Being named as an executor
It’s important to understand that the fact of being named as an executor does not require you to accept the role of executor. This holds even if you agreed to it previously. If you do not wish to act as an executor, you have 2 options. The first is to appoint someone else to act instead. The second is simply to complete a form of renunciation. In the latter case, a different executor or an administrator will be appointed using standard rules.
For more information, read Elements of a will.
The basic duties of an executor
Executors are legally responsible for the deceased’s estate (ie all of their money, property, and possessions, and anything else they owned). This responsibility starts on the date of the deceased’s death and lasts until all assets have been passed on to the relevant beneficiaries (ie those entitled to inherit). This is the ‘administration period’.
An executor’s duties start with ensuring that the death is registered (this has to be done within 5 days in England and Wales and within 8 days in Scotland) and the funeral arranged (eg in accordance with the deceased’s Funeral plan).
If the deceased was receiving any state benefits or private pensions, then you will need to inform the relevant authorities promptly. You’ll also need to contact HMRC and key service providers such as banks and insurers. You can use HMRC’s Tell Us Once service to report a death to most government organisations in one go.
If the deceased rented their home, you should be able to wind up their utility bills immediately. If, however, they owned their home, then the process for dealing with the bills will differ according to what is to happen with the property. Typically, the bills will either be transferred or the account will be put on hold and settled when the property is sold.
The bulk of the executor’s work, however, will typically revolve around the winding up of the deceased’s estate.
As a rule of thumb, in England and Wales, if the deceased’s estate included any property or a large amount of money held in accounts, you will need to apply for probate in order to have the legal right to deal with these assets. If this doesn’t apply, you can usually act without probate but in accordance with the deceased’s will. In Scotland, you will have to apply for confirmation (a right similar to probate) in most circumstances.
Valuing the deceased’s estate
Executors need to have the estate accurately valued so that they can determine its inheritance tax (IHT) liability (if any). When valuing the estate, you need to create an inventory of any assets and find out their realistic selling price on the open market.
You may need to include gifts made within the last 7 years. You should, however, make sure that you are only valuing the deceased’s share of any property. For example, if they had equal joint ownership of a house, then their estate may contain only half the overall value of the house.
Once this has been done, you can proceed to settle the IHT bill and other liabilities.
For more information on IHT, read Inheritance tax. For more information on finding all assets that comprise an estate, read Conducting an asset search. For more information on valuing an estate, see the government’s guidance on how to value an estate.
Applying for probate or confirmation
After the estate has been valued and IHT has been paid (or you’ve started paying it), you can apply for probate (in England and Wales) or confirmation (in Scotland).
For more information on the application process, including when you have to apply and when you don’t have to apply, read Probate and dealing with an estate (for England and Wales) or Confirmation in Scotland.
If you are applying for probate, consider using Rocket Lawyer’s Probate service.
Placing a deceased estates notice
To abide by the Trustee Act 1925, it is strongly advisable to place a deceased estates notice in The Gazette and in the deceased’s local newspaper. A deceased estates notice is an advertisement containing the deceased person’s details and the executor’s details. Placing such a notice gives the deceased’s creditors the opportunity to come forward and make a claim against the estate.
In England and Wales, creditors should be given 2 months to make a claim for money owed. In Scotland, creditors should be given 6 months to make a claim.
You should not distribute the deceased’s assets until this period has passed. If you distribute the assets early and a creditor then makes a claim, you may have to pay what is owed yourself if the estate cannot afford to pay the debts.
Placing a notice protects an executor from being held personally liable for any claims made against the deceased’s estate after it has been wound up.
Executors should open a bank account on behalf of the estate. This bank account should be used to collect the estate’s money and property.
Generally speaking, banks and other institutions will only transfer money from the deceased’s bank account into this new account once a grant of probate or confirmation has been issued.
