The loss of a loved one is never pleasant. Dealing with their absence is however one of the things we must do. One of these things may include having to deal with their property, especially if they passed on without a Will. When this happens, you have to go through the process of applying for Letter of Administration. The grant of letter of administration is a legal document that gives you the ‘authority’ to ‘administer’ the estate of the deceased.
The ‘estate’ of the deceased covers their money (cash, investments, and balance in bank accounts), properties, personal and prized possessions, and other valuable items. This estate also covers the debts of the deceased.
What Is The Difference Between An Executor And An Administrator?
The duties of the executor or the administrator are essentially the same. The difference lies in the way they are appointed. When a person dies and they leave a Will behind, the persons appointed to manage the estate are called Executors. On the other hand, when a loved one dies intestate (without a will), the persons tasked with managing the Estate are called Administrators.
For executors, the application submission is required for the grant of probate. The application process for probate is different for administrators. Also, even though the duties of both the executor and the administrator are said to be alike, the manner in which the duties and obligations are performed also differs. The Executor can only manage the Estate according to the intentions of the deceased as stated in the will. Since the deceased died without a will, the administrator must manage the Estate according to the laws of intestacy concerning succession.
When Is An Application For Letters Of Administration Required?
The letter of administration is required where the deceased died intestate, that is, without a Will. If the loved one died with a will, a Grant of Probate (not a letter of administration) will be required.
There are some other instances where you may be required to apply for the grant of a letter of administration. These include cases where:
- Where the will has been deemed invalid
- Original will is lost and a copy is not accepted
- Where executors have not been named in the will
- The executors so-named are by reason of incapacity unable to administer the estate.
Who Can Apply For A Letter Of Administration?
Upon the death of a loved one, it is important to first ascertain whether or not the deceased left a will. The will would have some named persons granting them the legal power to execute the estate. The named persons may then apply for a grant of probate.
It is advisable to first check with close persons, family members, family lawyers, or the bank of the deceased to ascertain whether or not a will exists.
In the absence of a Will, the rules of intestacy will then be used to determine who may or may not apply for the grant of letter of administration. The rules of intestacy also identify the hierarchy of persons who can apply for the letter of administration. It is accordingly placed in this order:
- The married or civil partner of the deceased
- The offspring(s) of the deceased (or grandchildren if the child is predeceased)
- The parent of the deceased
- The brother or sister of the deceased (or their children if they have predeceased)
- The half-brother or half-sister of the deceased (or their children if they have predeceased)
- The grandparents of the deceased
- Aunts and uncles of the deceased (or their children if they have predeceased)
- Half aunts and uncles of the deceased (or their children if they have predeceased)
- The Crown.
When Are Letters Of Administration Not Required?
Even though a grant of letter of administration is required for a person that died intestate, there are some exceptions to that requirement. A Letter of Administration will not be required if the value of the Estate is considered too small. In this instance means, a grant of letters of administration may not be necessary if it is realized that the total value of the estate is less than £10,000.
An application for letters of administration may also not be required in instances where the estate consists only of:
- Cash and personal possessions like cars and jewellery.
- Jointly owned property or bank accounts.
- Debts with a higher value than the assets.
- Life insurance policies and pension benefits.
It should be noted that you may be able to close some bank accounts even without a Letter of Administration. This is specifically for instances where the account does not contain a large sum of money. What a ‘large sum’ is varies from one bank to another. Each bank sets its own limits and it is advisable to first check with the bank of the deceased whether or not a Letter of Administration will be required.
How To Apply For The Grant Of Letters Of Administration
To get a grant of letters of administration, you have to submit an application to the probate registry. These are the essential steps involved in getting a grant of letters of administration:
- Consult a probate specialist to discuss the details and value of the estate
- Apply for the application
- Prepare the necessary tax forms to attach to the probate form for signature
- Send the application to the probate registry for approval
- If your application is approved, you’ll receive your letters of administration in the post.
To avoid making costly mistakes and save yourself the trouble and waste of time, you should engage the services of a professional probate service.
Documents Required For The Grant Of Letter Of Administration
To be granted the letter of administration, you need to prepare or fill out some necessary documents. These documents include:
- A copy of the death certificate (this will be given to you after you have registered the death of the relative)
- A probate application form. It is called Form PA1 in England and Wales and Form C1 in Scotland.
- The appropriate inheritance tax (IHT) form. This has to be filed in advance if it is due. Depending on the particular case, the IHT may however be deferred and paid in instalment.
How To Calculate The Inheritance Tax (IHT)
The inheritance tax must be calculated by the HMRC. To do this, you have to file the inheritance tax form. This is required even if you don’t require a Letter of Administration to deal with the estate. If the HMRC finds that the estate is taxable, you may have to pay the tax due before you get a grant of letters of administration.
There are some peculiarities about the inheritance that needs special attention. This is why the services of experts are recommended For instance, inheritance tax may not be due if the surviving spouse inherits the estate. Also, where the value of the estate is lesser than £325,000. However, the IHT may be due if some property or amount were gifted seven (7) years prior to the passing away of the person who died.
It is also possible to make a ‘variation’ on the amount of tax due. Such a variation will reduce the amount of inheritance tax (IHT) or capital gains tax (CGT) due. Where it is financially allowed, this will allow the estate to be treated as if there was a Will. The timeframe to do this however within two (2) years after the date of death of the loved one. For this variation to hold, the Beneficiaries to the intestacy must all be in agreement. Where one of the beneficiaries is under the age of 18, the Court will agree to the variation on their behalf.
Dealing With The Probate Registry
As become an administrator, you’ll be contacted by the Probate Registry for an interview. This is equally an important aspect of applying for the grant of letters of administration. Make sure you get all the required documents ready before going for the interview. The interview is a formality and you will be required to verify the necessary information on the legal paperwork.
If you are not chanced to go to the Probate Registry, you may send your probate solicitor or specialist to go in your stead.
What Happens After Visiting The Probate Registry?
After conducting the interview at the Probate Registry, you will be sent a letter that contains information on the amount of inheritance tax (IHT) due on the estate. It is not until after paying the IHT that the letters of administration will be sent to you.
The letters will contain the gross worth and net worth of the estate. The letters of administration are considered public documents. This means that they have to be produced upon request by anyone.
How Long Does It Take To Obtain A Letter Of Administration?
Normally, it should take you around 30 days to get a grant for the letters of administration. This is only for ‘straightforward’ cases. More complicated cases may take a considerably longer time to complete.
After your application has been granted and sent to you, the process after that may require you to close all accounts, disburse the property, and distribute assets to beneficiaries in accordance to the rules of intestacy. This process may take you between three to twelve months – or even more, depending on the size of the estate.
How Much Does A Letter Of Administration Cost?
The process of getting approval for the grant of letters of administration doesn’t come without financial cost. The cost varies, depending on the estate and whether or not you’re applying on your own. If the value of the estate is worth more than £5,000 after you have paid for funeral costs and settled other debts, the fixed application fee is £215. This is lessened to £155 if you engage the services of a probate solicitor or other professional probate service.
Additional professional fees will usually apply if you engage the services of firms providing probate valuation and legal support. This may range between 1 to 5% of the value of the estate.
What Happens Next?
Once you get approval and receive the Letters of Administration, you become authorized to administer the estate. Your duties will generally involve valuing the estate of the deceased, settling their debts and expenses, paying off their taxes, and dispensing the estate according to intestacy rules.
Before dispensing the estate, it should be noted that you must first put out advertisements asking for creditors to identify themselves. This will make sure that you fulfil all obligations and not incur any other personal liability.