Dealing With the Financial Affairs of Someone Who Has Died And Left a Will

When a loved one dies and you are tasked with executing their will, one of the first things you must do - even before probate can be granted - is to calculate how much the estate is worth. This is necessary because it will determine whether or not there will be Inheritance Tax (IHT) due on the estate.

Here, the experts at Clough & Willis Solicitors will explain how to value an estate for probate in simple steps and offer advice on managing the financial affairs of a deceased person. For specific advice, get in touch today; we aim to make the probate process as easy as possible during what will be a difficult time for the family and friends of the deceased.

What does an executor of a will do?

The executor of a will is responsible for carrying out the terms of the deceased’s will and ensuring the  estate is distributed accordingly. Executors are also expected to find the most efficient methods to distribute the estate to ensure that it retains as much of its value as possible, and undertake the probate process in a timely manner to avoid the chances of a dispute arising.

Who are executors of a will?

Executors are  named by the deceased in their will. if there is no executor named, one of the beneficiaries can apply for the Grant of Probate.  An executor can also appoint an attorney to act on their behalf if they are unable to fulfil the role.

Managing the deceased’s assets

Before you can make any plans regarding the deceased’s estate, you must first compile a list of everything it contains. This does not only include items that are identified in the will, but anything that gives value to the estate.

The contents of a person’s estate may include:

• ●     Finances
• ●     Debts
• ●     Shares
• ●     Property
• ●     Personal possessions, such as furniture or jewellery

What happens to bank accounts when someone dies?

Following someone’s death, the executor must take responsibility for organising the deceased’s finances. This requires them to close the deceased’s bank accounts, pay any outstanding debts and distribute any remaining money according to the provisions of the will. First, you should notify the relevant banks of the person’s death. They will not allow any funds to be withdrawn from the account until probate is granted (other than paying the funeral costs or Inheritance Tax), but they will tell you how much money is in the account, which can help you to value the deceased’s estate.

To close a bank account on behalf of someone who has died or access any financial details, the executor must provide the bank with a death certificate. When you receive a Grant of Probate, you may need to contact the bank again to begin closing the accounts and managing the distribution of the estate.

Why do wills go to probate?

Wills must go to probate to ensure that the estate is distributed in compliance with the law and the wishes of the deceased. There is often a risk of fraud, forgery or other criminal activities relating to wills because of the high value of many estates, so the probate process is designed to ensure that distribution of an estate is fair and transparent. Additionally, where the estate is liable for tax, probate ensures that this is paid.

Calculating the total value of an estate

As well as the value of the deceased’s assets on the day they died, the estate includes any gifts they made in the seven years before they died. This means any items of value or cash that they gave away, but not money that they paid in exchange for goods or services, or money to pay back any debts they owed. You can usually find out the information you need about these through managing the deceased’s bank accounts or looking through any paperwork they left behind relating to their financial affairs.

If your estimate indicates that the total value of the estate is likely to be over £325,000 (known as the nil rate band), and IHT may be due, you will need to provide a more accurate valuation to determine exactly how much tax you need to pay. If not, there is usually no need for the estimate to be completely accurate, although in either case you will have to report the amount when you apply for a Grant of Probate.

If the estate exceeds £325,000, it may be liable for Inheritance Tax, but this does not automatically apply. The executor should consider whether there is any transferable allowance from the deceased’s late spouse (also known as the transferable nil rate band), which may mean that the estate would not pay IHT until the value exceeds £650,000. If the estate exceeds the deceased’s own nil rate band and the transferable nil rate band (or if no transferable nil rate band applies), then the executor must consider whether the residence nil rate band would be available. Our expert team can provide you with advice on whether or not you must pay IHT as the executor of an estate.

In order to value a loved one’s estate, the first stage is to contact banks, financial institutions, utility companies and other organisations with which the deceased held an account. In this way, the executor can piece together a picture of their finances at the time they died.

The value of an estate is based on the assets the deceased owned, minus any money they owed. This will need to be paid from the estate before the remaining assets can be distributed to loved ones. You will need details of their savings, mortgage and any investments or loans, as all of these affect the overall value of the estate. Once you have calculated an accurate estimate of the estate’s value, you should have the information they need to submit an application to the Probate Registry.

If the deceased owned property, you must estimate the value of this property on the day they died. Your estimate should not be based on the amount that the person paid when they bought the property - it must accurately reflect the price the property could be expected to sell for today. Your estimate can be based on the value of other properties that have recently sold in the area, or you can have an estate agent provide a valuation for this purpose. If IHT is payable, then HMRC requires three estate agent valuations or a RICS valuation and the team at Clough & Willis can assist you with this.

How long does probate take?

Probate typically takes between six and 12 months to complete, but may take longer. This is because each situation is different; probate can be affected by the contents of the estate, the time it takes to sell any physical assets, and whether any disputes arise during the process.

Do you need a solicitor when someone dies?

Probate and the distribution of estate are complex legal processes - any mistakes can be costly and time-consuming, which can be especially difficult during a time of grief. While the law does not require you to have legal representation, it is highly recommended that you seek support from an expert solicitor.

A professional solicitor can provide advice and insight during the probate and distribution processes to help you identify ways to optimise tax and spending, facilitate communications, and guide you through the legal processes; they can even take on the role of executor on your behalf.

Clough & Willis’ team has solicitors with significant expertise in both probate matters and in property conveyancing, which means that we can provide a useful overview of how the probate process works and provide the assistance you need. That might include acting on behalf of executors to apply to the Probate Registry and pay any IHT due on the estate or dealing with the full administration of the estate.

If you need help with probate matters, from valuing an estate through to executing or challenging a will, Clough and Willis’ expert team of probate solicitors can help. We will advise you on how to execute a will or organise an estate if there is no will. Call us on 0800 083 0815, or fill in our online enquiry form to arrange a call back at a time that suits you.