Distributing the Estate
"The Executor/Administrator is responsible for paying all outstanding debts from the estate. It is therefore often recommended that notices are placed in The Gazette and local newspapers to allow for any undisclosed debts and creditor to come forward with claims. It is reasonable to allow two months for these claims to be made."
Once a grant of probate or Letter of Administration have been obtained it is possible to collect in all the assets, pay creditors and distribute the estate to the beneficiaries in accordance with the will or the rules of intestacy. See other guides on website for more information.
It is normally sensible to set up a separate bank account for this purpose. Not only does this ensure estate funds and personal funds remain separate, but it also makes it easier to produce the final estate accounts.
To ensure the estate has sufficient funds to pay off secured debts and funeral costs, there is an order of priority when paying estate debts:
- Secured debts – e.g. mortgage or car loan
- Funeral expenses and costs incurred during administration of the estate – e.g. out of pocket expenses, professional executor/estate administrator costs. A lay executor is not permitted to make claim for time taken to administer the estate.
- Unsecured debts – e.g. other loans
- Money owed to friends and family
It is normally sensible to determine if the deceased had insurance that will pay off certain debts before they are paid out of the estate.
Debts that are jointly owned such as a loan or mortgage involving multiple people will normally pass on to the surviving people. Other debts do not normally get inherited.
Any individual debts of the deceased will be paid using the assets in the estate.
The Executor/Administrator is responsible for paying all outstanding debts from the estate. It is therefore often recommended that notices are placed in The Gazette and local newspapers to allow for any undisclosed debts and creditor to come forward with claims. It is reasonable to allow two months for these claims to be made.
Once all debts are accounted for consideration should be given to inheritance tax and/or capital gains tax. It is essential to ensure there are available funds available to pay these prior to distributing assets to the beneficiaries.
Once the estate accounts are finalised and approved by the beneficiaries it is possible to make the final distributions of the estate. This will be determined by the will or the rules of intestacy.
For more information, please see other guides on the website.