What if I am an executor or personal representative?
If you are an executor or personal representative, you will have various duties to perform when the person whose affairs you are to deal with dies.
What is an executor or personal representative?
If someone has made a will and named you as an executor in the will, you are the person who will deal with their estate. (Their ‘estate’ is all the money, belongings and property that the person owned.)
If someone has died intestate, in other words they had not written a will, and you are dealing with their estate, you are known as an administrator. In Scotland, the person who deals with an intestate estate is called an executor.
The executor or administrator of a deceased person's estate can also, generically, be called their 'personal representative'.
What does an executor, administrator or personal representative do?
If you are an executor, administrator or personal representative, you have responsibility for administering the estate. This includes:
- collecting together all the deceased’s assets including any money owed to them;
- paying all debts and bills outstanding at the date of the deceased’s death;
- paying funeral and any other post-death expenses.
You also have to deal with the payment of any taxes due, including income tax and inheritance tax and you are also responsible for completing tax returns or repayment claims (more on this below).
Once you have done all these things, you can distribute the deceased’s ‘net’ estate to the beneficiaries, either in accordance with the will or under the intestacy rules. You cannot choose who gets what: this is laid down in the will or in law.
Personal representatives normally have to obtain a grant of representation. This is basically a document issued by the courts that confirms you have the power to act as an executor or administrator. If you are an executor this will be called a grant of probate (confirmation in Scotland). If you are administrator this is called a grant of letters of administration.
You can find more information on obtaining probate or letters of administration on GOV.UK. In Scotland this is known as confirmation. You can find more information on obtaining confirmation on the Scottish Government website.
If the estate is very valuable or complex or there are possible disagreements among the beneficiaries that might affect how the estate is distributed, you may choose to appoint a professional, for example, a solicitor to assist you. You can find someone by searching in the STEP directory.
How do I deal with the tax affairs of the deceased and their estate?
Firstly you need to contact HMRC, if this has not been done already, so that they know about the death and with whom they will need to correspond regarding any matters arising in connection with the estate.
It may then be helpful to think of what you need to deal with in three chunks:
- The deceased’s tax position up until the date of death (see below)
- Any tax issues that arise during the period that you are administering the estate (see below)
- Inheritance tax – which might be due depending on the value of the deceased person’s estate and gifts they made during their lifetime.
Tax for the deceased up to date of death
In all cases, you will need to settle the deceased’s tax affairs up to the date of death. Once HMRC have been notified of a death, either through the Tell us Once service or directly, the following should happen:
- HMRC will send a letter to the executor, personal representative or – if not known – the last known address of the deceased. The letter should explain the process of reconciling the tax affairs of the deceased up to the date of death and that a P800 tax calculation (or Simple Assessment) will be sent, once HMRC has received the final income and tax information from the pension providers, employers, Department for Work and Pensions (DWP), etc. Be aware that the deceased may have more than one tax year to be reconciled, especially if they had been ill and so their tax affairs had been neglected for some time.
Note that a full personal allowance is available for the tax year of the death to set against income arising before the date of death. If the deceased had earnings or pensions that were taxed under Pay As You Earn (PAYE), it is likely that they will have paid too much tax in the tax year of their death. This is because under PAYE, you are only given part of your tax-free personal allowance each month as the system assumes that you will be paying tax evenly across the entire year. When HMRC issue the P800 tax calculation (or Simple Assessment), it will show any refund due. More rarely, there is an underpayment that will need to be paid out of the deceased’s estate.
The executor or personal representative must check the P800 tax calculation (or Simple Assessment) against the deceased’s records. If they cannot agree with it, they must make contact as soon as possible with HMRC and discuss the matter.
Otherwise, HMRC should give information about when and how the repayment is to be made, or how payment of any amount owing to them is to be made.
Those in Self Assessment should receive a letter from HMRC according to their individual circumstances. In most cases the executor or personal representative will be asked to complete a Self Assessment tax return for the period from the last 6 April to the date of death. You do not have to wait until after the end of the tax year in which the death occurred to complete the Self Assessment. You can find out more about completing a Self Assessment tax return for someone who has died on GOV.UK.
If the deceased had any capital gains up to the date of death, then you should see HMRC’s Helpsheet 282 for further information.
It is not unusual to see errors in HMRC's calculations and it really is important to check them over carefully. You should:
- Check the figures against the final statements from pension providers, employers, DWP (regarding taxable state benefits), etc.
- Check income from savings, as the HMRC's calculations may show an estimate (based on the previous year’s savings income for example).
- Check if any ‘adjustments’ listed are correct.
- Question anything that does not make sense.
Check whether the deceased had claimed all reliefs and allowances that they were entitled to, and whether any claim can now be made. Particular points to note are that:
there might be a surplus in married couple’s allowance to be transferred from the deceased to a surviving spouse or civil partner (where one of them was born before 6 April 1935);
the blind person’s allowance might not have been claimed by someone who is severely sight impaired.
