Unadministered Estates: What to do/How to go about administering an estate where death was several years ago and nothing has been done since?

 In Probate

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As practitioners, we are aware that when someone dies they will leave an estate that needs to be dealt with – the assets collected in and distributed in accordance with the terms of the Will, or under the rules of intestacy, and any outstanding debts identified and settled.

However, those who lived with the deceased, such as their spouse, civil partner, children or siblings might not be as concerned as a practitioner. This could be down to inertia, grief, worry that they could lose their home, or concerns over cost when they believe nothing will/needs to change. It could also be to avoid having to share the estate with others “less deserving”.

At some time, though, it will become apparent that a death had occurred and nothing had been done to administer the estate. Yes, somewhere along the line the undertakers will have been paid, but that is often seen as a “personal” act with nothing to do with the administration of the estate.

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N.B. Throughout this article the person whose estate is “unadministered” is referred to as “the Deceased”

First Steps?

Once the existence of an unadministered estate is identified, it is important to ascertain if there is, or was, a Will. If it is believed there may have been a Will, where might it have been kept – with solicitors, a bank or at home, for example. Are there any family members, or others, who might be able to provide pointers? If the Will cannot be found in an obvious place, searches may be made using the commercial will registration services, such as Certainty – The National Will Register, or Willfinda. They have details of wills held by their member firms and can tell you if there is a “match” for the Deceased. They register the whereabouts of a will, although it may not always be the last will. A will may also be lodged for safekeeping with the Principle Probate Registry.

If there was a Will, and it was kept at home, did the Deceased lack mental capacity whilst it was in their possession? If so, the Will may still be valid even though the original document cannot be found. In the absence of any evidence that a valid Will existed at the time of death, the estate of the Deceased will usually be administered under the intestacy rules.

Once it is known if there was a Will, or if the estate is to be administered under the intestacy rules, it will be possible to identify who should act as personal representative (PR). If, as is too often the case, the existence of an unadministered estate is only recognised after the death of the principal beneficiary (and probable executor) reference should be made to the Non-Contentious Probate Rules 1987 to identify who is entitled to a grant (Rule 20 where there is a Will; Rule 22 where the Deceased died intestate).

Alongside identifying who should administer the estate is the need to identify the assets and ensure they are appropriately safeguarded. If the person who is to administer the estate can be readily identified they will have the joy of this challenge, especially if the Deceased died many years beforehand.

Identifying Assets

Even if the Deceased’s papers still exist, their death might have been sufficiently long ago that the asset holders no longer hold information that will assist in identifying with certainty what the Deceased owned at the time of their death.

As some assets cannot be dealt with unless a grant has been obtained (e.g. land and, usually, shares) it should generally be possible to identify ownership of such assets relatively easily. However, some share registrars and financial institutions (such as banks and building societies) will release assets after death against an indemnity from the person claiming an entitlement to the estate. There is therefore the possibility that some assets will never be identified. It is therefore important to talk with family members and others who might have some knowledge of the Deceased’s financial affairs.

In addition to contacting the known likely asset holders, enquiries might also be made of:

  • National Savings and Investments (National Savings Bank, Premium Savings Bonds, etc.);
  • Mylostaccount.org.uk (in case any bank or building society accounts have been swept up under the Dormant Assets Scheme);
  • The Pension Tracing Service or The Pensions Advisory Service, in case there are any unclaimed pensions, whether workplace pensions or personal pension plans;
  • Equiniti (which manages the shareholder registers of a large number of quoted companies);
  • HM Land Registry; and
  • Organisations such as Estatesearch, which search databases of the more popular asset holders to identify if they hold anything for the Deceased.

Once the assets have been identified (as far as practically possible) their value as at the date of death will need to be established. If shares, this might also include the need to identify changes in the shares since death due to corporate actions (e.g. bonus and rights issues, or takeovers/mergers/ demergers, or returns of capital). Dividends will also need to be identified and traced if paid under a mandate.

Liabilities

It is likely that any debts outstanding as at the date of death will have been paid, including the undertaker’s account. Whoever paid that may require to be reimbursed, especially if it was a public body.

If the death occurred over 6 years ago, most debts will be unenforceable unless secured on property. If death was within the last 6 years, what evidence is there of any outstanding debts? Again, enquiries should be made of family members and others who might have knowledge of the Deceased’s affairs.

Whilst the initial focus might be on what debts the Deceased owed, liabilities may have arisen post death. Pension providers might not have been aware of the death resulting in an overpayment that needs to be returned. Similarly, state pension and other state benefits might have continued to have been paid. If there have been any such overpayments, information as to where they were paid may help identify assets or, enable the PR to direct the claim to whoever might have received them (e.g. if paid into a joint banking account).

Next Steps

Once the assets and liabilities of the estate have been identified, as far as possible, the PR will need to consider applying for a grant. If the intended executor has also died, there can be no “chain of representation” as they will not have obtained a grant themselves.

