Probate and estate administration

Dealing with the legal and financial formalities following a death can be complicated and time consuming; therefore it helps to have experienced probate practitioners sharing the workload and responsibility.

Our probate team has a wealth of experience in dealing with a person’s affairs following a death. We can take routine tasks off your hands and guide you through some of the more complex issues.

Our team is spread across both our London and Tunbridge Wells offices and comprises partners, assistant solicitors, probate managers, chartered legal executives, paralegals and dedicated secretaries.

This enables us to staff matters with the appropriate level of expertise to ensure an efficient and cost effective service on all matters from the simplest to the most complicated estates.

While a large part of our work in this area is helping and guiding Personal Representatives through the administration process, we can also help when matters become disputed. Our team of specialist litigators can take on disputes as and when they arise or escalate, and whether purely for that aspect or in tandem with the wider administration of the estate.

The Administration of an estate (sometimes referred to as “Probate”) is the process of taking control of the assets of someone who has died, settling their liabilities and taxes and distributing the estate to those entitled to it.

Following a death the deceased’s assets are frozen and it is not simply the “next of kin” who can unlock them.  It is the Personal Representatives (Executors if appointed under a will, Administrators if not, and in both cases PRs for short).

The Grant of Probate (or of Letters of Administration where there is no will) is the document which gives reassurance to the holders of the assets that they are safe to act on the instructions of those whose names appear on it.  It is a document issued by the Court (usually following a simple paper application) which not only identifies the PRs, but also confirms that the Will put forward to the Court is the last Will and that it is valid – i.e. that all are safe to administer the estate on the basis of that Will.

The administration of an estate generally falls into two parts – the first is the work leading up to the application for the Grant – “obtaining Probate” –  the second the process of collecting in the assets, paying liabilities and taxes, and distributing what is left – “administering the estate”.

In many cases inheritance tax will be payable.  The collection of the tax is tied up with obtaining the Grant.  Part of the tax has to be paid before the Court will issue the Grant.  There is something of a chicken and egg situation here – until you have a Grant you can’t access the assets of the deceased to raise the tax, and until you can raise the tax you cannot obtain the grant!  Fortunately there are in most cases ways around this.

So the first step is to identify all that the deceased owned, and owed, and value it all.  That value is what is used for calculating the inheritance tax.  The tax is raised and the Grant obtained.  The Grant is then distributed to the various holders of the assets with appropriate instructions from the PRs, usually to sell assets and collect the cash centrally (although assets can also be transferred to beneficiaries– and often are) and from that central fund the PRs pay the deceased’s bills and other liabilities, and gifts of fixed amounts and particular items.  What is left is called the Residue and is distributed between those to whom the deceased left it.  Residue is usually the lion’s share of the estate, although by its very nature is of an uncertain amount only determinable on conclusion of the administration.

Some of the more complex aspects of estate administration

Whilst a great deal of the work connected with the administration of an estate can be relatively straightforward, there are some aspects that are more complex and where we, as probate specialists, are well placed to assist.

Some of the more specialist areas include:

It is becoming more common for estates to include an international element of one kind or another.

That may be because the deceased owned assets in a foreign jurisdiction, or because they died owning assets in the UK having left a foreign Will.

Those dealing with estates in which there is an international element face complex questions as to which country’s laws apply to the succession of the estate, whether the Will is enforceable in the countries involved, whether any foreign tax is payable on the estate, and how the PRs can go about getting control of any foreign assets.

Much turns on the deceased’s domicile at the date of death as this may dictate the tax position and which country’s laws govern who inherits the assets.

Domicile is a complex subject but, broadly speaking, means the country in which the deceased had their permanent home.

From a UK tax perspective, if the deceased was domiciled in the UK then their worldwide estate will be subject to UK inheritance tax.

If the deceased was domiciled outside the UK then it is only the assets located within the UK that are subject to inheritance tax.

The UK’s tax rules may conflict with those of a foreign jurisdiction, and vice versa, and there may be occasions where an asset is subject to tax in more than one country. If that is the case then careful consideration needs to be given as to whether the tax authorities in one jurisdiction will credit the tax paid in another and, if so, which jurisdiction has primary taxing rights.

