One of the first questions I am asked by clients is how long will the administration of the estate take? Clients want to know in terms of weeks or months, but my response is always as long as it takes to collect in all the assets, pay all the liabilities and obtain the necessary clearances.
Every estate is different and there are so many elements that may cause delay in the administration. All in all, it is not easy to give an accurate estimate of the time to conclude an estate, but everything involved in a particular matter makes it unique, interesting and keeps us on our toes.
Below I cover some of the top issues that can arise.
Obtaining Estate Values
Sometimes there is significant delay obtaining a death certificate, for example, where the death took place abroad or there is an ongoing coroner’s inquest. Obtaining date of death values for assets and liabilities (required for tax returns) was always a swift process, though restrictions on employees working in the office in the last 18 months has slowed receipt of valuations.
Some clients obtain valuations themselves, but if they don’t initially ask the financial providers for all the information, such as details of accrued income to date of death, then I may have to write requesting this information anyway, which leads to increased costs and further time delay.
Grant of Probate and IHT exemptions
Once I have all the information, I can assess if a Grant of Probate is necessary in order to administer the estate. It is not always necessary to obtain a Grant. Assets owned jointly, as joint tenants, pass by survivorship leaving little to administer in the estate. This process may only take a couple of months in its entirety.
If assets are discovered months or years after death, the assets still need to be administered so strictly speaking even a simple estate could take a number of years to conclude.
If a Grant is needed to administer an estate and I have all necessary information, I can usually prepare the HMRC inheritance tax (“IHT”) form and legal statement to apply for the Grant within a day. Delays may occur if an IHT exemption is being claimed on the basis of frequent gifts out of income.
This occurs where the deceased had a right to benefit from a trust; or lawyers in other countries are involved. These aspects may require collaboration with Trustees and lawyers or accountants in order to finalise the IHT form.
A couple of years ago I could rely on the Grant being issued within 2-3 weeks of the application to the Probate Registry. However, there have been some recent changes to the probate application process. One of my online applications for a Grant in January 21 was turned around within a week which was fantastic. Unfortunately, the majority of applications take considerably longer. The Probate Registry will not deal with specific enquiries until 8 weeks after the date of application for the Grant. I hope the application process will be quicker in future.
The Personal Representatives can deal with the assets once the Grant of Probate has been received. Most assets can be administered fairly quickly although selling land, businesses and foreign assets can take considerably longer. Some foreign assets can only be sold with a copy of the Grant resealed in the country in which the asset is situated and so further legal processes are necessary abroad before the foreign asset can be sold or transferred to a beneficiary.
Personal Representatives must act unanimously and if they cannot agree the administration halts and may take considerable time to move forward. As the world becomes more litigious there is an increase in the number of claims in estates.
If a caveat is registered at the probate registry the requisition has to be addressed before the caveat is removed and the Grant can issue. This, and later claims in an estate can cause considerable delay in the administration with significant monetary costs to the estate.
I should also mention that Personal Representative and beneficiaries may die during the administration of an estate causing delay whilst a further Grant is applied.
Concluding an estate
To conclude an estate I want to see HMRC clearance in respect of IHT, income and capital gains tax matters both to the date of death and during the administration period. At present HMRC is slow dealing with clearance for IHT.
Informal reporting of income and capital gains tax is dealt with fairly quickly but if tax returns need to be completed obtaining clearance may take 4 months to a year to obtain. Without clearance you run the risk that tax and interest remains to be or that penalties may be issued and the Personal Representatives are jointly and severally liable for these liabilities even if they later recover the funds from the beneficiaries.
Once clearance has been obtained the Personal Representatives can distribute the estate. This sounds simple but even this process can be prolonged where a beneficiary is difficult to trace or respond.
How Moore Barlow can help you
There are a variety of ways you can protect your wealth and assets. Every individual’s circumstances are unique and therefore it is important to receive advice that is tailored to your and your family’s needs. Find out more about Moore Barlow’s expert estates team and discover how we can assist you.