Administering an Estate

Administering an Estate

No one wants to think about death. Not their own death, nor especially that of a beloved family member or friend. We help our clients to prepare themselves both practically and mentally, and in some cases emotionally, for that inevitable moment. It can be a huge relief for some to know that their affairs are in order. For others, it is very trying and difficult making all the necessary decisions.

When a loved one sadly passes, there is a huge amount of work to be done. This, despite the fact that you are often barely functioning because of their loss. One of our team recently lost her mother and she is keen to share her practical thoughts and experiences with our readers. She found there is little straight-forward guidance available generally and of course most of us are administering an estate for the first time.

Make an Appointment with the local Registry Office

The initial hurdle to overcome is making an appointment to register the death at the deceased’s local Registry Office. (I am sorry – I’m going to refer to the person who has died as the ‘deceased’ for the purpose of clarity but I do recognise that no term is ideal.) You will need a ‘Medical Certificate of Cause of Death’ from the doctor in order to be able to do this. You will also be asked for various pieces of information and copies of documents but you will be advised exactly what is required.

‘Tell Us Once’ service

Do use their ‘Tell Us Once’ service as this undoubtedly saves you time and, more importantly, heartache. On your behalf, the Registry will contact HMRC (tax office), Passport Office, DWP (benefits), DVLA (driving licence) and the local council (possibly care fees). Again, various documents will be requested from you; do try to find them all. It may be that your loved one was due a tax rebate.

Arrange the Funeral and/or Memorial Service

The only other urgent task is to arrange the funeral. You may already know the deceased’s wishes or they may be detailed in their Will. (I hope they wrote one.) The deceased may hold a pre-paid funeral plan which may also detail their wishes but will certainly cover the basic costs. Opt for the earliest date you can for the funeral; you will not be able to move on until it has taken place. You may wish to think about placing an announcement in a local and/or national newspaper regarding the death and the date of the funeral. Once all this is done, you might want to take a breather as there is still much to be done, even if the estate is relatively simple. 

Gathering Finances

Once you can face it, you need to establish where the deceased held their ‘sole’ funds. (Joint funds will automatically pass to the other named account holder(s) according to the Laws of Survivorship.) This could include banks, building societies, Premium Bonds, financial advisors (ISAs/Bonds) etc. Register the death with each organisation and request a final valuation statement to be sent to you. (Do ask for a number of copies of the death certificate when you register the death. Whilst all organisations will return original copies to you, these certificates are like gold dust.) Do the same with all pension companies, including the DWP, if you didn’t use the ‘Tell Us Once’ service.

Your heart will be broken many times over the next few weeks as these organisations blandly respond to ‘The Late ________’ or the ‘Pers Reps (personal representatives) of _________’. It is shockingly impersonal. Do however retain all the documents received for your records. 

Probate?

You may need to go through Probate, you may not. Probate is the Latin word meaning ‘to prove’ so probate is the process of ‘proving’ the deceased’s death, who their personal representatives are, whether or not there is a Will, the assets etc. Each financial institution has its own rules and investment levels at which Probate needs to be done. Check with every financial institution where the deceased held ‘sole’ funds. Unfortunately, even if only one institution requires Probate, you will have to go through the process. Probate will also be required if the deceased held their property as Tenants in Common with a spouse or partner or individually. (You can check this via the Land Registry.)

Do go to the government website (https://www.gov.uk) and search under ‘Probate’. This site contains lots of really useful information, probably too much! From here, you can download all the necessary forms:

  • PA1 – complete by hand to apply for probate
  • PA2 – explains ‘How to obtain probate without using a solicitor’
  • PA3 – details probate fees (£215 at the time of writing)
  • PA4 – gives addresses of local Probate offices.

Tax forms for Inheritance Tax

You will also need to complete a tax form for inheritance tax purposes, even if there is nothing to pay. Complete form IHT205 if no tax is owing; complete IHT400 if inheritance tax is owing. If you struggle with either form, call one of the contact numbers or seek professional advice.

‘Swear an Oath’ at the Probate Office

Having sent off the necessary documents, you will need to arrange an appointment to ‘Swear an Oath’. Only one of the Executors needs to do this if you prefer.

Trusts

If there are any Trusts in the Will then these must be implemented within two years of the death. They cannot simply be ignored and need to be set up even if they are immediately closed again. A solicitor will be able to help you with this aspect of the estate administration but a fee will be payable for this service.

Distribute the Estate

Once you have all the final fund valuations, draw up an income and expenditure statement of the estate i.e. all the in and out payments. This should include any debts owed by the deceased. All debts must be settled prior to making any payments to beneficiaries. Circulate the income and expenditure statement as appropriate and distribute the estate.

