This is possibly one of the most important questions to an Estate's Executors and Beneficiaries; although, there is no set and simple answer just like there is no set and simple answer to how long is a piece of string.
How long Estate administration takes, and by extension how long it takes before money can be distributed to Beneficiaries, is dependent on a range of factors.
For free initial advice and guidance call our Probate Advisors on 03306069584 or contact us online and we will help you.
It is possible for this to be estimated by experienced Probate specialists but such assessments are often made dynamically throughout the Estate administration. This is because there are many small details which affect the overall timeframe and the build up to distributing funds. Also, it is important not to forget that each Estate is quite unique, so the timeframes are, of course, also unique.
What's Involved in Probate?
Once the grant of Probate (often simply referred to as Probate) is obtained, the person named on this document then has the authority to start dealing with the financial affairs of the Estate. This would include valuing the Estate, calculating and paying Inheritance Tax, closing down bank accounts and arranging the sale or transfer of property other assets.
Once sufficient funds are held from these closures and sales, any outstanding debts on the Estate (such as mortgages, utility bills or credit card bills) are paid.
Initial distribution of funds (often called interim distributions) to the Beneficiaries can then be considered.
So what are the smaller details in this process which affect timeframes?
Variety, Complexity and Amount of Assets
Unlike drawing funds from your own bank account, taking funds from Estate held assets is a longer process. One common misconception of Probate is that it will allow you immediate access to the deceased's money. In fact, each institution has their own procedures for drawing funds and for even the most basic of account closures, this can reasonably take four weeks.
Then there are more complex assets, or financial institutions which require a staged process to close accounts and release the money. Also some institutions have long timeframes to acknowledge receipt of Probate and action closure requests. These delays can amount to a number of months in some instances.
Therefore, whilst an Estate can call in some money in approximately one month, if there are many different banks then this time can add up. If the Estate has a variety of easier access cash assets compared to more complex cash assets (these may include non-nominated insurance policies, stocks and shares ISAs) then completing all the cash closures will inevitably take longer merely because of the administrative challenges faced.
As noted above, the cash is used to pay the Estate liabilities, which should always be done before paying any distributions to Beneficiaries. The Estate liabilities can often run into many thousands of pounds, especially if we remember that Inheritance Tax bills are treated as Estate liabilities. An Estate should have a reasonable cash reserve in excess of the liabilities to be able to distribute funds.
Therefore, as an example, an Estate compromises of a property that will be sold and two bank accounts. The two bank accounts are called in within a month of obtaining Probate and these cash funds total £20,000. But there are also liabilities which need paying totalling £15,000.
Considering a reasonable reserve needs to be retained by the Estate before the property sells because a property will incur ongoing expenses like insurance and bills, then this Estate would not make a distribution until the property has sold. If however, the situation was very similar, but the cash amounted to £100,000 then the Beneficiaries could expect a distribution, prior to the property selling, shortly after the month it took to obtain the cash funds.
As exampled above, the balance between cash assets and money locked away in property can have a significant effect on when distributions can be made to Beneficiaries.
It's impossible to accurately predict such a timeframe, and whether distributions can be made will also be reliant on the work of estate agents and Conveyancers.
Legal Complexities and Timeframes
What has been noted so far is, essentially, a set of administrative challenges which affect the timeframes of each individual Estate. As would be expected though, there are also legal stages that need to be completed before distributions can be made. This is the case even if an Estate has obtained the Grant of Probate and holds sufficient cash.
These stages include (but are not exclusive to):
- Expiration of the statutory advertisements which are placed in newspapers informing creditors and other people of the death. These expire two months from the date of placing the advert.
- Inheritance act claims period, within which someone can make a claim against the Estate. This period expires six month after the date of Probate.
- Department for Work and Pension investigations and claims against the Estate. Once the Estate has been notified of such investigations, there is no timeframe for these concluding and these can take anything from a few months to a few years in extreme situations.
Planning Ahead and Minimising Timeframes
As with anything in life, with some forward thinking, overall timeframes can often be reduced. Such steps can include:
- Preparing the paperwork for banks and other institutions while waiting for the Grant of Probate. This might include completing and signing bank closure forms or other documents.
- Clearing and marketing the property before the Grant of Probate has been received. In addition, offers can be accepted before the Grant has been received so conveyancers can be instructed and the sale process can begin. However, contracts cannot be exchanged until the Grant has been received.
- If statutory advertisements are being placed in newspapers, then these should be placed as soon as possible so that you don't have to wait for them to expire before making distributions.
- Complete and return all forms and provide all requested documents as soon as possible. Any delays in providing this information can cause delays in funds being distributed.
As it has been shown, the overall process of Estate administration is not an exact science and is often reliant on the work of third parties to be completed so inheritance can be distributed.
At Co-op Legal Services, our Probate specialists are highly experienced in the Probate process, meaning that preparations can be made where possible to reduce these timeframes. We understand how important it is to keep you informed on anticipated timeframes. Our Probate specialists offer realistic updates on a regular basis rather than an unrealistic estimate at the start of the process.
To speak with a Co-op Probate Advisor call 03306069584 or contact us online and we will call you.