What happens to the assets of the person who has died?
People who are beneficiaries of a will do not get the money or property of the person who has died until the legal process known as Probate is completed. Ownership passes first to the executors of the will.
The executors duty is to administer the estate and wind up the affairs of the person who has died. Once they have probate the assets pass to the executors, and they then transfer ownership to the beneficiaries.
What happens first?
The executors are responsible for arranging the funeral, although the family usually deals with this. Family members are often also the executors.
The executors are then responsible for securing and valuing the estate.
- Contact the company insuring any property in the estate, and inform them that the insured person has died. If this isn’t done the insurance company could refuse to honour a claim.
- secure the property if it has been left empty
- take any valuables into safekeeping
- inform the deceased person’s bank(s) that the person has died
- inform the utility providers that the person has died and payment of any bills will be delayed
- make a full inventory of all the property and possessions in the estate
- arrange for all the property and possessions to be valued
- list and collect paperwork on all the person’s financial affairs eg bank, building society or other savings accounts, investments, insurance and pension policies.
A significant amount of paperwork is then involved, including completing forms, advertising for creditors and preparation of the tax account for HMRC.
- When the valuation of the estate has been completed, the executors must prepare the application for probate.
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The executors must swear an oath which is a formal confirmation that the executors are entitled to probate, and they promise to do their job properly. It also states how much the estate is worth.
How do the executors administer the estate?
At this stage, all the financial affairs of the deceased will be finalised. This usually includes:
- transferring or cashing in any investments
- settling any unpaid debts
- arranging to sell any property or possessions which are not wanted
- paying out legacies (specific sums left to named people in the will)
- when the overall financial picture is clear, reviewing the tax position to see if any adjustments are needed.
- Paying the residuary beneficiaries the balance of money in the estate.
The solicitor who has been instructed will prepare accounts to show all the financial transactions that have taken place during the administration.
How long does this take?
The process of winding up an estate should take about 3 months, but can be longer where there is a dispute, or there are other delays outside the solicitor’s control.
Must an executor act if appointed in a will?
No, named executors have a choice. Choosing not to act as executor is called ‘renouncing’. A half-way house is to have power reserved, which means the executor can stand back, allow the other executors to take the lead but they can step back in if they are not happy with how the administration is being handled. Once the administration of the estate has begun, it is not possible drop out.
Executors can be beneficiaries of a will.
Can an executor be liable if things go wrong?
Yes they can. Specifically they will be liable if they:
- do not put the interests of the beneficiaries before their own interests
- make a profit from their position unless permitted
- fail to account to the beneficiaries for all the money passing through their hands
- do not act reasonably and prudently in relation to the estate property.
Problems can and do arise – being an executor involves a lot of work and it’s easy to miss things out or make mistakes.
Protect yourself, and save a lot of hard work by instructing Purely Probate solicitors. Contact them now by emailing firstname.lastname@example.org