How Long Before the Balance of an Estate Can Be Distributed?
29 April 2021
The short answer is that it all depends on what's in the deceased person’s estate. In this article we explain the estate administration process in England and Wales, which must be completed before the balance of an estate can be distributed. A simple estate could take 9-12 months to administer, but a more complex estate could take much longer.
Once all the debts, taxes and legacies have been paid from a deceased person’s estate, their personal representatives can distribute whatever is left over (known as the residue) to the residuary beneficiaries.
Administering an estate
After someone dies, their estate needs to be administered. This is the process of collecting in their assets, settling their debts and distributing inheritance to the beneficiaries. The people responsible for this work are called personal representatives.
The administration period of an estate usually starts shortly after the person has died. It ends when the personal representatives pay the residue of the estate to the beneficiaries (or the trustees, if there is a trust in the Will).
By law the personal representatives are under a duty to collect in the deceased's estate and administer it according to the law. If there's a Will, the estate needs to be distributed in line with the terms of the Will. If there isn't a valid Will, the estate needs to be distributed in line with the rules of intestacy.
The personal representatives' duty is an onerous one as they are personally liable for any mistakes made, even if they are accidental. The most common types of breach of duty include:
- Failing to protect the assets of the estate
- Failing to pay people who are entitled to benefit from the estate
Consequently, a personal representative must act diligently and ensure that all reasonable steps are taken to ensure a smooth and, above all, correct administration of the estate.
Getting a grant of probate
To apply for a grant of probate or grant of letters of administration, an application form needs to be completed and sent to the probate registry. In addition, an inheritance tax form will also need to be completed, which calculates the value of the estate and any inheritance tax that's due.
Collecting estate assets
The personal representatives are under an obligation to collect in all the assets which pass under the Will or rules of intestacy. This will include the deceased person's money, personal possessions, shares, property, etc. In most cases, the bank or building society will ask to see the grant before they agree to release money from the deceased's accounts.
This isn't always the case though, as each bank sets their own threshold for how much can be released without needing to see the grant. For more information, see bank limits for probate.
A grant will always be needed to deal with a property owned in the sole name of the deceased.
Settling estate debts and liabilities
As soon as funds are available in the estate, the personal representatives should begin to pay the deceased’s outstanding debts and expenses. This should be done before any money is given to the beneficiaries. Various administration expenses, such as court fees and conveyancing fees, will arise during the administration process and will also have to be settled.
The personal representatives must act in the best interests of the estate and the beneficiaries at all times. They must always act in accordance with the provisions of the Will and the beneficiaries’ wishes. They also need to consider potential tax consequences of any decisions they make. If there are any debts which cannot be settled, because the exact amount is unknown or is being disputed, the personal representatives should hold back enough money to ensure that the debts can be paid.
The personal representatives can notify potential creditors of the death by publishing statutory notices. This gives creditors a set period of time to come forward and make their claim on the estate. If statutory notices are placed, the personal representatives will need to wait for their expiry date before distributing any of the estate to the beneficiaries. This will be a minimum of two months after publication.
It’s also important to establish whether the deceased was in receipt of any benefits as this could trigger an investigation by the Department for Work and Pensions (DWP). These investigations can take several weeks and nothing can be distributed from the estate while the investigation is ongoing.
The personal Representatives must also establish whether there is a risk of a claim being made under the Inheritance (Provision for Family and Dependants) Act 1975. A claim can be made by any relative or financially dependent person who has been left out of the Will. This type of claim will have a major impact on the estate, and nothing can be distributed to beneficiaries until the claims have been correctly dealt with. Any potential claim must be made within six months of the grant of probate or grand of letters of administration being issued.
Paying the legacies
Once the debts have been paid, the statutory notices have expired and the other steps have been completed, the personal representatives should be able to pay the legacies in the Will. There are different types of legacies:
- Specific legacies – these gifts of specific items, which are paid or transferred first
- Pecuniary legacies – these are cash gifts and if they are not paid within one year of death, interest is added to the sum
The payment of legacies will be delayed until any outstanding issues have been resolved. There are various reasons why this might happen, including an investigation by the Department of Works and Pensions, difficulty selling a property, tax issues and claims being made against the estate. Once these issues have been resolved, these legacies can be paid.
At this stage, the personal representatives can also consider making interim distributions to the residuary beneficiaries.
Final distribution of the residuary estate
Once the deceased’s funeral expenses, debts, and any legacies have been settled, the personal representatives can pay what's left in the estate to the residuary beneficiaries. However, if any matters remain outstanding, they must ensure that there are still ample funds to cover these.
The personal representatives can draw up the estate accounts to show all the assets and liabilities of the estate, as well as the remaining balance for the residuary beneficiaries.
As soon as all the beneficiaries approve the estate accounts, the personal representatives can make the final distribution of the residuary estate. Again, the personal representatives have a duty to distribute the rest of the estate in accordance with the Will or the rules of intestacy.
So, as you can see, it’s difficult to say exactly how long it will be before the balance of an estate can be distributed, as there's so much involved in the process. The amount of time it takes to administer an estate varies depending on a number of factors, such as the complexity of the estate, whether there is a property to sell, whether there are any contentious issues to overcome, and whether any of the beneficiaries are missing.