How do Executors realise estate assets during Probate?
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Once Probate is granted, executors must then cash in the various assets that comprise the estate.
How executors cash in assets will differ from one asset type to the next, and even from one institution to the next (within the same asset category). Here, we take a look at the process, and if you are acting as an executor, how you can save time when it comes to cashing in assets.
Do Executors need Probate to cash in assets?
With a few exceptions, yes, executors will need the grant of probate to then cash in assets. The reason for this is that the only persons with legal authority to deal with an estate is the executors named in the grant of probate. If institutions pay out funds to someone else, and executor later appear, the institution may be liable to have to pay out a second time!
When is Probate not needed to cash in assets?
Some assets may be able to be dealt with without probate. National Savings will sometimes release funds pre probate. If the total estate is small in value, then institutions that might otherwise insist on seeing probate may release funds without it (eg banks). Assets held jointly to which the ‘right of survivorship’ applies will automatically pass on death to the surviving owners and all that is needed is to exhibit the death certificate.
Tips for Executors to speed things up when cashing in assets
It is a good idea to try to be one step ahead of things when dealing with the administration of an estate. And, try not to ‘double dig’ too. So, for example, when you are ‘establishing the estate’ and requesting date of death values for investments, banks, etc – take the opportunity to also ask each institution to provide any closure forms they will need signing, and/or details of what else they will need. You will then have that to hand, and have only had to contact them once, not twice!
When should Executors prepare the closure forms?
As above, executors should try to always be ‘one step ahead’. With that in mind, the obvious time to prepare the closure paperwork is once the probate application has been lodged with the Probate Registry.
The executors will have already established what institutions need what forms signing and or extra documentation (eg ID and or grant of probate). By preparing the paperwork before the grant of probate has been issued means that the moment the executors receive the grant, they can send the closure forms etc straight out as soon as it [probate] is received.
What do banks need to close accounts?
This is usually some form of written confirmation to close the account, together with an instruction on where the closing balance(s) should be sent, and of course, a copy of the grant of probate.
As above – you should check with each bank when ‘establishing the estate’ exactly what they will want to close the accounts.
Another top tip! When sending the closure forms and grant of probate, ask that the bank provides closing interest/tax details to save having to contact them separately to gather that information.
Clearing and selling a house will often be the biggest job for the executors of an estate.
How do Executors sell Shares?
This can be done through the share registrar of alternatively through a suitable independent advisor (eg stockbroker).
What about assets managed through an IFA?
If the deceased held assets managed through an independent financial advisor (IFA) they will be able to provide you with all of the necessary closure forms etc.
How do Executors deal with assets abroad?
It is very unlikely that a UK grant of probate will be accepted abroad. This is a whole subject of its and own and beyond the scope of this article.
How do Executors sell the deceased’s house?
Executor’s will deal with the sale of the house just as they would their own. As with other assets, the grant of probate will be needed. Indeed, a purchaser will only ‘exchange contracts’ once the grant is issued.
That’s not to say that the executors can not or should not market the property relatively soon after the testator has passed away if they feel it right. Indeed, houses can prove a particularly time consuming and burdensome part of the administration of any estate. Most insurers will require the executors to visit regularly (weekly typically), and simply ensuring it is secure and issue free is really important. It is often sensible therefore to start to market the property sooner than later. Buyers will be aware that it is a probate sale, and that the grant of probate will be needed for exchange of contracts to happen. Typically, the probate application will ‘catch up’ with the house sale in good time.
What should Executors do with the asset proceeds?
Executors should hold all money in a designated executors account. They should NOT mix it with their own funds.
Once funds are available, the executors should pay any liabilities, and then can look to pay legacies and residuary distributions too.
They should produce estate accounts at the end of the period of administration detailing all payments in and out of the estate. This will include payment of cash legacies, and any interim distributions to residuary legatees.
Cash assets can generally be realised as soon as probate is granted. The sale of a house is of course more dependant on 101 other things and so it may be some time later the sale proceeds are received from the house sale. This is why executors should consider making interim distributions.
What needs to be done after assets have been realised and liabilities have been paid?
This is the bulk of the administration of the estate done. Assuming there are no complicating factors (eg negotiations with HMRC over the IHT valuations of unusual assets like businesses), then all that should need to happen is clearing the deceased’s income tax affairs. This can only happen once all money has been received, and indeed paid out, as this is likely to include ‘income’ for the period of administration which the executors will need to declare.
It is only once the executors have that HMRC clearance that they can release the final distributions to the residuary legatees. This can take months, and can be very frustrating for all concerned! The secret is to try to ensure (as an executor) that you have paid as much to the residuary beneficiaries as is safe (ie any retention is adequate to cover anticipated final costs without being overly cautious).
Want help with cashing in estate assets?
We hope you’ve found this article helpful. If you are an executor and want help with any aspect of probate, do reach out. Our expert probate solicitors are here to help! You can leave a comment below, call, or email us.
Do please remember that this article is not legal advice, and it (and any comments left) should not be taken as such.
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