For the deceased’s assets to be distributed amongst the beneficiaries, the personal representatives will need to step in and organise this. The term ‘personal representatives’ is a generic term that encompasses both executors and administrators. They are required when there is no will in place, or when there is a will but there is no executor able or willing to act.
Executors
An executor is an individual appointed to administer the deceased’s estate according to the will itself and also any relevant provisions set out by the law. Usually, family members and friends are appointed to do this, however, some people will instruct a solicitor to carry out this role. There are some limits as to who can be appointed. For example, you cannot appoint a minor (someone under 18 years old) or someone who lacks mental capacity. It is worth noting that if you draft a will and nominate your spouse or civil partner as executor, but you get divorced or annul your marriage, your nomination would now be ineffective as of the date of the divorce/annulment.
In life, many unforeseen circumstances could arise. Therefore, it is best to appoint a substitute executor in your will to ensure that the process to distribute your assets goes as smoothly as possible during this difficult time for your loved ones. By appointing a substitute, you will be able to cover any unexpected situations such as the first-named executor being unable or unwilling to act, or possibly even passing away before you.
Renunciation of an executor
Although you may appoint someone as an executor, they cannot be forced to accept this role. Any named executor is free to reject this appointment and effectively renounce their rights to a grant of probate (more on this later!).
If you have been appointed as an executor and you do not want to take on this responsibility, you must ensure not to intermeddle in the estate of the testator. If you ‘intermeddle’, you will lose your right to renounce and consequently, you will have to act as executor. Examples of intermeddling include notifying the bank of the deceased’s death and settling the deceased’s debts.
To renounce executorship, you must write a letter to the Probate Registry confirming renounce your rights and that you have not intermeddled in the estate. This letter will usually be filed by the personal representative who is applying for the grant of probate.
It is not possible to partially renounce your executorship – you either act as the executor, or you do not. There is no middle ground option for this. Additionally, once you have renounced executorship, you cannot reclaim this title again unless the court permits this.
If you have been appointed as an executor AND a trustee, renouncing your executorship will not affect your status as a trustee. If you do not want to remain as a trustee, you will need to disclaim the trusteeship.
Whereas, if you have been appointed as an executor, but you are not able to take on the responsibility at the time, you can apply to have your power as executor reserved. This means that you can set a later date to take over. This is usually in the form of a backup plan in the event another executor falls ill or passes away or if that executor no longer wishes to act. In these circumstances, you will still need to apply for a grant of probate when you wish to act as executor as there is no automatic substitution.
To commence the process of handling the deceased’s estate and transferring assets to the beneficiaries, the executor(s) will need a grant of representation. You will need to apply for a grant of representation at the appropriate court. The personal representatives can apply themselves, or they can instruct a solicitor or probate practitioner to help with this. Along with your completed forms, you will also need to send any other relevant documentation such as any will, death certificate and HMRC Inheritance Tax forms. If all has been executed correctly, the grant is then prepared and sealed by the court.
In some circumstances, the court may require additional evidence before issuing a grant. This may be for example evidence of the execution of the will. The majority of probate matters are dealt with in the Family Division of the High Court provided that the will is not contested. In many cases, it may be more appropriate to use a local Registry, but this is not a requirement.
If the probate matter is contentious (meaning that there is a dispute regarding whether a document is admissible to probate or who is entitled to a grant of representation), the Chancery Division of the High Court will instead settle the matter. The County Court will instead deal with the application if the deceased’s estate is less than £350,000.
Types of Grant:
There are 3 types of common grants the personal representative(s) can apply for:
- Grant of probate: This is where the deceased has left a valid will which appoints executors willing to act
- Grant of letters of administration with will annexed: This is most appropriate when the deceased has left a valid will, but there are no executors able/willing to apply for a grant of probate, or the estate is partially intestate.
- Grant of letters of administration: The deceased has not left a valid will. The order of entitlement to grant is set out by statute for grants of letters of administration.
