Someone has to close out a deceased estate, after a suitable period of grieving and coming to terms with what happened. That’s because the assets and bank accounts lock up, but there bills to pay and perhaps insurance pay-outs pending to cover them.
If this sad task falls upon you, then you may or may not need to apply for a grant of probate or letters of administration. However beyond that administrative detail, the processes are broadly the same.
Determining the Full Extent of the Estate
An estate is as complex, or a simple as the late person’s lifestyle. However it will typically include the following:
1… Liquid assets such as cash, bank accounts and insurance pay-outs
2… Money owed on account or due as a result of a legal obligation
3… Semi-liquid assets in the form of stocks, shares and other investments
4… Fixed property in the form of land and buildings that may be mortgaged
5… Personal possessions of all kinds the possibilities are too numerous to list here
The Duty of the Estate Is to Settle Debts First
A deceased estate must first apply this cash to settling its debts. Your first task as executor is to establish its net value, and make arrangements with Inland Revenue regarding any inheritance tax due. This applies regardless of whether you are doing probate in Chelsea or elsewhere in England or Wales.
Moneys the estate may owe could include credit card purchases, petrol accounts, property rent, mortgage payments, and clothing accounts. The deceased’s bank statement should help you nail these details down.
The Heir(s) to the Net Value of the Estate
The balance, if any after settling all the debts belongs to the estate’s rightful heirs. These may be entitled to their share in one of four ways:
1… The late person’s will specifically mentions them
2… They are not mentioned but successfully appealed
3… They are beneficiaries of a last-minute deathbed wish
4… There is no will: they are close relatives of the deceased
How to Close Out a Deceased Estate
Find the will if you can, and all the deceased’s financial documents too. Send a copy of the death certificate to their bank, and ask them to freeze their account. Identify the creditors by going through the late person’s papers, and prepare a list of all their assets.
Value these assets less any amounts owed, calculate any inheritance tax due, and arrange to pay it. Apply to the probate court office for permission to close out the estate. When you have their consent, advertise the estate in a local media.
Now you have the necessary permission (or exemption), you can start claiming money due to the estate. This may include bank accounts, insurance policies, pension funds, money with building societies, and damages credited the estate after the death.
You can then use this money to pay your expenses, settle the debts, and any solicitors fees. If you need more money than is available, then you may sell some of the assets to increase your cash base. If there is still not enough, you should seek professional assistance.
When you have a ‘clean estate’ without any debt you can share the remaining value with the heirs we listed above.
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