If the deceased left a will the PRs will need to establish whether it deals effectively with the worldwide estate.  Local laws may override its terms particularly in the case of real (or immovable) property.  This is usually so when the succession rules of the jurisdiction in question prescribe who should inherit and do allow a testator to choose who that should be (a system often referred to as forced heirship).

Where the deceased died owning assets abroad, it may also necessary for the PRs to apply for a separate grant in that jurisdiction. This can include jurisdictions as close to home as the Channel Islands and the Isle of Man.

When dealing with an estate involving an international element it is important to seek professional advice from the outset. This will usually involve having to engage a local lawyer to assist with the legal and fiscal obligations in the countries involved. We can help co-ordinate this, acting as a central reference point for the PRs and co-ordinating advice from advisers in foreign jurisdictions.

A beneficiary of an estate can vary his entitlement in order to benefit someone else in his stead.  This is achieved by the beneficiary signing a Deed of Variation.

The Deed may redirect an inheritance so that it passes to an individual outright or so that it is held on trust.

The effect of a properly drafted Deed of Variation is to ‘read back’ into the Will the terms of the new arrangement.  Special tax provisions apply which for inheritance tax and capital gains tax purposes allow the beneficiary’s gift to be taxed as though it had been made by the deceased.

For inheritance tax purposes it means that the person making the variation is not treated as having made a taxable gift. He is treated as never having owned the asset being redirected.

For capital gains tax purposes it means that the person varying their entitlement does not make a chargeable disposal. Capital gains tax will not be charged until the asset is disposed of by the new beneficiary.

A Deed of Variation can be made whether or not the administration of the estate is complete, or whether the beneficiary has already received the assets they wish to redirect. There is, however, a strict time limit. The Deed must be dated within two years of death in order to obtain the inheritance tax and capital gains tax advantages.

We have a wealth of experience in advising beneficiaries on Deeds of Variation and would encourage anyone considering forgoing their inheritance to contact us to discuss the options available to them.

Assets which are considered to be of national interest (referred to as “heritage assets”) may qualify for one of two principal reliefs or exemptions from tax. 

The estate may include assets which qualify for some form of inheritance tax relief.

The most common forms of relief include business property relief, agricultural property relief and conditional exemption on heritage assets.

The rules governing the application of each relief are complex and we would encourage you to seek advice if you think the estate includes any assets which may qualify for a form of inheritance tax relief.

Business Property Relief (BPR)

BPR most commonly applies where the deceased owned a qualifying business, assets used in a qualifying business, or shares in an unlisted company.

It can also apply in other limited circumstances such as where the deceased had a controlling interest in a listed company.

The relief works by reducing the value of the asset in question when calculating the inheritance tax due on the estate.  Relief is available at a rate of 100% or 50% depending on the nature of the asset involved.

To qualify for the relief, the deceased must have owned the asset for a minimum of 2 years prior to their death.

The business or company in question must also be a trading business. BPR is not available if the business wholly or mainly deals with securities, stocks or shares, land or buildings or in making or holding investments.

 

Agricultural Property Relief (APR)

APR may be available where the estate includes assets that were owned and occupied for agricultural purposes. This most commonly includes farm land and buildings.

As with BPR, the relief works by reducing the value of the asset in question when calculating the inheritance tax due on the estate. Relief is available at a rate of 100% or 50% depending on the circumstances involved.

There is also a minimum period of ownership test; either 2 years or 7 years depending on whether it was the deceased or someone else who occupied the agricultural property.

 

Heritage assets

The first is conditional exemption.

As the name suggests, the exemption is conditional on the owner fulfilling certain obligations in connection with the asset.  The most significant of these is to allow the public access to view or enjoy the asset in question.  The obligations are set out in an agreement with HMRC (known as “an undertaking”).  In addition to the public access arrangements the undertaking will include promises to insure and maintain the asset and to keep it in the UK.    

Conditional exemption allows Inheritance Tax to be deferred until the asset is disposed of (be that on death or during the owner’s lifetime), or there is a breach of any of the terms of the undertaking.   If the asset is given away or passed on the exemption can be carried forward to the new owner provided they can give a satisfactory new undertaking. 

