your guide to executry administration

Transcription

1 your guide to executry administration

2 Dealing with the loss of a family member or friend is always difficult. If you are appointed as an Executor you will require to ensure that matters are dealt with after the death. Our aim at Mackinnons is to help you to understand your role and to assist you as much as you need through the executry procedures.

3 Executors Duties If you have been appointed as an Executor of the deceased s Estate under the Will, you may be unsure as to your and any fellow Executors duties and responsibilities. The Executors first responsibility is to ingather all the assets of the deceased i.e. the Estate as soon as practicable. However, before the Executors can begin to ingather the Estate usually Confirmation will require to be obtained from the Sheriff Court to establish the Executors legal authority to deal with and administer the Estate. If no Will has been left, it may also be necessary to request by petition for the Sheriff Court to appoint an Executor. The Court will also require an Executry Bond of Caution a type of insurance policy in most cases where there is no Will. Once Confirmation [ Probate in England] has been obtained and the Estate ingathered, the next duty of the Executors will be to pay any debts of the deceased, including any Inheritance Tax. Consideration can then be given to paying any legacies to beneficiaries specified in the Will. The final duty of the Executors is to pay out the residue of the Estate i.e. what is left after debts and legacies are met, to those people who are entitled to share in it i.e. residuary beneficiaries. In all these duties the Executors can be assisted by the professional advisors they choose to appoint. In most cases this will be a firm of Solicitors. Meeting with the Solicitor The first meeting with the Solicitor normally takes place shortly after the funeral. However if there are matters of pressing importance then an earlier meeting will be necessary. The Executors or next of kin should bring to the first meeting as much of the deceased s paper work as can be located. In particular, the following information and/or documents will be useful: The Extract Death Certificate from the Registrar of the Births, Deaths and Marriages Pension books and details of any other Pensions/ Benefits received. Bank books Bank statements Cheque books and cheque cards Building Society passbooks Life Insurance Policies Premium Savings Bonds National Savings Certificates and Bonds Insurance Certificates including house/contents insurance papers Title deeds and any other property related papers Income Tax papers Any outstanding accounts or debts due by the deceased Credit cards Vehicle registration documents and car insurance papers Passport Stocks, Shares and Unit Trust Certificates Dividend Counterfoils ISA, PEPS, Certificates and papers TESSA books/statements Any other papers which appear important If you are unable to identify all the appropriate paper work then Mackinnons will be able to assist you in the investigation of any missing items. If the Executors are not existing clients of Mackinnons they will be asked for proof of identity. This is a requirement of the Law Society of Scotland for the purposes of Money Laundering Regulations. You should bring with you to the first meeting therefore your own Passport [or other form of proof of identity bearing your photograph] and a recent utility bill or other evidence of your home address.

4 Small Estates Certain small Estates may be administered without the need to obtain Confirmation. In such situations Banks, Building Societies and Insurance Companies will provide Forms for completion by an Executor or, in some cases, by the next of kin. Where the value of an Estate does not exceed 25,000 the Sheriff Clerk s Office can advise and assist an Executor in obtaining Confirmation. The Sheriff Clerk s Office do not charge a fee for this service. Mackinnons can assist in the administration of even the smallest Executry. Our minimum fee for Executry administration is 500 plus VAT [see later for more information on fees]. Outline of Administration Procedures The administration of an Executry Estate comprises four stages, namely: 1. Investigation of the Estate After we receive the paper work referred to in Section 4 we will write to all those who hold assets for the deceased e.g. Banks, Building Societies and Insurance Companies to obtain an up to date value of the assets. If a house is owned it may be necessary to obtain a professional valuation from a Surveyor. It may also be necessary to obtain a valuation from a local Auctioneer of the deceased s furniture, jewellery and personal effects. Any Stocks and Shares of the deceased will also be valued by a Stockbroker. A small fee is payable for such valuations. Professional valuations are normally required where either the Estate is likely to attract Inheritance Tax or the residue is to be divided amongst a number of different residuary beneficiaries. Once the investigation has been completed an Inventory of the Estate, i.e. - a list of all the assets and liabilities of the deceased at the date of death, is drawn up for signature by the Executors. In addition a separate Inheritance Tax Return is required for estates above the Inheritance Tax threshold. Any Inheritance Tax payable on the Estate at this time must be paid to the Capital Taxes Office with the Inventory i.e. before it is lodged with the Sheriff Court for Confirmation to be issued and therefore before the Executors can deal with the assets of the deceased. This means that a loan for Inheritance Tax may require to be taken out with a Bank. Mackinnons can advise you regarding the arrangement of such a loan, if required. 2. Ingathering of Assets Once the Inventory has been lodged with the Sheriff Clerk, he will issue Confirmation, together with a series of Certificates of Confirmation. These Certificates are then sent to the holders of the various assets of the deceased e.g. Banks, Building Societies etcetera together with appropriate forms signed by the Executors, to allow us to transfer or ingather the Estate. 3. Payment of Debts and Legacies The next duty is to deal with payment of the debts of the deceased. Normally this would include all funeral expenses, general domestic accounts of the deceased, repayment of any overpaid private pensions or state benefits, and the loan for Inheritance Tax. You should note that creditors have six months from date of death to notify Executors of any outstanding debts, and therefore the estate should not be paid to beneficiaries until after this point. After payment of all the deceased s debts, the Executor can pay any cash or specific legacies provided for in the deceased s Will. We will normally send to each of the legatees a cheque for the amount of the legacy or arrange delivery of the items bequeathed together with a form of receipt acknowledging payment or receipt from the Executry. The form requires to be signed and returned by the person receiving the legacy. 4. Payment of Residue Following payment of the deceased s debts and any cash or specific legacies, the Will will provide how the residue of the Estate is to be distributed amongst the residuary beneficiaries. At this stage an Executry Account is prepared detailing all the assets in the Estate and how each asset has been dealt with during the course of the administration, to be approved by the Executors. From this Account the exact value of the residue can be established and payments made to the residuary beneficiaries. It may also be necessary at this stage to prepare Certificates detailing the amount of income received during the course of the administration and the amount of Tax deducted from that income. These R185E Certificates are passed on to the residuary beneficiaries to retain with their own papers and lodge with their Income Tax Return for the appropriate year.

