If you find yourself needing to administer the estate of a loved one (usually because the person who has died has named you as an executor in their will), a question which often arises is “Do I really need a solicitor – can’t I do this myself?”
Taking a reasonably typical example of someone who did make a will appointing executors, some examples of things they would be expected to do would include:
- Registering the death
- Arranging the funeral
- Ascertaining whether the Will that they are holding really is the current will
- Ascertaining the values of all of the known assets and all of the debts (and there are technical valuation requirements to observe, especially when valuing shares)
- Identifying the people due to inherit
- Taking reasonable precautions against the possibility of there being any unknown assets or debts which were not known to the immediate family
- Checking whether any Inheritance Tax (IHT) is payable. This duty goes much further than simply comparing the value of the estate with the IHT allowance and paying 40% of any excess. It will include asking precise questions of certain individuals about whether they have received any gifts from the person who has died (do you know which questions to ask and who to ask?), it will include establishing whether all the beneficiaries are taxable and, if some money is left to charity, whether enough money has been left to charity to affect the overall tax rate applied to the rest of the estate
- Checking whether any beneficiary is bankrupt before paying anything over to them (an executor who pays an inheritance to a bankrupt beneficiary might end up being sued by the trustee in bankruptcy, but do you know how to check?)
- Making sure that any property in the estate remains properly insured
- Selling or transferring shares or property
- Finalising the income tax position to the date of death and for the post death administration period
- Making sure that the Capital Gains Tax (CGT) position is considered and, if appropriate, protected. If you are selling the house (or a share portfolio) for more than it was worth at the date of death, that could give rise to a liability to CGT – there are legitimate steps that an executor can take to reduce or even eliminate this CGT liability and the executors would be expected to know this and to take those steps
- Distribute the estate as per the terms of the Will (but not too quickly or, if someone later challenges the will successfully, the executor might not still have the funds from which to settle the claim) – do you know when you should distribute?
Of course, an executor named in the will does not have to do all these things personally. It is perfectly permissible to ask a solicitor to do these things on behalf of the executor and to pay all of the legal fees out of the estate. If the executor makes one mistake with the tax, it could cost them (personally in many cases) rather more than the legal fees would have amounted to in order to have a trained professional taking care of that and everything else. Moreover, as well as dealing correctly with the requirements, a solicitor might spot (for example) a tax planning opportunity which a layman might not.
All in all, if you want to be sure that you are administering the estate of a loved one correctly, it’s always advisable to seek professional help.