Settling the deceased’s debts and liabilities
Executors have to settle the deceased’s debts and liabilities. This will involve:
paying the deceased’s unpaid bills
applying for any applicable tax refunds
if necessary, completing a self-assessment tax return on the deceased’s behalf
repaying any benefit overpayments
If you use HMRC’s Tell Us Once service, you will be told what taxes are owed and/or if any tax refunds are due.
An executor should make all reasonable efforts to contact creditors and settle all liabilities with them. This is, of course, easiest when the deceased was fully solvent (ie their total debts and liabilities are less than the value of the estate). If the deceased was not fully solvent (eg their debts and liabilities are greater than the value of the estate), then it’s recommended to Ask a lawyer how to settle liabilities appropriately (eg in which order debts should be paid).
Paying taxes on new income earned from the deceased’s assets
Depending on the specific circumstances of the situation, an executor may have to pay taxes on the estate if there is any new income while it is being administered.
Capital gains tax
the deceased’s death, or
being valued for inheritance tax
CGT does not need to be paid if an asset is transferred directly to a beneficiary.
For more information, see the government’s guidance on CGT and death.
Certain assets continue to generate income after someone’s death until they are transferred or sold. Such income will be subject to income tax. Examples of assets that may continue to generate income include:
properties, which may generate rental income
shares, which may earn dividends
savings, shares, and other investments that earn interest
businesses that earn profits or payments
Income tax must be paid on the full income the estate receives during the administration period.
Reporting to HMRC
Depending on the specific circumstances, an executor may have to report to HMRC about the estate’s income during the administration period. What you need to report on, and how, depends on:
the estate’s value
the amount of income generated during the administration period
whether any tax was payable
If the estate only receives income from bank account interest during the administration period, and this interest is under £500, you do not need to report the estate to HMRC.
Estates that earn more than £500 in bank account interest or which have more sources of income generally don’t necessitate reporting to HMRC. These can be simple estates or complex estates.
A simple estate is an estate:
valued at less than £2.5 million at the deceased’s death
with less than £10,000 due in total income tax and GCT, and
where, during the administration period, no more than £500,000 worth of assets were sold in any single tax year
Reporting on simple estates simply involves sending a letter to HMRC at the end of the administration period. This is known as ‘information arrangements’.
A complex estate is an estate that is not a simple estate and which cannot be reported on using information arrangements. Instead, the estate must be registered online and a self-assessment tax return must be completed for the estate.
For more information on simple and complex estates and how their reporting works, see the government’s guidance on reporting an estate to HMRC.
Dividing and distributing the deceased’s estate
Once all debts and liabilities (including any applicable taxes) have been paid, the executor can distribute the estate as detailed in the will. Note that, before dividing the estate between beneficiaries, it is advisable to wait:
2 months and 1 day from placing the deceased estates notice, if the deceased lived in England or Wales
6 months from placing the deceased estates notice, if the deceased lived in Scotland, or
10 months from applying for probate, to ensure no claims have been made against the estate under the Inheritance (Provision for Family and Dependants) Act 1975 (this applies in England and Wales only)
Again, this is easiest if the deceased’s assets cover all the bequests they wish to make. If they don’t then it’s best to get legal advice on how to proceed.
If tax was paid on any income received during the administration period, you should provide a completed statement of income from estates form to any beneficiary receiving that income.
In England and Wales, if a real property (eg a house or flat) is being transferred to a beneficiary, the Land Registry must be updated accordingly to reflect the property’s new ownership. In Scotland, the Land Register of Scotland should generally be updated. For more information, see the government's guidance on updating property records when someone dies.
Preparing final accounts
After the estate is fully distributed, the executor should prepare the final estate accounts. These accounts should include all documents showing how the estate was distributed. For example:
the value of the estate when the deceased died
confirmation from HMRC that IHT has been paid
receipts showing all debts paid
receipts showing the executor’s expenses related to administering the estate
written confirmation that the beneficiaries received their shares of the estate
A copy of the final accounts should be sent to each of the main beneficiaries. The main beneficiaries should approve the final accounts and sign them, ideally returning a copy.
If you have any questions or concerns about administering a will, do not hesitate to Ask a lawyer.