Heritage assets often pass from one generation to the next and you may find yourself dealing with an estate which includes an asset subject to an existing undertaking.  You will then need to decide whether the undertaking should be renewed.  That will usually turn on the tax that would be payable on loss of the exemption and the ability and appetite for the new owner to enter a new undertaking.  Calculating the tax that is due when the exemption is lost involves the rates and values at the time and the way in which the asset arrived with the existing owner. 

The second is the “Acceptance in Lieu” scheme.

Here the heritage assets are used towards payment of the inheritance tax due on the estate as a whole. The asset is given to the nation in exchange for a tax reduction of an equivalent value.  Given the asset is not put on the open market the value is negotiated between valuers acting for the parties, but enhanced by the “douceur”, an extra amount given as an incentive not to sell the asset into private ownership. 

The aim of these two heritage schemes is to help keep the nation’s heritage available for the nation to enjoy. Usually an asset accepted in lieu is then moved to a suitable public gallery, but arrangements can be made for the asset to be kept in place and enjoyed in its original context.  This is called an acceptance in lieu in situ.  It will invariably require public access and so is more commonly used where a house is already open to the public or would be suitable for public opening.

There are occasions when Personal Representatives (also called either Executors or Administrators, or PRs for short) don’t wish to act, have died, don’t have capacity to act, or cannot be found.   In many cases this does not present a problem, but there will be occasions when it does, for example when there are no others appointed.

 

It may also be that PRs embark on the administration and find themselves unable to see it through.

 

And in some cases there will be PRs who whether deliberately, accidentally, or through lack of the appropriate skill or knowledge, fail to carry out their responsibilities properly.

 

When we are acting for the PRs in the administration we will be able to help and guide them through the process and advise on the difficult decisions and situations and in extreme cases help defend them against challenges from beneficiaries, or third parties.   We can also step in to help PRs who may have been administering the estate without professional help, or with professional help which has proved to be wrong or inadequate.

 

But we can also act for beneficiaries or third parties who are having difficulty with the PRs, ensuring that they do act appropriately, or seeking compensation from them for their failings.   There may be occasions when beneficiaries want to see PRs removed and replaced.  And again we can help with that too.

If a deceased was a shareholder or partner in an unlisted business there are likely to be added complications in the administration of his estate.

Executors will need to decide whether and when to dispose of the shares.  There may be predetermined rules for that, whether in the articles of the company or in a separate shareholders’ agreement.   In some cases this might mean a sale of the whole company, or even a winding up if there are no buyers.

Valuing the shareholding may be complicated as there are various bases on which to do that, and those who might want to take up the shares will want a low valuation while the executors will want a high one.   If those who want to buy are involved in the company then they will be in a better position to argue for their value since they will know more about the company than the executors who may be coming to it for the first time.

It is also important to remember that what the deceased owned was shares in a company, and not the assets which the company held.  This can be particularly confusing or frustrating if the company is an investment company which might hold property for example, or a business which owns its own premises.  

If the business was a partnership then there will technically be a dissolution of the partnership and division of assets, but in practice where the partnership is large there will be provisions in the partnership agreement which prescribe what should happen on the death of a partner.   It is also worth noting that a partner’s right is limited to what stands to his share of the capital account.  It is not a right to extract particular assets, although often assets may be distributed in satisfaction of that right.

It is not uncommon for executors to be appointed because they are involved in the business whether as a partner, director or fellow shareholder.  That may create a conflicts of interest which will have to be managed carefully.

The rule that says if 10% of the chargeable estate passes to charity the rest qualifies for a lower rate of Inheritance Tax can present an unexpected bonus.  Sometimes what a testator leaves to charity is less than the necessary 10% but there are cases where increasing that to the level required (for example by a deed of variation) actually increases what is to pass to the non-charity residuary beneficiaries.  Click here to find out more. 

There can be occasions where disputes arise during the course of administering an estate. Should that be the case then we are well placed to deal with these, involving the appropriate expertise within the team to assist either on an ad hoc basis or to take over the running of a matter. Find out more.