Administrative Powers of Personal Representatives
Personal representatives have a statutory duty to carry out various powers. These powers include, but are not limited to the powers listed below.
Power to Sell, Mortgage or Lease
This power may be executed to pay various administrative expenses such as tax, funeral costs and debts.
Power to Accept Receipt’s for a Minor’s Property
As a minor is unable to receive a valid receipt for monies or assets transferred to them, personal representatives can appoint a trustee for the minor if they have a vested interest. The simplest way to deal with any uncertainty is for the testator to include an express clause within the will explaining what process they would like to be carried out.
Power to Maintain a Minor
Section 31 of the Trustees Act 1925 (which also applies to personal representatives) states that income for the maintenance or educational benefit of a minor can be provided before the minor turns 18 years old if the property and gift held on behalf of the minor allows for interim income.
Power to Advance Capital
Section 32 of the Trustees Act 1925 allows trustees to advance capital to a beneficiary (whether a minor or not) who has vested or contingent interest in the capital at their discretion. The tester may vary the terms of the statute in the will as they choose.
Power to Insure
Personal representatives can insure any trust property against risks to the full value of the property.
Power to Delegate (‘Pass Off’)
Personal representatives can pass off particular functions to agents on agreed terms (if they are not already set out in the will).
Power to Indemnify for Expenses
Personal representatives can reimburse themselves for any incurred expenses.
Power to Run the Deceased’s Business
Generally, personal representatives do not have the authority to continue running the deceased’s (sole) trade unless they do so to sell it. The will may include express provisions for this. If the deceased had a partnership, the partnership agreement must be consulted at the first instance before doing anything further. Whereas If the deceased was a shareholder, the company’s articles of association should be assessed to determine what power the personal representative may (or may not) have.
Exercise of Personal Representatives Powers
Where there is more than one personal representative, the power is held equally between them. Joint personal representatives have what is known as joint and several authority. This means that the act of one representative binds others. However, all personal representatives must be on board for the transfer of land and shares.
Collecting and Realising Assets
The personal representatives should prioritise maintaining sufficient funds to pay off any of the loans they have taken out to cover the inheritance tax liability.
Sales of Assets
In deciding to sell assets, the will should be referred to for guidance, and the personal representatives should consider the beneficiaries wishes, e.g. any property specifically gifted in the will should not be sold unless all other assets have been exhausted.
Changes After Death
Sometimes the situation may arise where the distribution of estate through a will or the intestacy rules is not suitable or satisfactory. This may occur due to inadequate provisions in the will relating to particular beneficiaries, or perhaps the beneficiary has decided they do not want the gift that has been left to them. Adaptions can be implemented in the following ways:
- Through a disclaimer: This allows the beneficiary to reject or disclaim a gift. It will then form part of the residuary estate.
- Through a variation: The beneficiary rejects the gift and controls who will receive it.
Administration of Estate
After payment of any outstanding debts, funeral expenses and all tax, the personable representatives are then able to distribute the remaining assets left as gifts to the beneficiaries in the will.
The method used to vest these gifts to the beneficiary differs depending on the type of asset which is being transferred.
- Chattels – Transfer is most commonly carried out by simply delivering the items to the beneficiaries
- Company shares – A stock transfer form should be completed and sent with an official copy of the grant alongside the share certificate.
- Land – The assent for the transfer must be in writing and any existing insurance relating to that land should be cancelled. The beneficiary will also need to register their interest in the land with the HM Land Registry.
Any costs relating to the transfers must be incurred by the beneficiary unless the will has any express provision which states otherwise.
Receipts
Personal representatives should obtain a receipt from beneficiaries to evidence that they have satisfied their obligations to them. Do note that minors generally cannot give a good receipt unless the will specifies that they can.
Distribution of the Residue Estate
Once all debts and legacies have been paid, the personal representatives must then determine the residue which needs to be distributed following consideration of the tax implications, reasonable funeral expenses, and any professional or legal costs. As the personal representatives are acting in a professional capacity, they may also consider their remuneration for the duties they have carried out.
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