Are there any time restraints for taking out a Grant of Probate and administering an estate?
There are no strict legal timescales for administering an estate however there are a few things an executor may like to consider.
- Executors are under a general duty to administer the estate properly and not unduly delay the payment of legacies. General legacies of money should be paid within 12 months of death (called the ‘Executors’ Year’) and if payment is delayed beyond a year (for whatever reason – sometimes delay in unavoidable, or the estate simply takes that long to deal with) the beneficiary is entitled to receive interest on top of their legacy calculated from the year anniversary of death.
- If the estate requires a Grant of Probate (for example it contains a property) an inventory of the estate must be provided to HMRC. The longer the time passes between death and administration, the more difficult it can be to gather the necessary information and ensure its accuracy.
- If the estate bears Inheritance Tax (40% of the value of the estate above the current threshold value of £325,000), it needs to be paid within 6 months of the date of death. After 6 months, interest accrues to the amount due. Executors could be at risk from the beneficiaries complaining about the estate being reduced by the interest paid.
- Also, if the estate bears Inheritance Tax, there is a deadline of 12 months from date of death to submit the relevant form (IHT400). If this is not done and the tax is not paid, then as well as interest, the Executors will be liable to pay penalties to HMRC.
- If the beneficiaries of the estate wish to amend the provisions of the Will, then they can use a Deed of Variation to adjust these without the usual tax consequences which would apply if they simply made a gift themselves. However to engage the tax benefits, this must be done within 2 years of date of death.
- If there is likely to be a claim on the estate under the Inheritance (Provision for Family & Dependants) Act 1975, then the potential claimant has a time limit of 6 months from date of Grant of Probate to issue their claim. Any delay in securing the Grant will extend their time to issue a claim.
- If the Executor fails send the death certificate to banks etc., then accounts will not be frozen hence leaving the accounts open to fraudulent activity.
- Also, unless pension companies are notified of a death, they will continue to make pension payment, resulting in a potentially significant amount needing to be repaid by the Executor when they do eventually engage in the process.
- And finally… There’s also the risk that if an Executor does not deal promptly and properly, the beneficiaries of the estate may make an application to Court to have them removed as an executor.
Case study
- The executor is also the sole beneficiary of the estate.
- There is no inheritance tax due.
- The executor did notify all banks of the death.
- For personal reasons the client did not get round to applying for a Grant of Probate to close everything down and kick start the official process.
The only impact on this executor (and sole beneficiary’s) inheritance, are the potential losses through interest and charges incurred as a result of delaying the process.
If you would like more information relating to Grant of Probate matters, please contact Kathryn Caple on kathryn.caple@elselaw.co.uk or 01283 526230.