but we shall provide a progress report whenever required. We will be happy to respond to telephone calls or letters, but again we will always try to be conscious of the fact that whenever we write a letter or deal with a telephone call there is a legal cost to the Estate.

 

Statements of truth

During the course of administering an Estate it will be necessary for our client to sign documents (including a tax return and the application for probate) that include statements of truth. We shall prepare these documents but the person signing will remain responsible for them and so should read them carefully and satisfy him or herself as to their accuracy. In many circumstances we shall have to rely upon our client for information (e.g. as to whether any gifts were made during the 7 years before the deceased’s death) and they must take reasonable precautions to ensure that they have made proper enquiry as to the value of any assets. A person can be exposed to criminal and civil penalties if they are negligent or act fraudulently in valuing the Estate or providing a statement of truth.

Whenever we provide a document which requires our client to confirm the accuracy of the contents, we will let them know.