Questions asked when writing a will.
The information below covers questions asked when writing a will.
Executors
What is an executor?
An executor is the person that ‘executes’ your will. They administer your estate after you die, and allocate your estate to beneficiaries as defined in your will.
What if I don't have an executor?
Normally you will have named an executor or executors in your will. If they have died or don’t want to act as your executor, an administrator can apply for letters of adminsitration to allow them to deal with your will.
How do I choose an executor (or executors) for my will?
When you make a will you will need to choose an executor or executors. Being an executor involved a considerable amount of work and a lot of responsibility. It’s a good idea to choose someone who’s responsible, organised, administrative and trustworthy. You’ll need to explain what’s involved to your executor(s) and check that they’re willing to act on your behalf.
Can I have more than one executor?
It’s a good idea to have more than one executor in case one of them dies before you do. Having more than one executor also allows the responsibility of your will to be shared between them.
Who should I choose to be an executor?
An executor could be a friend or a family member. You don’t have to choose someone that’s related to you, but you should choose someone you trust, and who can take on the responsibility involved. Your executor can inherit something from your will.
What if I don't know anyone to appoint as executor?
If you don’t know anyone who you can appoint as executor, or if your friends and family don’t want to act as your executor, you could appoint a professional executor such as an accountant or a solicitor.
I'm an executor what do I have to do?
If you’re an executor, you’ll have the responsibility of adminsitering someones will, which is likely to include:
- Collecting any assets or money due to the deceased, including property.
- Ensuring the property owned by the deceased is secured as soon as possible after their death.
- Paying any outstanding debts or taxes out of the estate of the deceased.
- Distributing the remainder of the estate to beneficiaries as defined in the deceased’s will.
You can claim reasonable expenses for your work as an executor.
Probate
What is probate?
A grant of probate gives the executor(s) the legal right to deal with someone’s estate.
How does an executor apply for probate?
Probate isn’t always needed for small estates (usually less that £5,000). For small estates an executor would normally write to the bank or building society holding the money and ask them if they’re willing to make payment without a grant of probate.
If probate is needed (for larger estates), the executors would need to complete form PA1 and the relevant tax form. Call HMRC on 0300 123 1072 for advice on probate and Inheritance Tax and help with completing forms.
After completing the forms, the executor(s) will, then need to send them to the local probate registry along with an official copy of the death certificate, the original will and three copies of it, along with a cheque for the application fee of £215.
When the executor(s) receive a grant of probate or confirmation, they should make several copies. Send an office copy (as issued by the Probate Registry) with instructions to asset holders (people holding the assets of the deceased).
How does an executor value the estate?
An executor would normally start with everything that the deceased owned at the time of their death.
The combined value of the deceased’s property, possessions and money (including assets and investments), minus any debts owed by the deceased, such as mortgage, loans and credit card bills, gives a value of the deceased’s estate.
For assets such as property or land, an executor should get a professional valuation.
HMRC recommends having items worth over £500 valued professionally.
How does an executor pay inheritance tax?
Inheritance Tax will have to be paid on the estate of the deceased if the estate is over a certain amount. The current tax-free allowance is £325,000. After that, tax inheritance is usually payable at a rate or 40%.
HMRC will require a detailed account. If there could be Inheritance Tax to pay, it’s strongly advisable to obtain a professional valuation on high-value items such as a house or stock market investments.
The Inheritance Tax form can be downloaded here or ordered one by calling the Probate and Inheritance Tax helpline on 0300 123 1072.
How does en exector distribute the estate?
The main tasks for distributing the estate of a deceased person are as follows:
- If the will states a specific item is to be given or bequeathed to someone, the executor can do this before probate is granted, but they should make sure to value the items.
- Once probate has been granted, the executor should draw up estate accounts for each beneficiary (what each beneficiary will receive).
- Bankrupt beneficiaries may not be entitled to receive their inheritance, so the executor will need to search to see if any beneficiaries are on the Individual Insolvency Register.
- The executor then distributes the estate, making sure at least two trustees have been named for any gifts left to children under 18. The executor may want to wait at least six months after probate is granted before distributing the estate in case any claims are made against it.
- The executor should give each beneficiary an R185 tax form (ask the Probate and Inheritance Tax Helpline – 0300 123 1072 – for more information) for their share of estate income.
- The executor should keep clear records of the work they’ve done so that they can answer any questions about how you administered the estate.
Power of Attorney
What is Power of Attorney?
A power of attorney is a legal document that allows someone to make decisions for you, or act on your behalf, if you’re no longer able to or if you no longer want to make your own decisions.
There are various reasons why you might want someone to act on your behalf or make decisions for you, such as:
- If you loose your mental capacity and feel that you’re no longer capable of making decisions for yourself, or may loose the capacity to do so in the future.
- If you find yourself in a temporary situation such as being in hospital, and need someone to pay your bills from your bank account for you.
What is mental capacity?
Mental capacity is the ability to make decisions or to communicate decisions at the time they need to be made.
To have mental capacity you must understand the decision you need to make, why you need to make it, and the likely outcome of your decision.
Some people may be able to make decisions about some things but not others. Someone may find that they can decide which colour socks to wear but they may be unable to understand and select a suitable insurance policy.
Needing more time to come to a decision doesn’t mean someone lacks mental capacity. Where someone has difficulty coming to a decision or taking time to communicate their decision, efforts should be made to allow them time to do so, and overcome difficulties to help them come to the decision themselves.
Types of Power of Attorney
There are different types of Power of Attoreny:
- Ordinary Power of Attorney: This is valid while you have mental capacity and covers decisions about your financial affairs. You might use this if you’re in hospital and need assistance with things such as paying bills, or if you’re finding it harder to get out to banks and building societies to be able to manage your affairs. You can also limit aspects of this Power of Attorney to, for example, only manage your bank account, but not make any financial decisions about your house.
- Lasting Power of Attorney: This is used when you don’t have mental capacity. This can be set up if you’d like to make sure that you’re covered for the future. You’d also use a Lasting Power of Attorney if you don’t want to make decisions for yourself. There are two types of Lasting Power of Attorney, one for healthcare decisions and one for financial decisions:
- Lasting Power of Attorney for financial decisions: This can be used while you have mental capacity, or you can state that it should come in to effect if you loose mental capacity. You can restrict the decisions your attorney can make, or let them make all financial decisions on your behalf.
- Lasting Power of Attorney for healthcare decisions: This covers your helathcare decisions and can only come in to effect if you have lost mental capacity. This type of attorney can make decisions about what you should eat, where you should live, what treatment you receive, your medical care, what activities you can take part in and where you should live. You can also give special permission for your attorney to make decisions about life-saving treatment.