Administration - preliminary steps

Question 1

What are the pre-Grant steps?

Answer 1

• Death Certificate/Funeral
• Secure estate assets
• Locate will/codicil
• Basis of distribution & identify beneficiaries
• Scheduleof asstes and lifetime tranfers

Question 2

Death Certificate/Funeral?

Answer 2

• PRs may register a death - but more like done by family who provide death certificate - must be registered before funeral takes place
• PRs need official copies of certificate to send to institutions where deceased held assets (e.g., banks)
• Government organisation (e.g., HMRC) can be notified of death via centralised service when registering death

Cost of funeral is a post-death administration expense payable from estate funds and may be taken into account when calculating IHT

Question 3

Secure the estate assets?

Answer 3

• PRs have duty to preserve value of estate and may be personally liable to account for loss or damage to assets - must ensure assets and documents are safe
• if property is left vacant, it should be secured and insurers notified, if vehicle left unattended and off road, insurers and DVLA should be notified
• consider security of any digital assets and possible closure of social media accounts

Question 4

Locate will/codicil?

Answer 4

• PRs should obtain original will and any codicils - copy will not suffice for obtaining grant unless special permission obtained from Probate Registry
• PRs should satisfy themselves will is valid - checks for failings with drafting porcess (e.g., missing clauses) should be carried out
• solicitor should ensure that codicil is drafted in a way that makes logicial sense when read together with will

Question 5

Locate will/codicil - what if deceased is intestate?

Answer 5

• PRs should make enquiries to confirm this before proceeding with administration
• commercial organisations charge a fee for operating search service against national will register (optional to register will on there) - when grant is issued, will becomes a public document.

Question 6

Basis of distribution?

Answer 6

• After reviewing will and/or codicil, beneficiaries should be identified, if no will, intestacy rules determine benefits - those entitled should be notified.
• PRs should provide beneficiaries with a realistic timescale for distribution of estate

Question 7

Schedule of assets & liabilities?

Answer 7

PRs must compile an accurate list of deceased assets and liabilities:
* identify and value estate assets
* identify deceased’s creditors
* work out steps required to manage distribution of assets
* calculate IHT due
* estbalish estate is solvent
* estimate what each beneficiary is entitled to

In creating list, PRs rely on family members to provide information - if no family, PR may need to search deceased’s home for evidence

Need these information to obtain grant or calculate IHT

PRs owe a duty not only to beneficiaries but creditors

Question 8

What should be done when assets & liabilities are scheduled?

Answer 8

PRs should contact any appropriate organisations to:
* notify them of death and provide certificate
* request confirmation of value of assets at date of death
* request instructions for how to close and account/transfer ownership of items to PRs

Question 9

How to establish value of commonly held assets?

Answer 9

• Joint accounts: presumed 50/50 but enquires should be made of any alternative arrangement.
• Low value chattels: estimated value - probate value will normally be lower than their value for insurance purpose
• Single items worth more than £500 (unusual): formal probate valuation should be obtained
• Quoted shares: valued by taking lower of the two prices on Stock Exchange Daily List and adding one-quater of difference between higher and lower value
• Land: instuct estate agents to prepare valuation - of owned jointly, PR needs to view land registry official copies

Question 10

What should PRs do with debts possibly owed?

Answer 10

• PRs should take steps to locate possible creditors unknown to family or PRs
• usually amount of deceased’s debts are taken into account when calculating IHT but will not be possible if following applies:
  
  • deceased had borrowed money to finance purchase of an IHT excluded asset
  • a debt owed by deceased is never actually repaid from estate funds

Question 11

Lifetime transfer?

Answer 11

• Value of lifetime transfers made 7 years before death will have an impact on IHT so PRs should ask questions to family to establish:
  
  • nature of any transfer
  • date it was made
  • amount or value
  • identity of donee