Administering the Estate of a loved one or friend can be an extremely challenging experience, particularly when acting without legal advice. We have therefore outlined a few points of interest that may assist you along the way.
If you would like to discuss the administration of an Estate with a member of our team then please contact us on 0118 958 9711 or [email protected], or visit our Wills and Trusts page, and we will be glad to assist you.
Valuing the family home
When administering an Estate, one of the responsibilities of the Executors is to value all the assets for Inheritance Tax purposes.
A common misconception is that, when valuing the family home, the best outcome is to have as low a probate valuation as possible. Whilst this may be favourable for Inheritance Tax, this will backfire if HMRC conclude that the property was deliberately undervalued, and then issue penalties on top of the extra tax. In any event, if the property is later sold at a higher value, this could have huge Capital Gains Tax consequences.
When instructing Estate Agents to value a property it is therefore important to stress that you require the open market value of the property, i.e. as if it were sold on the date of death.
Is the Will unusual?
In the past it was relatively common for individuals to prepare Wills at home, rather than with solicitors. This resulted in Wills being prepared that are relatively unique in appearance or content.
If you need to administer a home-made Will it is often therefore necessary to include a statement or Affidavit regarding such aspects as; the condition of the Will, the circumstances in which it was signed, or the way in which it was signed or witnessed. This often causes delays and additional costs for Executors.
If you or a family member have a home-made Will or simply wish to review your Will it’s a good idea to meet with our Private Client team to get things legally ship-shape.
Response times can vary
You may be surprised to learn that HMRC have recently indicated that they expect to reply to correspondence within 20 days and that you should not chase them for a response until 20 days has elapsed. Various local authorities are also applying the same criteria. You should not therefore distribute an estate until you have clearance from all relevant agencies; and be aware that you usually must request clearance: it is not automatically given at the end of a matter.
Cancelling the Powers of Attorney
If someone passes away having been the Donor of a Power of Attorney, whether registered or not, it is important to ensure that this is officially cancelled by the Office of the Public Guardian.
A Power of Attorney, and the powers granted within it, die with the Donor and so your Attorneys have no power to access your funds after your death. Innocent mistakes occur, for example, where an Attorney withdraws money from the deceased’s bank account for funeral costs. An Attorney does not have the authority to do this and will be accountable to the Estate for withdrawals made.
If you are concerned about funding for funeral costs, please see below where we have outlined some alternatives.
Paying for Funeral costs
After a loved one passes away, the first action that most families take is to organise the Funeral in accordance with the deceased’s wishes which, of course, can be very expensive.
A common misconception is that the Funeral deposit must be paid at the point of organising, by the family members doing the organising. This should not be the case as, if you ask the Funeral Director for an invoice, you should be able to take this to the deceased’s bank (any branch of that bank) with a Death Certificate and ask for the Funeral costs to be settled directly from the deceased’s account. The bank will either give you a cheque made payable to the Funeral Director or send this to them directly.
The alternative to this is to write to the bank directly, again with a Death Certificate, asking for the invoice to be settled.
If you or someone in your family is dealing with the Estate of a loved one, or wishes to amend/prepare their Will, please contact Hilary Buckle, the head of our Private Client team on 0118 958 9711 or [email protected], or visit our Wills & Trusts page for more information.