– Administering an estate;
– International probate;
– Deeds of variation;
– Specialist inheritance tax advice;
– Business Property Relief (BPR);
– Agricultural Property Relief (APR);
– Conditional exemption;
Contesting a will or an estate

Key Contact
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Louise Sargent

Senior Associate

+44 (0)20 7591 3372

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Claire Tyrrell

Probate Manager (Senior Associate)

+44 (0)1892 506 012

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Paul Fairbairn

Partner

+44 (0)1892 506 350

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Ray Bennett

Probate Manager (Senior Associate)

+44 (0)1892 506 120

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Harriet Page

Associate

+44 (0)20 7591 3309

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Francesca Salliss

Legal Secretary

+44 (0)1892 765 411

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Katharina Reibach

Associate

+44 (0)20 7591 3304

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Kate Arnold

Partner

+44 (0)1892 506 337

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Jackie Farrington

Legal Secretary

+44 (0)1892 765 435

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Jeremy Curtis

Partner – Head of London

+44 (0)20 7591 3324

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Victoria Fairley

Partner

+44 (0)20 7591 3306

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Greg Fletcher

Associate

+44 (0)20 7591 3363

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Stephanie Palmer

Legal Secretary

+44 (0)20 7591 3326

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Jessica Jamieson

Partner

+44 (0)1892 506 019

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Dominic Ribet

Managing Associate

+44 (0)20 7591 3321

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Suzanne Chiles

Legal Secretary Team Leader

+44 (0)1892 506 320

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Sophie Rowe

Probate Manager

+44 (0)1892 506 252

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Tara Payne

Probate Manager

+44 (0)1892 506 285

Our experience in this area is extensive covering high and low value, routine and complex. 

This includes everything from simple spouse to spouse “first death” estates comprising house, personal possessions, cash, and shares, to involved multijurisdictional estates with business interests, complex asset ownership structures, and intricate tax compliance and planning. 

We can advise on intestate (where there is no will) and insolvent (where the liabilities exceed the value of the assets) estates.

We work with advisers outside the UK who need advice and assistance in dealing with UK assets on a death. 

We can also act as professional independent executors or trustees(if necessary through our corporate trustee) for example in contentious estates at the request and agreement of the parties or following appointment by the Court.

While we will consider and will be happy to take on all cases we generally find the level of our fees make us less cost effective for estates with a value below £1m, unless these are part of a wider administration, for example the UK elements of an international estate, or the winding of up more substantial trusts of which the deceased was a beneficiary.

 

Examples of some of our more involved cases include:

  • Acting in the administration of an estate which comprised a wholly owned private company, a number of joint venture property investments, a series of failed lifetime gifts, and an overseas claim against the deceased brought after the death
  • Acting for the executors of whom one was the estranged husband of the deceased who was to share the estate with his minor son. The husband brought a claim against the estate for greater financial provision, and also against a related trust from which the deceased was entitled to the income during her life.
  • Acting for the administrators of an estate where the deceased died unexpectedly and intestate, leaving children from a first marriage, a second wife and minor children from the second marriage. He was also a beneficiary or a substantial family trust which had granted leases of certain property to the deceased.  He owned a majority stake in a private business, which was disposed of through a management buyout.
  • Acting as executors of an estate and trustees of a number of related trusts passing on the death of the testator to distant family members who wished to donate part to charity. Identifying and implementing an arrangement across all the estate and trusts to secure a gift to charity sufficiently large to qualify the estate for a reduced rate of inheritance tax the net effect of which was to create additional value for the beneficiaries which additional value was given to the charity.  The trusts were further extended for some of the family who wished to keep funds in trust longer term.
  • Advice to the executors of a substantial estate (in excess of £100m) holding a number of property interests including co-ownership shares, units in privately owned unit trusts, and wholly owned property companies in the UK and off-shore, distributed amongst a wide class of beneficiaries. The size of the estate required us to design and maintain a comprehensive system for managing the process the effect of which was to bring the estate very quickly to a position where distributions could be made.
  • Assuming the executorship part way through the administration of an estate where the appointed executor took ill and had to be removed by application to the court. The estate comprised a valuable collection of art works which were bequeathed to museums in the UK and abroad.  The residue of the estate was bequeathed to a non-existent charity but for a specific purpose. Negotiating with the Charity Commission and those who would otherwise have benefited to secure a successful gift to a charity which most closely reflected the wishes of the testator. 
  • Acting for the executors of a substantial estate of a UK resident and domiciled testator with assets in US, France, Switzerland and the UK, coordinating advice from the different jurisdictions and working with advisers outside the UK to ensure appropriate credits secured in the right jurisdiction to avoid double charges to inheritance tax and its overseas equivalent.
  • Advising the executors of the estate of a life tenant of a settled land act settlement, in concert with advising the trustees, on the handover of the landed estate the subject of the settlement, including renewal of undertakings and securing conditional exemption of the main house previously designated and the object of a maintenance fund.
  • Advising the executors of two related estates which included heritage property, assisting in the negotiations for a successful offer in lieu of Inheritance Tax and deeds of variation to both estates to maximize the inheritance tax reliefs available.