Contact the Office of the Public Guardian

Lastly, (as if you haven’t already tackled enough bureaucracy), you should cancel any Enduring or Lasting Powers of Attorney held by the deceased. These are ‘lifetime’ documents and they cease to be of use once the Donor (the person who drew them up) has died. Send the original documents (there may be one for Finance and a separate one for Health) along with a copy of the death certificate and a covering letter to the Office of the Public Guardian to get them cancelled. They should not merely be destroyed.

Administering an estate is not pleasant but there is a certain satisfaction, and of course, relief, in seeing your loved one’s final wishes carried out as they wanted them to be. Alternatively, if it is a complicated Estate or you are lacking time, you could consult with an Estate Administration service.

The pandemic from our perspective!

The pandemic from our perspective!

As we approach 15 months of living through the Covid pandemic, I thought it timely to give you our experiences to date.

I think it is one of the positives, which I will always be proud of, during this time that we have survived and come out stronger.  None of the team were furloughed and no one lost their job.  More importantly, the team rallied stronger than ever.

Within a very short time, just before the first lockdown, we took the decision to work from home.  We all climbed the steep learning curve of remote working and changed our working practices rapidly.  This was no small feat as, unbeknown to most of our clients, producing a legal document from start to finish requires managing a myriad of processes full of minutiae.

I think the biggest surprise to me was how quickly myself and my team and my clients switched to using online video conferencing.  I had always been very averse to that medium as I believed that the personal relationship that I so enjoyed with my clients could never be fostered.  I was proved wrong.  We have, like many professional businesses that used to work face to face with their clients, now learned that we can almost exclusively work online with our clients.  This is both time- and cost-effective, both to the business and the environment.  I cannot see us or many businesses returning to the old ways.

The team went back into the safe and socially-distanced office almost a year ago.  That is what they requested.  The novelty of working from home wore off but again, we have learned that when they need to work from home, they can do it very effectively.  Everyone’s a winner, and everyone is safe.  However, we still cannot conduct client meetings at the office.

We have sadly taken the inevitable ‘phone calls from our clients who have been affected by Covid, either themselves or their family and friends. Some have been seriously poorly and some have died.  It is always hugely shocking and upsetting.  The reality of the constant news bulletins then ‘hit home’.

We have a very positive outlook for the next six months.  Yes, full opening up has just been put back by four weeks until July 19th, but the future looks good.  We have plenty to be excited about with the launch of the new brand Hamilton Legacy and all that it will bring.  Family Wills has been trading for almost 20 years and we look forward to the next 20 years as Hamilton Legacy.

What happens to my beloved pet when I die?

What happens to my beloved pet when I die?

I am a doggie person; some people prefer cats. There are of course many other varieties of pets, but we are undeniably a nation of pet lovers.  My beloved boy, Finley, the little rescue dog we collected eight years ago, is my ‘world’ now that my children are up and away and has been joined by another friend called Flora. What happens to them if both my husband and I were to die together is extremely important to me. 

I am not alone; over 45% of households in the UK own a pet but that statistic is from 2018 and I can only think that percentage would have grown during the pandemic.  I know from my many home visits that virtually every pet owner feels the same way I do about their pet.

However there are a few things to consider to ensure they are cared for after our death.  The Administration of Estates Act 1925 defines domestic animals as ‘personal chattels’ and therefore your pet can be gifted just as you would gift any of your other possessions.

Sometimes I get the impression that a client is gifting their pet quite easily at their death and I worry that the recipient does not feel quite so happy at being given such a responsibility if and when that time comes.  So, you must make sure that person is fully aware they have been nominated as the guardian of your pet.  You may be gifting an old or infirm pet or a pet with a long-life span such as a parrot or a tortoise.  Has your proposed guardian considered the task ahead?

Of course, the cost of housing, feeding and caring for a pet must also be considered as it can be a sizeable amount.  For example, a horse could need livery, or at least stabling.  You would not want your guardian to refuse to care for the animal simply due to lack of funds.

The clauses that can be used within your Will to achieve the appropriate care for your pet are varied.  They could range from a lump sum to the guardian on the condition of caring for your pet through to a regular income to the guardian.  Again, the clauses need to be carefully considered to encompass all the pets you own at the time of your death, or specific pets, depending on your wishes.  It is probably a good idea also to have a reserve guardian, just as you would for your children, in case your first choice is unwilling or unable to act as your pet’s carer.

I have been asked by clients if they can leave a gift of money to a pet.  This is not possible as the pet cannot take receipt of the money nor can it open a bank account!  Instead the gift must be left to the guardian.

