Jessica Jarvis

Hey there, intrepid executor or administrator! Before you start managing a deceased person’s estate, you usually need a legal authority, either a ‘Grant of Probate’ or ‘Letters of Administration’. A Grant of Probate is issued when there’s a will, and Letters of Administration come into play when there’s no will. However, if you’re dealing with a smaller estate, these may not be needed – some banks and building societies will release funds without one if the amount is below their specific threshold.

Understanding Your Role

In your role as an executor or administrator, you need to find all the deceased’s assets, settle any outstanding bills and taxes, and distribute the remaining assets to the beneficiaries.

Dealing with Inheritance Tax

One significant aspect you need to consider is inheritance tax. The estate may owe inheritance tax if its value, after deducting any debts but before deducting any exemptions or reliefs, is above the current inheritance tax threshold (£325,000 as of 2021, but do check for updates). It’s typically due within six months of the death. Failing to pay on time can result in interest charges. So, ensure you get a handle on this early in the process.

The Deal with Debts

Handling the deceased’s debts is another big task. But don’t fret – as long as you follow the rules, you’re not personally on the hook for these debts. However, make sure you settle all debts before distributing the inheritance, or you might find yourself in hot water.

Your Executor/Administrator Action Plan

1. Play Detective: Start by identifying all assets and debts.
2. Make a Public Announcement: Place a ‘Deceased Estates Notice’ in The Gazette and a local newspaper, giving creditors two months to stake their claim.
3. Pay Up: Pay those bills. Begin with funeral costs and administrative expenses, then tackle secured debts like mortgages, and finally, handle unsecured debts.
4. Spread the Wealth: With all bills settled, it’s time to distribute the remaining assets to the beneficiaries.
5. Ask for Assistance: Don’t hesitate to ask for help if you’re feeling overwhelmed. Solicitors or probate specialists are there to guide you through this process.

Extra Security with Insurance

Consider executor insurance for an extra layer of protection. It can shield you from potential personal financial loss if there’s a legal error during the estate administration process.

Now that we’ve walked through the basics, let’s tackle some FAQs to equip you better for the journey ahead.

Frequently Asked Questions

Q: Am I personally responsible for the deceased’s debts?

A: Generally, no. As an executor or administrator, you’re not personally responsible for the deceased’s debts, as long as you administer the estate correctly. This includes paying all debts before distributing assets to beneficiaries.

Q: What happens if the estate’s debts exceed the assets?

A: If the estate’s debts are greater than the assets, the estate is considered insolvent. The executor or administrator needs to follow a specific process to pay off as many debts as possible. Any remaining debts are typically written off, and creditors can’t usually claim the rest from the executor or the beneficiaries.

Q: What’s a ‘Deceased Estates Notice’, and why is it important?

A: A ‘Deceased Estates Notice’ is a public announcement of someone’s death. Placing this notice in The Gazette and a local newspaper gives creditors a chance to make claims against the estate. This process, sometimes referred to as a ‘Section 27 Notice’, helps protect the executor or administrator from personal liability for any debts they weren’t aware of.

Q: What’s the deadline for creditors to respond to a ‘Deceased Estates Notice’ and what does that mean for me as an executor or administrator?

A: Once a ‘Deceased Estates Notice’ is placed in The Gazette and a local newspaper, creditors have two months to make their claims against the estate. This period allows creditors to come forward with any outstanding debts. As an executor or administrator, after the two-month period, you can distribute the estate to the beneficiaries with a degree of protection against claims from unknown creditors. However, it’s worth noting that some debts, like those to the Department for Work and Pensions for overpaid benefits, can still be recovered after the estate has been distributed. It’s always a good idea to seek legal advice if you’re unsure.

Q: What order should I pay off the debts?

A: Debts should be paid off in a particular order: first, funeral costs and administration expenses; next, secured debts like a mortgage; and finally, unsecured debts.

Q: How can I find out if the deceased had any debts and who the creditors are?

A: As an executor or administrator, it’s your job to identify any debts. A good starting point is to go through the deceased’s paperwork for loan statements, credit card bills, utility bills, or other indications of debt. You can also contact banks, building societies, and credit companies that the deceased had accounts with. Once you’ve identified these, you can then contact the creditors directly to find out how much is owed. Remember, you can place a ‘Deceased Estates Notice’ in The Gazette and a local newspaper to notify any unknown creditors, giving them two months to make a claim.

Q: What’s executor insurance?

A: Executor insurance, or probate or estate administration insurance, is a type of insurance that protects executors or administrators against potential personal financial loss due to legal errors during the estate administration process.

Q: When should I distribute the estate to the beneficiaries?

A: You should distribute the estate to the beneficiaries only after all debts and taxes have been paid. Distributing assets too early can lead to personal liability if a creditor then makes a claim.

Q: What if creditors are still contacting me, even though there’s no money left in the estate to pay off the debt?

A: If the estate is insolvent, i.e., the debts outweigh the assets, and creditors continue to contact you, it’s important to communicate clearly with them about the situation. Notify them in writing that the estate is insolvent and there are no remaining assets to cover the debt. Remember, as an executor or administrator, you’re generally not personally responsible for the deceased’s debts, unless you’ve distributed the assets to beneficiaries before settling the debts, or failed in some other way to properly administer the estate. If creditors continue to harass you, consider seeking legal advice.

Q: I’m feeling overwhelmed. Can I get professional help?

A: Absolutely! Solicitors or probate specialists can provide valuable advice and assistance. Administering an estate can be a complex process, and seeking professional help can ensure it’s done correctly.