Tax for the estate
If the deceased’s estate receives any income after the date of death (for example, from investments held at the date of death), or makes a capital gain (for example, from the personal representatives selling some assets) then there may be tax considerations. You may have to complete a tax return for the period after the date of death if the tax position of the estate is complex or if the tax liability is significant – this will not be a personal tax return, but a trust and estate tax return. Find out more on our page How is an estate taxed during administration?.
What is a beneficiary?
A person is a beneficiary if they are either:
- named in a will as someone who will receive assets or cash from the deceased’s estate; or
- someone who is entitled to receive assets from the estate of a person who has died intestate.
In Scotland, a beneficiary may also be a close relative who was not named in the will, but is able to claim prior or legal rights.
In their will, the deceased may leave a beneficiary something specific (sometimes called a ‘legacy’), for example their house, or they may just leave them a share of what is left after all other gifts, taxes and expenses have been paid – this is known as a share of the ‘residue’.
The executor or personal representative may pay out some income that arises from assets that make up the estate to one or more beneficiaries during the time that they are administering an estate. If they do, they should withhold tax at a special rate (depending on what the income is) and they need to give the beneficiaries a certificate each tax year showing the income paid and any tax deducted. The form is called an R185. You can find the form on GOV.UK.
You can read about more about tax implications of inheriting from a beneficiary's perspective in our page What if I am a beneficiary?.
What is the effect of a Deed of Variation?
If all the beneficiaries are of full age and agree, it is possible for them to vary the way an estate is paid out; or it is possible for some beneficiaries not to claim their legacies or ask that they be paid to someone else if they do not want them. In order to do this, they have to draw up a written variation, sometimes called a Deed of Variation (although the document does not have to be in the form of an official ‘deed’).
These types of deed can be useful for paying less inheritance tax and capital gains tax, but they have no effect for income tax. It is necessary to say in the Deed of Variation that it is to apply for inheritance tax and/or capital gains tax, or neither, as required.
If they do so within two years of the date of death, the variation may take effect for capital gains tax and inheritance tax purposes as if it were made at the date of death and inheritance tax is charged as if the revised distribution had operated at death.
If the changes result in further inheritance tax being payable, the personal representatives must sign the document as well as the beneficiaries, but they may decline to do so if insufficient assets are available to pay the extra tax. They must also notify HMRC within six months of the date of the variation and send them a copy of the document.
If there are any unborn beneficiaries or any beneficiaries who are minors – below the age of 18 – it will be necessary to obtain a court order to vary the will where the change might have an adverse effect on that beneficiary's share of the estate.
There is a brief guide on altering inheritances on GOV.UK.
What happens when an estate is wound up?
Once all taxes have been paid, and all other matters relating to the estate have been settled, the executors or personal representatives can then distribute the estate to the beneficiaries under the terms of the will or intestacy. In Scotland, this is subject to claims being made according to ‘legal rights’ (there is more information on legal rights on the Scottish Government website). This then completes or 'winds up' the estate (in other words, the ‘period of administration’ comes to an end).
What if I do not want to be an executor?
If someone has died and appointed you as an executor in their will, but you do not wish to be an executor, you do not have to. Instead, you can ‘renounce’ your role as executor. In order to renounce your role as executor, you need to sign a deed of renunciation and submit it to the Probate Registry.
If you wish to renounce your executorship, you must do so before doing anything that could be considered to be part of the executor’s role. If you carry out any duties of an executor, you cannot renounce the role, although you can delegate the role to an adviser (you can find more information on finding an adviser below).
If the will appointed other executors as well as you, they can usually apply for probate and carry out the duties without you. If the will did not appoint any other executors, then someone must apply to court to be appointed as administrator of the estate.
Be aware that if you renounce your role as executor, you give up your right to be involved in the affairs of the deceased’s estate entirely.
There is more information on what to do if you are an executor or personal representative for someone who lived in England or Wales on the GOV.UK website: wills, probate and inheritance and what to do when someone dies.
If the deceased lived in Scotland, you should read the guide on the Scottish Government website.
If the deceased lived in Northern Ireland, you should read the guide published on the nidirect website.
In dealing with an estate, a personal representative may well find it advisable to seek professional help from a:
- solicitor – you can find a solicitor on the Law Society website;
- tax adviser – you can find an adviser on the Chartered Institute of Taxation website; or
- trust and estate practitioner – you can find a practitioner on the Society of Trust and Estate Practitioners website.
There are different sources of help if you need a solicitor in Scotland – you can find a solicitor on the Law Society of Scotland website, or a solicitor in Northern Ireland – you can use the Law Society of Northern Ireland website.
Any costs involved will come out of the estate, not the pocket of the personal representative.