FAQ’s

What will be expected of me if I am asked to act
as
a Personal Representative (PR)?

You have a duty to act diligently and in the best interest of the estate and the Beneficiaries.

Although we take on most of the administrative work and provide advice throughout the process, you will be making the key decisions, for example whether to accept an offer on the house, when to distribute and how much, and whether to distribute assets instead of cash.

We will normally ask you to distribute and dispose of the household goods and personal possessions. At the end of the Administration financial accounts of the Administration (‘Estate Accounts’) are usually prepared for the “PRs” or for “you” to sign. Apart from acting as a useful record of the estate such accounts help show the Beneficiaries that you have discharged your duties properly.

Do I have to act if I am named as an executor, or am I entitled to act as an administrator?

You have three options:-

  1. Take up the appointment. You should be aware that once you have taken up the appointment you cannot retire from it until the Administration is complete. There are exceptional circumstances such as severe ill health which would allow you to retire before then. Additionally if the Will or intestacy creates on-going trusts, you will become a trustee of that trust (unless the Will directs otherwise) and so your obligations will continue beyond the administration period. You can retire as a trustee, provided there are enough trustees who are continuing, or if not, if you are replaced by a suitable person.
  2. Do not take up the appointment – “renounce probate”. You may not then interfere in the Administration and you will have no say in any decisions taken.
  3. Retain the option to join in at a later date – have “power reserved”. In practice joining in later causes additional work and so normally it is only done when absolutely necessary for example on the death of one of the other PRs.

Can I become liable for the debts of the deceased or the estate?

No. The debts of the deceased are met from the deceased’s assets.

If however you distribute assets before all debts have been paid, or ascertained, you may find yourself liable for debts which you later discover. This will be so if you have not retained enough money to meet those debts. You can protect yourself from unknown creditors by placing notices in a prescribed form and in prescribed publications. This is sensible when you are not familiar with the deceased’s financial affairs.

If the assets of the estate are insufficient to meet the debts, the estate is insolvent. A special process needs to be followed in winding up an insolvent estate, but to the extent that there are insufficient assets to meet all the debts in full any remaining unpaid debts are in effect written off.  It is vital that PRs approach the administration in a cautious manner in the case of an insolvent estate and take professional advice as appropriate.

Am I responsible for foreign assets?

What happens to foreign assets, and who is ultimately responsible for them will depend on a number of factors, including the relevant foreign law. This is a specialist area, but one in which we have the necessary expertise to advise.

Even where there are no assets in the UK, but the PRs are based in the UK we can act for PRs in a
co-ordinating capacity by acting as a central reference point for the PRs, co-ordinating advice from advisers in foreign jurisdictions, and ensuring that the PRs’ UK legal and fiscal obligations are satisfied.

How much will I get?

If the Will is specific about what you are to receive, for example a fixed sum of money or a particular possession, then provided the deceased left enough money, or the possession in question, you can expect to receive that sum or possession.

If the deceased no longer owns the possession then you are not entitled to a substitute, or the cash equivalent. You will receive nothing.

If there are insufficient assets in the estate, then your cash gift will be reduced proportionately with the other cash gifts.

