According to research from October 2021, over 10% of over 75s in the UK have not made a Will. When someone dies without leaving a Will, known as dying intestate, it hands one of their relatives a role they may not have been expecting, as an Administrator must be appointed. In this blog, we aim to clarify what an Administrator of an estate does, and we also look at the help available if you find yourself in this position.
What is an Administrator of an estate?
The Administrator of an estate handles the deceased’s affairs when there is no Will. The Administrator of an estate is the same as an Executor of a Will. The difference is that the Administrator of the estate is not named in the Will, they are appointed by the court. The umbrella term for Administrators and Executors is Personal Representatives.
Who can act as an Administrator of an estate?
An Administrator must be appointed according to the Non-Contentious Probate Rules 1987. The Administration of Estates Act 1925 (commonly referred to as the rules of intestacy) outlines who can take on this role in England and Wales. This lists relatives of the deceased person in order of priority to handle the role of Administrator.
The person at the top of this list – often the spouse or civil partner of the deceased – has the right to apply for the role of Administrator. If there are multiple people entitled to apply (e.g. multiple children) then they can either act together, or anyone who does not want to be involved can step back. Up to four Administrators can be named on the Grant of Letters of Administration, which will be required before estate administration commences.
Ultimately, the court will appoint Administrator(s) according to the rules of intestacy. Therefore, if multiple people apply and cannot act together, the court will make the final decision as to who is named on the Grant.
Personal Representatives may also ask someone else to represent them, such as a professional estate administration provider like Kings Court Trust.
What are Letters of Administration?
The Administrator needs to apply to the court for a Grant of Letters of Administration. Administration of the estate should not begin until this is granted.
Letters of Administration provide the Personal Representative with the same rights as a Grant of Probate when there is a Will; the umbrella term for these is Grant of Representation. These documents give those administering the deceased’s estate permission to proceed.
Applying for Grant of Letters of Administration
Once appointed, the Administrator needs to apply for the Grant of Letters of Administration from the Probate Registry using form PA1A. This will give them the authority to handle the estate. They can then close bank accounts, handle any property, and submit Inheritance Tax forms to HMRC if necessary. Some bank accounts won’t require a Grant of Representation to release funds if they are below a certain amount, but this is subject to the individual financial institution. Learn more about probate thresholds for UK financial institutions.
Once Letters of Administration are granted, the Administrator of an estate is legally responsible for handling the remaining steps in accordance with the law. If they do not handle their duties correctly, it is possible one of the beneficiaries could open a dispute.
Kings Court Trust can apply for the Letters of Administration on behalf of the Administrator to relieve them of the complicated paperwork and stress. We can also help with the full estate administration process to take away the financial and legal burden from the Personal Representative. Find out more about our probate and estate administration solutions.
What does an Administrator of an estate do?
The role of the Administrator involves estate administration – in short, taking care of all of the deceased’s assets, debts, and taxes. They are also responsible for distributing inheritance to the beneficiaries of the estate once they have completed all other obligations.
Below is an overview of administering an estate, although much more could be involved in the process.
Gathering financial information
The Administrator must gather all financial documentation related to the deceased. This includes all bank accounts and insurance policies they held in their name.
They must notify all affected parties of the death of the individual. This includes sending certified copies of the death certificate to banks, utility companies, etc.
Securing property and post
It is important that only the Administrator has access to the post of the deceased person. They will handle all correspondence and ensure that it is secure.
They will also make sure that the deceased's property is secure. This includes putting in place buildings and contents insurance.
Calculating debts and valuing the estate
Once all the assets and outstanding debts have been identified, the Administrator can begin to value the estate. They will calculate all liabilities (mortgages, debts, loans, etc.) and all assets (property, bank accounts, personal possessions, etc.). The Administrator must also review all gifts the deceased made in the last 7 years.
They will then arrive at an estimated valuation. This will determine whether there is any Inheritance Tax to pay. Currently, the threshold is £325,000, meaning that the first £325,000 of an estate is not subject to Inheritance Tax.
There are certain requirements that make an estate an ‘excepted estate’; this can affect reporting requirements. Read our blog on Inheritance Tax reporting for excepted estates. Additionally, there will be no Inheritance Tax to pay if the entire estate passes to:
- the spouse or civil partner of the deceased person;
- a charity;
- a community amateur sports club; or
- the estate meets the excepted estate requirements.
Notify creditors and beneficiaries
Being the Administrator of an intestate estate is a big responsibility, as it involves working out and locating those who will benefit under the rules of intestacy. If there are issues in contacting beneficiaries, the estate may be at risk of claims against it. The Administrator is personally liable for making sure that the correct beneficiaries are identified. They may want to seek the help of a professional genealogist to ensure there are no mistakes made at this stage.
Another way to protect the Administrator against claims post-distribution, which also ensures that all the deceased’s debts are accounted for, is to put a statutory advertisement in place. This essentially makes sure that everyone with a claim to the estate has been given due notice.
A statutory advertisement is placed in the London Gazette newspaper for a minimum of two months. If the deceased person owned property, it is advisable to place the advertisement in the local paper for two months as well.
No funds should be distributed until the two months have elapsed. Once the two months are over, the Administrator is freed from personal liability for any claims made against the estate by unknown creditors or beneficiaries.
In addition to unknown creditors, anyone can make a claim on the estate (with a valid reason) and can be notified to the Administrator up to six months after the Letters of Administration have been granted. Therefore, it is not unusual for Administrators to delay distribution to beneficiaries until month seven if they are concerned about the family tree and other family members that may be entitled to some of the estate.
Prepare assets for distribution
The Administrator will need to open a bank account for the estate. They will then collect all the assets of the estate and close bank accounts that are now empty. They will also arrange for the sale of any property.
Before any distributions can be made, debts must be settled from the estate account. This includes paying any Inheritance Tax due. They must also calculate any Income Tax that the estate has become liable for during the administration period.
Capital Gains Tax may also be incurred if an asset increases in value during probate.
Distributing the estate to the beneficiaries
After settling all the debts, the Administrator can distribute the estate to the beneficiaries. The Administrator should provide a copy of the estate accounts to each beneficiary for their records.
Does an Administrator have to handle the estate administration themselves?
The process of administrating an estate can be long and complicated, potentially putting a great deal of stress on the Administrator. Above all else, they must fulfil their legal obligations and ensure that all parties are paid what they are owed. It requires a high level of attention to detail and can take up a lot of time.
An Administrator cannot be paid for this work. However, they can claim reasonable expenses for expenses incurred during the estate administration process. Learn more about what expenses can be deducted from the estate.
The Administrator can pass on the responsibility of dealing with the deceased’s estate to a professional if they wish. Here at Kings Court Trust, estate administration is all we do, and our expert teams know how to handle intestacy, locate missing beneficiaries, and deal with every stage of the process.
We offer a variety of award-winning probate and estate administration services to help families at the difficult time of losing a loved one. Whether there is a Will or not, our Client Services Team are on hand to offer free advice and guidance about the processes following a bereavement. They can help you determine the next steps and offer a no-obligation quote for our professional help.