Personal Representatives: Executors and Administrators

A Grant of Probate is the permission of the Probate Registry to the Executors named in a Will to distribute the estate in accordance with the deceased’s Will. The Probate Registry requires the Executors to swear an Oath identifying the deceased, the Will, that they are the persons named in the Will, the size of the gross and net estate and whether any Inheritance Tax (IHT) is payable or not.

As part of this process they must complete an IHT return setting out the value of the deceased’s estate as it was at the moment of death, except that it also allows all costs associated with the funeral and disposal of the body to be deducted, which are obviously incurred after death. The form produces a gross figure, which is the value of the estate without any debts being deducted and a net figure, which is the value after the debts have been taken off.

The liability for IHT is based on the net figure, but you should note that there all sorts of exemptions and reliefs that can reduce the IHT figure down to zero in many cases and tax planning is something that you should consider if your net estate is above the current IHT threshold, especially if you are not married.

If the deceased did not leave a Will, or destroyed it, revoked it or it is found to be invalid for some reason, then the deceased is said to have died ‘intestate’; (i.e. without a Will). In this case obtaining Probate is more complicated because there are no Executors. It is called obtaining a Grant of Letters of Administration and this appoints Administrators rather than Executors, but the roles are the same, despite the difference in name.

Probate Administrators

Administrators are selected following the rules of intestacy. There is a statutory order of relatives that can apply that must be followed and the administrators have to again identify the deceased, the size of the gross and net estate and whether any Inheritance Tax (IHT) is payable or not, but they also have to explain who they are and where they are in the statutory order and why any one in the order above them has not applied. Thus a grand child of an intestate widow can apply to be the administrator, but only after confirming that the spouse is dead and all the children of the widow are dead, leaving her as the next in the order. If there was a child living, say an aunt, then that person should apply or appoint the grandchild as her attorney.

Appointing administrators can be very complicated if it goes outside the immediate family and it is a headache that is entirely avoidable for the sake of making a Will appointing Executors.

A further complication is that the Intestacy rules also determine who gets what from the estate and this can be very inconvenient, not to say expensive and painful to sort out. For example, a husband dies with the house in his sole name worth say £350.000 (after the life assurance has paid off the mortgage), no joint bank accounts but other assets worth £20,000 once all his debts are paid. He leaves a non-working second wife and three small children, two of whom are by and live with his ex-wife, who is not on good terms with the new wife.

In this case, the second wife would be entitled to the first £250,000 of the estate. The balance (£120,000) would then be divided in two, with half going to the second wife (£60,000) as a life interest and the other half going to the three children on trust until they are 18. Each child is now entitled to £20,000 and the ex-wife demands payment of £40,000 to her as the guardian of two of the children, forcing the second wife to sell up and downsize to be able to pay her the money. Had the husband made a Will leaving everything to his second wife, or even just leaving her a life interest in everything with it then passing to his children in various shares, this would have been avoided.

For the sake of completeness, had all three children been over 18 and willing to co-operate then they could have entered into an agreement called a Post Death Deed or Instrument of Variation, that would vary the Intestacy rules to a set of arrangements acceptable to all the parties. For instance to allow the second wife to stay in the home and delay them taking their shares until she moved, remarried, died or they could waive taking their share altogether.

This article was written via Paul Handford at RWFC

If you have you have any questions or queries regarding the above article please e-mail Paul Handford

Also see:

Executors
Probate explained
Probate glossary (terms used)
Probate procedure liable for inheritance tax
Probate procedure not liable for inheritance tax

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