What Does the Administrator of an Estate Do?
31 July 2019
An Administrator of an Estate is a person who has been appointed by the Court to deal with the Estate of a deceased person. This could be because the deceased didn't leave a Will, because there was a Will but there was no appointment of Executors, or because the Executors named are unable or unwilling to act.
The role involves a lot of tax, legal and administrative work. This includes valuing the Estate, contacting the beneficiaries, calculating and paying Inheritance Tax, settling outstanding debts, collecting in assets and distributing the Estate to the beneficiaries.
Who Takes on the Role of Administrator?
The person who is entitled to be the Administrator is determined by legislation under the Non-Contentious Probate Rules 1987 and principally under the Administration of Estates Act 1925. Commonly, this is referred to as the Rules of Intestacy. These rules take into account the value of the deceased's Estate and the family members he or she left behind.
Under the Rules of Intestacy, relatives of the deceased will be placed in order of priority, starting with their spouse or civil partner. The person at the top of the list is entitled to take on the role of Administrator.
This differs to the appointment of an Executor, who is appointed under a Will. The role of Executor and Administrator are exactly the same, the only difference is the way in which they are appointed.
Administrator Tasks Explained
1. Valuing the Estate
One of the first tasks of the Administrator will be to value the Estate. In order to do this, they will need to contact the various asset holders (such as banks, pension providers, etc.) to obtain the value of the asset as at the date of death. The Administrator will need to go through all of the paperwork held by the deceased to ensure that all assets are identified. They will also need to arrange any professional valuations which may be required such as for property or high value personal items.
They will also need make sure that the assets are secure. If there is a property in the Estate, they will need to make sure that there is sufficient buildings and contents insurance in place. The insurer will need to be made aware if the property is unoccupied.
They will then need to calculate the value of any liabilities (debts and/or mortgages) of the Estate. The value of these liabilities will need to be deducted from the value of the assets to calculate the overall Estate value.
When the Estate has been valued, the Administrator will then be in a position to calculate whether any Inheritance Tax is due.
2. Applying for the Grant of Letters of Administration
Once the Inheritance Tax has been calculated, the Administrator can complete the relevant Inheritance Tax Return and apply to the Probate Registry for the Grant of Letters of Administration.
This document gives the Administrator the legal authority to deal with the Estate, including closing the deceased's bank accounts and selling their property.
When the Grant of Letters of Administration has been issued, the Administrator has a legal duty to administer the Estate correctly and efficiently.
3. Placing a Statutory Advertisement
In order to protect the Administrator from liability, they should consider advertising for potential unknown beneficiaries and creditors to come forward. This can be done by placing a Statutory Advertisement in the London Gazette and a local newspaper where the deceased lived.
The advert must give potential claimants at least two months to come forward. An important point to remember is that the Administrator must not distribute the Estate until the adverts have expired.
4. Collecting in Assets
The administrator will be responsible for collecting in all of the assets of the Estate. This may include selling any property which forms part of the Estate.
The formalities for collecting in the assets will vary depending on the type of asset. For example, bank accounts can usually be closed by completing the closure form issued by the bank. This will need to be signed by the Administrator and submitted to the bank with a sealed copy of the Grant of Letters of Administration.
5. Settling Debts and Paying Inheritance Tax
The Administrator also has a duty to pay any debts as quickly as they can, including settling any Inheritance Tax which may be due. It is important that the debts of the Estate are paid before any distributions are made to the beneficiaries.
The Administrator is responsible for calculating any outstanding income tax liability of the deceased up to the date of death so they will need to ensure this is paid out of the Estate. They are also responsible for calculating outstanding income tax that the Estate has incurred during the administration period. Equally, if any assets are sold during the Administration which has had a significant gain from the date of death, the Administrator is responsible for calculating and settling any Capital Gains Tax.
6. Distributing the Estate
Finally, the Administrator is responsible for ensuring the Estate is distributed in the correct way to the beneficiaries. They should keep detailed Estate Accounts which give a clear and accurate statement of the Estate. The accounts should detail all of the assets of the Estate and what has happened to each one, as well as any expenses and liabilities that have been settled from the Estate.
The residuary beneficiaries should be given a copy of the Estate Accounts for their records.
Help and Advice from a Probate Specialist
It's important to note that whoever takes responsibility for carrying out the role of Administrator could be held personally liable for any mistakes made. The above is a general guidance of what an Administrator is typically required to do during Probate, but these tasks can vary depending on the circumstances of each individual Estate.
If you are acting as the Administrator of an Estate and you're unsure of what's involved or you need help with the Probate work, our Probate Specialists are on hand to help you.
Our Probate Advisors can provide you with initial advice and with our Probate Complete Service we can take full responsibility for carrying out the tax, legal and administrative work on your behalf.