Distributing the Estate
DISTRIBUTING THE ESTATE
Once all assets have been realised and all debts paid, including any loan taken out to pay Inheritance Tax, you may distribute the estate in accordance with the will or rules of intestacy.
LEGACIES (WHERE THERE IS A WILL)
If the will contained several beneficiaries (people who inherit) and legacies (gifts to specific people)
you should take advice before distributing any assets.
Legacies can fail and therefore be invalid for several reasons.
Contact us for advice.
Executors are responsible for estate distribution therefore can be personally liable for mistakes.
Property can be transferred to a beneficiary rather than being sold. You can complete the relevant paperwork and submit to Land Registry.
Where you are following the intestacy provisions as the deceased left no valid will the distribution of the net estate (after all costs and debts have been paid) is determined by law based on the surviving family at date of death.
Remember as we noted before co-habitees who are not married or in a civil partnership are NOT included in the intestacy provisions and therefore do NOT inherit. If there is a co-habitee this may make probate contentious. You should seek legal advice.
Family at date of death:
Spouse only – spouse inherits everything if survives 28 days after the deceased.
Spouse & children – spouse inherits all personal chattels, £250,000 (or less if the estate is small), 50% of any remainder. Children inherit an equal share of the other 50%.
Spouse & near relatives (eg mother/father) – spouse inherits everything.
Children only – 100% shared equally
No spouse or children – 100% or an equal share (within each category) to 1. Parents, 2. Siblings.
The full lists of who should inherit are much longer than this so if none of these situations apply please contact us for advice.
If there is no one to inherit the estate passes to the Crown (government) ‘bona vacantia’.
RESIDUE TO BENEFICIARIES
The will should include an ‘everything else’ clause where the person or persons are named to receive the remainder of the estate after any legacies. The remainder should be split as per the terms of the will.
It is very common for an estate to consist of a property (family home), some investments or bank accounts, some liabilities, and only one or two beneficiaries (eg sons and daughters).
In this instance you may be able to deal with the estate in a relatively straightforward manner, paying debts once assets are realised.
But then it comes to selling the family home which may take some months.
You may decide to distribute the estate fully bar the sale of the property.
In this case you can request that your conveyancing solicitor sends funds from the sale of the property direct to the beneficiaries at completion.
INDEMNITY FROM BENEFICIARIES
If you are working on the accelerated 30 days to Probate timeline you will need to consider new creditors (see 'Creditors'). You can either part distribute and hold back partial funds to cover any new creditors, or you can require the beneficiaries to sign an indemnity letter confirming they will pay funds back into the estate if necessary. If the estate is complicated with many assets, debts and beneficiaries the most appropriate course of action is to wait until all matters are finalised and the creditors notice period has expired. Personal Representatives are ultimately responsible for the estate and any unpaid debts if distribution is too early.