How to Manage Beneficiaries’ Expectations as an Executor

09 January 2020

Probate often takes several months to complete, and no money can be distributed to Beneficiaries until a certain stage of the Probate process. For this reason, it's important to manage Beneficiaries' expectations from the outset so that they know where they stand, what they are entitled to and when to expect their inheritance.

In this article, we explain at what stage in the Probate process you can begin to distribute inheritance to Beneficiaries, as well as common delays to be aware of.

Collecting in Assets

As the Executor or Administrator of an Estate, you are responsible for winding up the deceased person's affairs and distributing their Estate in line with the terms of their Will (if there is one) or inheritance laws (if there isn't). There is a lot of administrative, tax and legal work involved in this process and inevitably this can take time.

In order to administer an Estate, a legal document called a Grant of Representation may be required. This document grants the named person legal authority to deal with the Estate. Once you have this document, you can begin collecting assets. This could mean closing bank accounts or selling deceased's home, for example.

It's not uncommon for Executors to come up against delays at this stage of the process. Anyone who has sold a property will know that the Conveyancing process can be fraught with unexpected delays, and this inevitably has a direct impact on the Probate process. The sale of other assets can also cause holdups, with missing paperwork, missing share certificates or foreign assets often creating additional obstacles to overcome.

These are all important factors to bear in mind when communicating information to the Beneficiaries. If there are multiple properties in the Estate, for example, and each of these needs to be sold, then it's important to make Beneficiaries aware of this and the associated timeframes right from the outset.

The more complex assets that are owned by the Estate, the longer this stage of the process is likely to take.

Settling Outstanding Debts

Once assets have been collected in and liquidated, this money can be used to settle outstanding liabilities (or debts). This might include an outstanding mortgage, for example, a credit card bill or a utility bill. Also, any Inheritance Tax that the Estate is liable for needs to have been calculated and paid to HM Revenue & Customs. It is only once all of these liabilities have been settled that you can begin distributing money to the Beneficiaries.

As the Executor or Administrator, you have a duty to carry out your role in the correct way, acting in the best interests of the Estate and the Beneficiaries throughout the Probate process. If any mistakes are made along the way then you can be held personally liable for these mistakes. This means that if you distribute the Estate to the Beneficiaries before settling the Inheritance Tax, for example, leaving insufficient funds in the Estate to pay the outstanding bill, then you could find yourself personally liable to foot this.

This is exactly what happened in one high profile case. For more information, read our article on the Administrator who was held liable for a £340,000 tax bill.

Distributing Legacies in the Right Order

Once you are in a position to begin distributing the Estate to the Beneficiaries, there is an order of priority that must be followed. If the deceased left a Will, then there are different types of legacy that they could have left to different people. Some of these legacies will be higher up the priority list than others.

Two of the most common types of legacy are:

  • Pecuniary legacies – this is a fixed sum of money to a specific Beneficiary
  • Residuary legacies – this is a share of what's remaining in the estate after all liabilities have been settled

Residuary legacies must be paid after pecuniary legacies. If there are insufficient funds in the Estate to cover all of the legacies once the liabilities have been settled, then it's likely to be the residuary Beneficiaries who will lose out. This is another factor that it's important to consider when managing Beneficiaries' expectations. If there's any chance that Beneficiaries may not receive the amount of inheritance they are expecting to, then the sooner you can make them aware of this the better.

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