Estate administration

Price transparency

Administration of estates – price and service information

Introduction

Each person’s estate administration is different. Some may be relatively simple and be concluded quickly whilst others can be much more complex for a variety of issues and take much longer to complete. It is therefore difficult to accurately estimate the fees which will be payable or how long it will take to complete the administration of the estate.

Also unexpected issues may arise during the administration process. If the estate includes a property which is to be sold it will not be possible to complete the administration until after the property is sold and sometimes there may be a delay in the sale.

Some estates have multiple assets and many beneficiaries whilst others may have few assets and a single beneficiary.

We charge by reference to the time spent dealing with the matter. Consequently any aspects which prove to be time consuming will increase the level of fees payable. Sometimes a high value estate may be simple and quick to administer and conversely a low value estate can be complicated. We would endeavour to be fair and reasonable having regard to the circumstances including the value of the estate.

The exact costs will depend on the individual circumstances applicable to the estate in question. We have set out below information on fees for certain types of estate. We also explain why some estates are straight forward and the main factors which make other estates more complicated or time consuming.

The fees mentioned below are for the general administration of the estate. A separate fee would be payable for the sale of a property in the estate.

Summary of estate administration

The first step is to ascertain whether a grant of representation is required, who is entitled to apply for it and who is entitled to share in the estate.

The second step is to ascertain details of the assets and liabilities of the estate and of other assets in which the deceased had an interest which do not form part of the estate devolving under the will or intestacy. Sometimes the deceased’s share of an asset held in joint names will pass to the surviving joint owner and not be an asset of the estate.

The next step is to consider which type of Inheritance Tax forms will be needed and to obtain the information to be inserted in them.

If the more detailed type of Inheritance Tax form (IHT400) is required this will need to be signed by the personal representatives and sent to HMRC. If the estate is liable to Inheritance Tax it will usually be necessary for some of the tax to be paid to HMRC before applying to the probate registry for the grant. Following submission of the IHT400 (and payment of tax, if any) HMRC will return form IHT421 which will then be sent to the probate registry with other documents on applying for the grant.

The appropriate form of Oath will be prepared for the personal representatives to sign which will be sent to the probate registry with the will, Form IHT421 and any other documents required. If the shorter type of Inheritance Tax form (IHT205) is appropriate this is sent to the probate registry with the will there being no need for an IHT421.

There are various types of grant of representation. If the will is being proved by the executors the grant is a grant of probate. If there was no will the grant will be a grant of letters of administration. Once the grant is issued by the probate registry official copies of it will be sent by us to the asset holders with appropriate other forms to sell or transfer the asset.

Out of the money received from the realisation of assets (e.g. closure of bank accounts or sale of investments) arrangements are made for the liabilities of the estate to be paid.

Once the liabilities have been paid or provided for consideration can be given to the payment of any legacies and to interim distributions being made to the residuary beneficiaries of the estate.

In some cases it will be necessary to defer paying legacies and interim distributions until after the period for claims has expired, which in some cases will be six months after the grant is issued.

Where the estate is liable to Inheritance Tax any tax which remains unpaid will need to be paid at the appropriate time. Where the tax is attributable to land it may be paid by instalments pending the sale of the property. Where an estate which is liable to Inheritance Tax includes a property which is to be sold the value of it for tax will not normally be agreed until it is sold. This enables the District Valuer to compare the initial estimated valuation with the price realised to arrive at what he concludes was the true market value at the date of death.

During the administration of the estate details of any adjustments to the value of assets and liabilities will be reported to HMRC together with details of any new assets or liabilities which come to light. Also the sale of any properties would be reported. This information will affect the amount of Inheritance Tax payable. It may also affect any available reliefs which in turn affect the amount of tax payable.

In some cases where property or investments are sold for less than the original date of death value it is possible claim a reduction in the Inheritance Tax liability.

Details of income and gains arising on the disposal of estate assets are reported to HMRC and any Income Tax or Capital Gains Tax due is paid.

After all liabilities have been paid and all taxes paid final distribution to the persons entitled can be made.

Estate accounts are prepared for the residuary beneficiaries. They are also given information on estate income to report in their personal income tax returns if they need to submit them.