5 Legal Rights Under Scots Law the surviving spouse and the children of the deceased person have certain rights in the Estate. These are known as Legal Rights. These rights apply whether or not the deceased has left a Will. These rights have been available under Scots Law for many years and form one of the unique aspects of our legal system. Legal Rights claims apply to what is termed moveable Estate, which essentially includes everything excluding land and buildings. As part of the administration we will enquire as to the existence of Legal Rights and will seek and obtain Discharges, where appropriate. The rights subsist for many years after the date of death and can be claimed up to twenty years after that date, or twenty years after the claimant attains the age of sixteen, whichever is the later. Legal Fees Our minimum fee for the administration of an Estate is 500 plus VAT. In all but very simple Estates, it is our normal practice to submit the files to either the Auditor of Court or to a professional firm of Law Accountants for the assessing of our fees. This means that the file is independently reviewed and a fair charge for the work undertaken is suggested. A charge is made by the party assessing the fees for this service which we normally anticipate will be paid from the Estate. Please note that if you do not wish this independent assessment of fees to be undertaken you should advise us as soon as possible. Once the final fee is assessed it is generally charged at the conclusion of the administration. Our Account will be fee d in accordance with the Law Society General Regulations. The fee is payable from the Estate as are all the costs of administration. It is also our practice to charge an interim fee for Estates following the obtaining of Confirmation [the usual charge at this time is up to 1% of the gross value of Estate]. In larger Estates, interim fees may be charged at other times. It is very difficult to estimate what the fees may be for the administration of a particular Estate. Circumstances vary enormously and often an Estate of low or moderate value can be as complicated or more complicated than Estates of larger value. This can be discussed in more detail at the initial meeting. How Long Will It Take? We are often asked how long the administration of an Estate will take. Unfortunately it is impossible accurately to predict the time scales to completion of an Executry: timing in these matters depends on a number of factors. However, it is often possible to complete the administration within the following time scales: Type of Estate Not including a house to be sold and not subject to Inheritance Tax [total value of assets less than 100,000] Total value of assets greater than 100,000 or including a house to be sold and not subject to Inheritance Tax Larger Estate [over 220,000 or subject to Inheritance Tax Examination] Likely time of Completion 6-8 months 8-12 months months Please note that the following matters may cause delays in the completion of the administration of an Estate: House to be sold Foreign assets Legal Rights claims Intestate Estate [no Will] Missing beneficiaries Inheritance Tax valuations and payments Income Tax aspects Outstanding debts Variation of Will Several Executors living at a distance [It is helpful to appoint one acting Executor to be the principal contact].

6 Your Own Will and Tax Planning We recommend that everyone should consider planning ahead and making a Will. Our Wills preparation service is speedy, efficient and reasonably priced and we would be pleased to assist you in this respect if required. If you have already made a Will, it is important to review this as your life circumstances change or at least every five-ten years. Please ask for one of the explanatory Wills leaflets. If your Estate is large or complex our Estate planning service may be of interest to you. Mackinnons have developed a high level of expertise in this area through having a Specialist Private Client Department. Investing Legacies Many beneficiaries are unsure as to how they should deal with the investment of monies received from an Estate. Mackinnons can recommend the services of various Independent Financial Advisors. Unlike some Banks and Building Societies these Independent Advisors will be not be tied to any Insurance Company or other financial services provider and can therefore give independent advice or review the recommendations of other non Independent Advisors. We understand how difficult and upsetting it can be dealing with the estate of a family member or friend. We believe that we have the expertise and understanding to assist you as much as you require at this time, and hope to make the process as straightforward and painless as possible for you.

7 Other information leaflets available include: your guide to granting a power of attorney your guide to residential & nursing care your guide to bereavement make your will with mackinnons

8 your guide to executry administration with Mackinnons. Please contact your local office for further, more detailed information. Offices located at: Aberdeen Osborne Pl Albert Ln Albert Pl Albert St Cults Manor Pl Kirk Brae Aboyne B9094 Ballater Rd A93 Prince Arthur St Carden Pl Albert Ter Waverley Pl Cults Av School Rd North Deeside Rd South Av St Devenicks Pl Ballater Rd A93 Charlestown Rd Rubislaw Ter Ln Deeview Rd South B968 Birsemore B Carden Place Aberdeen AB10 1UR Tel: North Deeside Road Cults, Aberdeen AB15 9SX Tel: Ballater Road Aboyne, Aberdeenshire AB34 5HN Tel: