There seem to be many reasons for dying intestate. Inertia may be the culprit; or the (usually mistaken) beliefs that “my partner will get everything” or “I haven’t got anything to leave.” Occasionally intestacy may arise accidentally, for example where a will has been prepared but not signed, or, for whatever other reason, fails.
There is no need to die intestate. Doing so can cause real problems for those left behind, beyond the distress naturally associated with being bereaved. However, with professional help, there’s no reason why the administration of the estate should not proceed smoothly.
Who owns the assets in the estate?
Where there’s a will, the assets in the deceased’s estate vest in the executor(s) from the moment of the testator’s death. The chain of ownership is unbroken and the executor(s) can get on with applying for the grant of probate and administering the estate.
But what happens when there’s no will? What happens to the assets between the death of the intestate and the extraction of the grant of letters of administration? Who owns them? The truth is that, although the assets vest in the Official Solicitor until the grant is extracted, very little, if anything, can be done until that point. However, there will be practical things that will nonetheless need doing. Does the deceased’s house need to be insured? Who has the keys? Who has the right to enter the property? Are there pets to be fed or re-homed? Who is entitled to the grant of letters of administration? How will they get it?
Things to do
At Kings Court we have administered many hundreds of intestate estates. We have years of experience of correctly identifying the person(s) entitled to the grant of letters of administration and either helping them with the application or, as people more usually prefer, applying for the grant on their behalf.
Getting the grant
As a general rule, the person(s) entitled to the grant of letters of administration is the next of kin. In this context, next of kin has a specific legal meaning and may not always be the person that one might think of as being one’s next of kin. For instance, co-habitants are out but parents might be in. Depending on the family circumstances, the next of kin might be a nephew or niece once removed or, perhaps, a distant cousin. If the latter, the next of kin could be someone who never knew the deceased existed, much less knew that they were related: it happens - frequently.
The process of identifying the entitled next of kin is known as clearing off and the person(s) who apply for and extract the grant of letters of administration are called administrators. When they take the grant, they must swear that they are entitled to do so and that no-one else has a better entitlement. This is a risk to the uninitiated – a risk easily laid off by getting professional help. However, the risk to the administrators (and, arguably, to the beneficiaries) on distribution of the estate is far greater – as we shall see.
Personal liability
So, once the administrators have been appointed – and accepted the personal liability to Her Majesty’s Revenue & Customs and to the beneficiaries that goes with the job – they can get on with administering the estate: collecting in the deceased’s assets and turning them into cash, settling the liabilities (any debts, inheritance tax etc) and correctly distributing the balance amongst the heirs.
The administrators’ liability to HMRC and the beneficiaries should not be underestimated. If they underpay inheritance tax, or any other tax (e.g. on income to the deceased in the final year and to the estate during administration), or inadvertently distribute the estate incorrectly, it is they personally, and not the estate, who will have to account for any shortfall. The role of administrator is fraught with more risks than that of executor.
Distribution conundrum
Distribution of an intestate estate can cause a real headache: the next of kin must be identified correctly, as with the clearing off process necessary to identify the administrator. However, once you know who all the beneficiaries are (and many families these days are quite fluid in structure) you need to know where they are (and many families these days are quite widely dispersed) and how much to pay each family member. Woe betide the administrator who simply divides the distributable estate by the number of beneficiaries and pays out on that basis. The amount payable to each beneficiary can depend on how many other members of each beneficiary’s immediate family there are as well as on the degree of kinship between each beneficiary and the deceased.
How a professional can help
As we’ve seen, there’s quite a lot more to administering an intestate estate than there is to dealing with a straightforward estate with a will. Prompt action is essential. An experienced professional will be able to take on all the necessary tasks and deal with them easily, quickly and cost-effectively. They will take on all the risk and liability to HMRC and the beneficiaries and, should something go awry, will have the necessary professional indemnity insurances in place to put everything right. Above all, a professional will have the experience to deliver an estate, cleanly administered from grant application to final distribution, for a guaranteed fixed price agreed with you in advance.