Some factors which simplify or complicate the estate administration

Inheritance Tax is one of the main complications. Where it is payable it can involve complex issues regarding availability of reliefs, valuation of assets and liabilities, calculation of the liability, completion of forms, arranging payment at appropriate times and correspondence with HMRC and reaching agreement with them.

The administration will be more complicated where there the estate includes one or more properties. There will be ongoing liabilities to deal with pending sale or transfer and if the estate is liable to Inheritance Tax there will be a delay in ascertaining the tax liability.

The administration will be less time consuming where the entire estate goes to a surviving UK domiciled spouse. This is because usually there will be no Inheritance Tax liability.

The administration will be more time consuming where there are many assets, or where the assets are difficult to sell or transfer or there is a delay in sale or transfer. If investments are held through a stock broker nominee account this will less time consuming than if they are held directly whether certificated or uncertificated.

The administration will be more time consuming where there are more beneficiaries, particularly if there is difficulty in tracing them or ascertaining their entitlement.

The administration will be more complicated where the estate has unusual assets which raise issues regarding valuation or disposal, such as business interests, agricultural property, commercial property, works of art, other valuable chattels and heritage property.

Foreign issues may complicate matters.

Having to consider Inheritance Tax on lifetime gifts will increase costs. There may be delays in agreeing various types of tax liabilities for the period prior to death or for the administration period.

Where trusts are involved it will be more complicated.

Additional legal documentation may be needed such as Deeds of Variation or Deeds of Appointment.

Where numerous charities are beneficiaries this will complicate matters.

If any disputes arise between the interested parties or if claims are made against the estate this will increase costs.

If there are delays in the provision of information provided to us or if such information is inadequate this will increase costs.

Where there are a large number of investments producing income and capital transactions more time will need to be spent.

Simple Type of UK estate

This example assumes as follows

  • There is a will or intestacy where the estate goes to immediate family members and there is no uncertainty as to entitlement.
  • There is one residential property.
  • There are two bank accounts.
  • There are less than 10 investments.
  • There are no unusual assets.
  • There is no Inheritance Tax liability.
  • No claim to normal expenditure out of income exemption for lifetime gifts applies.
  • There are no disputes with HMRC, by beneficiaries or claims against the estate.

For this type of estate the anticipated fees would between £6,000 and £12,000 (plus VAT).

The anticipated timescale to complete the administration would be 8 to 12 months.

Middle Type of UK Estate

This example assumes as follows

  • There is a will or intestacy where the estate goes to immediate family members and there is no uncertainty as to entitlement.
  • There are less than 5 legacies.
  • There are one or two residential properties.
  • There are less than 5 bank accounts.
  • There are less than 20 investments which are held in a stock broker nominee account.
  • There are no unusual assets.
  • There is a liability to Inheritance Tax.
  • There are no disputes with HMRC, by beneficiaries or claims against the estate.

For this type of estate the anticipated fees would be between £12,000 and £25,000 (plus VAT).

The anticipated timescale to complete the administration would be 12 to 24 months.

Moderately complicated Type of UK Estate

This example assumes as follows

  • There is a will with various legacies and several residuary beneficiaries.
  • There are one or two residential properties and other land.
  • There several bank accounts.
  • There are a large number of investments held in a stock broker nominee account.
  • The deceased was entitled to income from a trust.
  • There is a business interest or other unusual asset.
  • Inheritance tax is payable.
  • There are no disputes with HMRC, by beneficiaries or claims against the estate.

For this type of estate anticipated fees would be between £25,000 and £60,000.

The anticipated timescale would be 18 to 30 months.

Exceptionally complicated high value estate

There is no way to estimate fees or time scale for such an estate. Fees would however be on a time basis.

Other expenses

These will vary considerably depending on the circumstances.

The amount of Inheritance Tax will depend on the value of the estate, the types of assets, the availability of reliefs and exemptions, the available nil rate band (if any) and residence nil rate band (if any) and status of beneficiaries.

There may also be Income Tax on estate income and Capital Gains Tax on gains made on disposals.

There could be fees payable for valuations of assets.

There will be a fee payable to the probate registry.

There may also be fees for advertisements.

There could be various other administration expenses (e.g. utility bills for properties).

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