When someone dies and they have left a will that is valid and properly witnessed, the will should name an executor who will be responsible for sorting out the affairs of the estate and dealing with the Probate Registry and HMRC. If there is no will, or the will fails to name an executor, then an administrator will be appointed.
The administrator will usually be the next of kin or another close relative. An administrator will also need to be appointed if a person named in a will as an executor declines to take up the role, which they have the right to do.
The administrator has the same set of duties and responsibilities as the executor. The administrator must apply to the Probate Registry for probate and they must also declare the value of the deceased person’s estate to HMRC so that they can assess if any inheritance tax is due.
The administrator may choose to use the services of a solicitor or other competent professional to sort out the affairs of the estate, and this is usually advisable when an estate has a high net worth or affairs that are unusually complex.
Applying for probate entails filling in a form and sending it in to the local office of the Probate Registry. The administrator will then have to attend the local office in person to swear on oath that the information in the application form is true and accurate to the best of his or her knowledge.
The administrator is also responsible for calculation the net value of the estate and reporting this to HMRC. Although inheritance tax is only payable on estates that are worth more than £325,000, HMRC will expect a report even if it seems clear that not inheritance tax will be due. Inheritance tax is paid at a rate of 40% on the value of the estate above the £325,000 threshold. The tax rate can be reduced to 36% if the will stipulates that a minimum of 10% of the total value of the estate is to go to charity.
To calculate the value of the estate, you first need to find out the total worth. This will include any property, vehicles and personal possessions such as jewellery, collectibles and artworks. Advice from HMRC states that any single item worth more than £500 should be valued by a competent professional. You then calculate all the liabilities which may include bank loans, credit card balances and utility bills. Subtract the liabilities from the assets to get the net worth of the estate.
Once probate has been granted, the administrator will be able to sort out all the affairs of the estate and this will include paying out any legacies to beneficiaries that have been named in the will.