Sometimes there is simply no one to whom we feel we can leave our pet.  In those circumstances, certain charities, both local and national, will provide rehoming schemes.  To name a few, the national charities are: the RSPCA’s Home for Life, the Cinnamon Trust and The Dog’s Trust.  If you are considering using these services, often the charities concerned require certain wording to be included within your Will.  Of course, it would be appropriate, although not essential, to leave a donation to that charity on condition of rehoming your pet. Please don’t forget how important legacies are to charities to continue their excellent work with our strays and other specific projects.

And finally, your Will should include what happens to the legacy in your Will if your chosen caretaker does not take on the responsibility of your pet or, indeed, you outlive your pet.

As ever, it is essential that you take appropriate advice in drawing up your Will.  Personally I believe it helps if the estate planner concerned is an animal lover!

 

Contentious Wills and Capacity

Contentious Wills and Capacity

Sometimes I come across clients who want to make a bold decision and remove a key member of their family from their Will.  This is not done lightly, flippantly or without due consideration. In fact, it is usually quite upsetting and raw for them.  If the person giving me this instruction (the testator) is elderly, this immediately rings alarm bells for me.  It could be an open door for a challenge by the aggrieved, removed beneficiary on the grounds of the testator not having mental capacity and hence not knowing what they were doing when they wrote that person out of their Will.

Throughout the testator’s consultation with me, in my professional capacity, I will be assessing whether they have the mental capacity to make a Will; this is called testamentary capacity.  This is framed by a case called Banks vs Goodfellow which broadly asks the following:

  • Does the testator understand they are making a Will?
  • Do they understand the extent of the estate they are bequeathing?
  • Do they understand who may have a claim on their estate (those who would normally be assumed to be the beneficiaries)?
  • Are they suffering from delusions?

Although we now have the Mental Capacity Act 2005, Banks vs Goodfellow is still used, despite dating back to 1870.

I will be making file notes throughout our meeting to show my views on their capacity. However, if a Will is clearly going to be contentious, I would also recommend an independent Mental Capacity Assessment.  This is not necessarily because I doubt someone’s mental capacity but because it nips in the bud any challenge on the grounds of capacity.  If an independent medical professional has made a report on that person’s ability to make a Will, and it is favourable to them, then a challenge through the courts becomes unlikely.

Approaching a client to suggest they have a mental capacity assessment can be difficult.  Many feel this is a slight on their mental capacity but it is important for them to understand that it is quite the reverse.  It is to prove that they DO indeed have capacity so that the Will isn’t challenged on mental capacity grounds.

Don’t forget contentious Wills can take many forms and are not just about excluding a person from a Will.  It could be where the values in the distribution are uneven. A less-obviously contentious Will could be where an uneven distribution is understood and agreed by all concerned, maybe because one adult child has already received an advance of money during the testator’s lifetime. However, the Will actually shows an even distribution e.g. between all the children.  This is hard to spot as it is the ‘normal distribution’ one would expect.

Of course, there are also other ways to challenge a Will such as the Inheritance (Provision for Family and Dependants) Act 1975 which we have covered in other blogs.

So, if you have a family member who wishes to leave a lower than expected distribution or to exclude a family member who is expecting to inherit, and they are ‘elderly’ then please warn them that a professional medical mental capacity assessment is the best way forward to achieve what they wish to achieve.

Are you just about to get Married OR Separated OR Divorced?

Are you just about to get Married OR Separated OR Divorced?

If so, then you’d better know how each affects your Will.

Marriage

Marriage is one of the few events that REVOKES a Will.  Not many realise this in the excitement of the nuptials. So, if you had a Will before your marriage, it is now null and void.  If you don’t make a new Will after your marriage, you will now die ‘intestate’.  You can make a Will ‘in contemplation of your marriage’ but there must be genuine intent and your partner must be known by you as your ‘intended’, rather than there being just an open-ended wish or hope!  This would mean the appropriate wording being included within your Will when it is written.

Getting married should be a trigger to review your Will or to write your first Will anyway as your spouse-to-be will have different rights and your obligations to them will differ from being those of just ‘a partner’.

Separation

Separation is never an easy time and it may mean that you are potentially on the road to divorce.  But, as far as your Will is concerned, you are still married and whatever your Will says will still happen if you die before you are divorced.  Your spouse still has the same rights. If you haven’t got a Will and you die when you are separated from your spouse then you die ‘intestate’ and the Laws of Intestacy would give your spouse the same from your estate as if you weren’t separated.  The end result could be that your spouse ends up with all your estate.  Most divorce lawyers will recommend that you rewrite your Will as soon as possible to stop both the Law of Intestacy or your current Will resulting in your spouse inheriting your estate, if you die before your divorce.