If you are to receive a prescribed share of the estate, for example “one half of”, then you are what is called a Residuary Beneficiary. Your share will be of “Residue” that is to say what is left after all tax, debts, specific gifts and administration costs have been taken. How much you will receive will depend of course on the value of the assets, and the extent of the liabilities, gifts, tax, and costs.

The entitlement of Beneficiaries who take a share is subject to the interests of those left a specified sum of money or item. It is possible therefore that the former will receive nothing while the latter receive their entitlement in full.

At the stage of obtaining the Grant it should be possible to say with a fair degree of accuracy what your entitlement might be, but it will not be possible to say exactly how much you will get until the Administration is complete.

As a Residuary Beneficiary, you should expect to see the Estate Accounts which will give you a full picture of the Administration of the estate and show how your entitlement has been calculated.

When will I get it?

Usually gifts of possessions and of fixed amounts
of cash can be made as soon as the PRs have obtained a Grant and have control of enough cash. In a straightforward case this should be between 6 and 9 months after the death.

If you are entitled to a share of the estate then you could normally expect an interim distribution at any time after the liabilities and fixed legacies of the estate have been paid. A final distribution will only be made on completion of the Administration which at best will be shortly within a year of the death.

There are no hard and fast rules, and in complex estates it may take much longer.

If you are entitled to a fixed amount of cash, you are entitled to interest on that amount from the first anniversary of the death.

Do I have to pay tax on what I get?
It is usual for all taxes to have been paid by the PRs. It is possible you will have an income tax liability on some of what you receive. If that is the case the PRs should provide you with the information necessary for you to deal with this.

The exact tax treatment of distributions and of gifts made by the deceased before he or she died is a complex area and will differ in each estate. We will advise you as necessary in each case.

What can I do if I don’t think the PRs are doing their job properly?

If you are unable to obtain satisfactory explanations for the way the estate is being administered then you can apply to the court if necessary to have the PRs removed and others appointed in their place. You can also apply to the court for an order that the PRs prepare full accounts of the estate.

Such a court application should be a last resort only. You should always try to resolve your concerns between you; indeed the court will expect you to do so and you could be liable for costs if you do not talk first to the PRs and their solicitors.

What happens if there is a dispute?
It is possible that a disappointed friend or member of the family may seek to challenge the Will. This might be because they allege the Will itself is invalid, or wrongly worded so that it does not correctly reflect the wishes of the deceased, or
that the deceased should have made provision for someone left out of the will.

If you think there may be a dispute about the Will or you believe there are grounds for challenging the Will, please let us know immediately. We will be able to advise you and help you take any immediate action necessary to protect your position, and to act on your behalf in defending or bringing a claim.

What happens about trusts?
The trustees of the Trust will be responsible for ensuring that the Trust assets are properly dealt with following the death of a beneficiary of the Trust. However it is important for the PRs to liaise with the trustees, for a number of reasons: there may be undistributed benefit still due to the deceased beneficiary; the will may have a bearing on the how the Trust fund is to be distributed; and the value of the Trust may have to be taken into account in calculating the IHT due on the death.

Estate Accounts – what are they are why are they necessary?
Estate Accounts act as a record of the Administration of an estate. The exact form of the Accounts will vary depending on the size and complexity of the estate. Usually they start with a snapshot of the deceased’s assets and liabilities with values as at the date of death.

The main body of the Accounts show movements of cash and assets during the Administration period. A final section shows the entitlement of the Residuary Beneficiaries and shows any distributions made during the Administration.

Apart from standing as an accurate record of the Administration of the estate, they demonstrate to both PRs and Beneficiaries that the estate has been properly administered.

How long does it all take?
We aim to obtain a Grant within 6 to 9 months of the death, and to begin making distributions within a year. It is unusual to complete the process in much less than a year. Large and complicated estates can take longer. We will discuss likely timescales with you when we know the assets and liabilities comprised in the estate.

Exactly how long it will take will depend on how quickly information is provided to us and what sort of assets are included in the estate.

How much will it all cost?
We generally find legal fees for administering an estate work out between 1% and 4% of the gross value. A more accurate figure can be given when the full extent of the assets and liabilities are known.

Don't just take our word for it...