What Can Be Claimed as a Probate Administration Expense?
17 October 2019
During the Probate process, the person responsible for dealing with the Estate can incur expenses, which are recoverable from the Estate as long as they are reasonable. These may include things such as funeral costs, house clearance costs and some travel expenses, for example. However, it's important to note that Lay Executors cannot be paid for the time that has been spent working on the Estate administration.
In this article, we explain what does and doesn't generally count as a Probate Administration Expense.
Executor / Administrator Expenses
The person responsible for administering the Estate of a deceased person is called an Executor if the deceased left a Will, and an Administrator if they didn't. Both of these roles work in largely the same way, and involve a significant amount of legal, tax and administrative work. For more information on what exactly is involved, see Executor / Administrator Duties.
A lot of this work will incur associated costs, and while the Lay Executor or Administrator isn't paid for their time, it's important that they aren't left out of pocket as a result of carrying out their duties. For example, one of these duties may be to sell the deceased's property. This may mean paying a house clearance company, a cleaning company, an Estate Agent, a Conveyancing Solicitor and so on. Because these costs will have been incurred by the Executor or Administrator simply carrying out their duties, these will be recoverable from the Estate.
Other expenses would include things such as Inheritance Tax, Probate Registry fees and professional fees (if a Probate Specialist is instructed, for example).
Keeping a Record of Probate Expenses
One of the duties that the Executor or Administrator has is to prepare the Estate Accounts. These accounts should show a detailed breakdown of all the money that has come into and out of the Estate during Probate.
The Estate Accounts will show any debts (liabilities) that have been settled from the Estate, as well as the income received from the sale of any assets, closing of bank accounts, etc. The accounts will also show all of the expenses that were incurred during the Estate administration, and that were subsequently recovered from the Estate.
In addition, the Estate Accounts should set out Inheritance Tax calculations (along with any other tax liabilities). This will be calculated based on the overall value of the Estate, along with any tax reliefs that can be applied.
The final amount remaining will then be displayed, along with how much is to be distributed to each of the Beneficiaries.
Disputing Probate Administration Expenses
While not everybody is entitled to see the Estate Accounts, certain individuals are.
The Beneficiaries entitled to inherit the remaining Estate (once all other liabilities and gifts have been paid) are called the Residuary Beneficiaries. Aside from the Executor / Administrator, these are the only people entitled to see the Estate Accounts. This is because expenses incurred during the Estate administration will have a direct impact on how much these Beneficiaries are entitled to receive.
If a Residuary Beneficiary believes that the Executor / Administrator has claimed unreasonable expenses during Probate, then they are entitled to question this and ask to see the Estate Accounts. If it's found that the Executor or Administrator has claimed unreasonable expenses, then this will be a breach of their duty of care, which is to act in the best interests of the Beneficiaries. In these circumstances, the Beneficiaries could be entitled to take legal action against the Executor or Administrator.