Divorce

Once divorced, the general rule is that it is as though your ex-spouse has predeceased you.  So, if you still don’t rewrite your Will once you are divorced, your old Will will still be valid (divorce DOESN’T revoke a Will) but your ex-spouse will be viewed as though they have already died.  So, if your ex-spouse is an executor of your Will, they no longer will be now that you are divorced and your reserve executor will act instead.  If your ex-spouse stands to inherit from your Will, at your divorce the gift will fall to whoever would have received it if your spouse had died before you.  Any powers given to your ex-spouse in the Will will no longer stand as it will be deemed that they have predeceased you.

Of course, if you don’t have a Will, an ex-spouse does not inherit at all according to the Laws of Intestacy.

What many do not realise is that being divorced only means that the marriage is dissolved.  It does not stop any financial agreements or claims, nor does it affect the rights of birth parents.  Do-it-yourself divorces are becoming quite common and where the divorce is relatively amicable, many choose this option as it is significantly cheaper than involving divorce lawyers.  However, what many do not realise is that by not using a professional, there will be no full and final financial settlement in place and, because of that, your ex-spouse has a legitimate claim on your estate at your death.

Joint Assets

It is worth remembering that any assets that are held jointly, including both property and bank accounts, will automatically pass to the remaining joint owner at death.  It is irrelevant whether you and the other joint owner are married, separated or divorced.  This is because the asset passes according to the Law of Survivorship which surpasses the Law of Intestacy and is not affected or controlled by your Will.

As ever, it is always worth getting legal advice if you are considering either marriage, separation or divorce as it will affect your estate.

 

Does having a Will mean I won’t need Probate?

Does having a Will mean I won’t need Probate?

Actually, the statement I hear is “I have a Will so I won’t need probate”.  Let’s clear this up now, THE TWO ARE NOT LINKED. Yes, they are both relevant to death but one does not negate the need for the other.

A Will is a legal document drawn up in your lifetime.  It enables you to specify the beneficiaries of your estate and how it is distributed.  Your estate may comprise of possessions, money, property and land.  A Will also enables you to state who you wish to administer your estate at your death i.e. your Executors.  Lastly, it also means you can control who are the guardians of your children under the age of 18.

If you don’t have a Will, at your death you are said to have died ‘intestate’.  For more information, see our intestacy blog.

However, PROBATE (from the Latin word meaning ‘to prove’) is the legal process that happens when you die.  The main purpose of Probate is to give a person (or people) the legal authority to administer your estate. These people are called Personal Representatives (PRs).

Probate enables the PRs to access your assets at your death, such as your bank accounts, property and pensions. It means they can do things such as:

  • Finalise utility bills
  • Sell or transfer property
  • Gather in assets, including pensions, stocks, shares and savings
  • Liquidate (sell) all the assets in your estate
  • Pay any outstanding debts using funds from the estate
  • Calculate and pay any income tax or inheritance tax due
  • Distribute the estate to beneficiaries (as set out either in your Will or via the Law of Intestacy).

I think the reason people often get confused regarding Probate is because Probate is not always required at death. There are two main reasons why Probate may not be required at your death:

  • You own all your assets JOINTLY usually with your partner or spouse who is still alive. In this case, at your death, all your assets would pass automatically to the other joint owner according to the Law of Survivorship; therefore no administration is required.  This is why I often hear “we didn’t need probate at my dad’s death so why do we need it now that my mum has died?”.  At the father’s death, all the assets were owned jointly between mum and dad so passed automatically at his death to the mother.
  • There is very little in your estate i.e. it’s a small estate. Financial institutions such as banks and building societies all have their own individual Probate threshold.  So if, at your death, you have a certain value of savings in a bank and that amount exceeds the bank’s Probate threshold, the bank will need a ‘grant of probate’. Without this, the bank won’t release those funds to your executors or PRs so they may be distributed to the beneficiaries.  To make life a little trickier for your PRs, every establishment has a different threshold.  So, the same amount may trigger the requirement for a ‘grant of probate’ at one bank but not at another!!  So, it could happen that if the value of your estate is held in several banks and the level of funds in each is under that bank’s threshold, no Probate will be required.

Importantly, do bear in mind that if a property is not owned jointly (i.e. as joint tenants) but it is owned as ‘tenants in common’ then a ‘grant of probate’ is ALWAYS required.  This is why a ‘grant of probate’ is often required at the second death of a couple – the property passed to the joint owner at first death but is now owned solely by the remaining spouse; at their subsequent death, a ‘grant of probate’ is required.

So, you see that a Will and Probate are totally separate concepts; the Will enables you to say how your estate is to pass at your death; Probate is the legal authority for your PRs to carry out the wishes in your Will.  It is not the Will that dictates whether Probate is required but instead what your estate is comprised of.