The application for a grant will follow the normal course for the type of grant being sought. If it was known that the Deceased left a valid Will, but neither the Will nor a copy of it can be located, it may be appropriate to initiate a probate action to prove an unsigned copy if there is sufficient evidence to support such a course of action.

Any application for a grant will need to be supported by the appropriate IHT form, and it will need to be born in mind that the IHT rules and rates will be those applicable as at the date of death of the Deceased and not those as at the date of the application.

Once a grant has been issued, the PR will need to collect in the assets (i.e. obtain control of them), settle any liabilities of the estate and then consider how the estate is to be distributed.

Distribution of the Estate

Once the challenge of identifying and collecting in the estate assets is complete, or at least well-progressed, the PR will need to turn their mind to distributing the estate. This may not be as simple as it sounds – the value of assets may have varied greatly since the death, and specifically gifted assets might have been lost or somehow disposed of.

Additionally, some of the assets might have been “collected” from financial institutions by persons under an indemnity, or people may just have retained assets, such as cash from the house or jewellery or other chattels. If the “person” has a legitimate interest in the estate (and the assets in question), their entitlement will need to be adjusted to take account of what they are holding. However, if they have no entitlement to what they have obtained, they will need to account for it to the PR, so that they can account to the correct beneficiary in turn.

The above applies irrespective of whether the Deceased was testate or intestate. However, different issues arise in some of the underlying principles on the distribution under a Will or under intestacy.

Intestacy

Where a surviving spouse or civil partner is entitled to the statutory legacy under intestacy, such entitlement is lost if the legacy is not satisfied within 12 years from the date of death (applying Re Bhusate [2018] EWHC 2362 (Ch)).

However, the entitlement of any beneficiary to an interest in residue will not become statute barred until 12 years from the date the administration of the estate is completed (applying Green v. Gaul [2006] EWCA Civ 1124). Accordingly, time does not run against a surviving spouse or civil partner in respect of their entitlement to residue (or a share thereof) where no action to administer the estate has been taken. The same is true in relation to the entitlement of any other person to a share in the residuary estate of the intestate.

Testate succession

The principle in Green v. Gaul applies equally to estates where there is a Will as it does to intestacy, although not just to interests in residue but to any entitlement under the Will. As with intestacy, time does not start to run against a beneficiary until the administration of the estate is completed. This will include not just a right to capital, but also a right to income.

There are two particular types of testamentary gifts which demand further consideration:

Specific gifts: if these are still in the same form as at the date of death, then no questions arise, other perhaps than in relation to tracing any income produced by the subject matter since the death of the Deceased.

Where shares or other investments are the subject of a specific gift, various changes to the nature of the asset may have occurred – if shares, the company could have been taken over, demerged some of its interests, or issued new classes of shares to existing shareholders. It will therefore be necessary to identify the holdings at the date of death and follow through to identify what the Deceased should “now” own.

If the shares had been liquidated, perhaps under a discretionary management mandate that had continued, the beneficiary may be entitled to the sale proceeds, or perhaps the sale proceeds “followed” into the replacement assets.

Specific gifts of chattels will be more problematic as, over time, knowledge of their whereabouts may be lost.

The situation in relation to property, whether residential or otherwise, should generally be more straightforward, as a grant would generally be required in order to deal with it. If jointly owned, though, the surviving co-owner(s) would have power to sell it, etc. In any event, it may be necessary to trace what happened and follow the asset. If the property had been let, it will also be necessary to seek an accounting for the rents, etc.

Nil Rate Band Gifts: the amount payable in respect of a nil rate band gift (NRB Gift) will be defined by the Will, regardless of the value of the estate as at the date of death. If the Will directs that the value of other legacies under the Will is to be deducted to ascertain the amount of the NRB Gift, it is the value of those gifts as at the date of death that applies, not some future value when the estate might be distributed.

As with other general legacies, an NRB Gift carries the right to interest from the first anniversary of death (unless the Will provides otherwise).

Even if, at the date of death, the estate is insufficient to fund the NRB Gift in full, the extent to which the gift is eventually satisfied is dependent upon the value of the estate as at the date of the proposed distribution (applying Re Charteris, Charteris v. Biddulph [1917] 2 Ch. 379).

Conversely, despite the assets at the date of death being sufficient to satisfy all legacies in full, if their value has fallen over time, this could result in an abatement situation when the estate is eventually distributed.

Abatement

There may be cases where, once as much detail as reasonably possible of the assets and liabilities of the estate have been established, the estate might have been insufficient as at the date of death to satisfy all of the prior legacies, so that residue was non-existent and an abatement arose.

As identified above, the value of the assets comprising the estate may have varied significantly between the death and the time that it is possible to distribute the estate. By the time of any distribution, it may be that all legacies (and any income or interest accruing thereto) can be met in full. If so, the residuary gifts will have been “revived” and those entitled will share in the distribution.

But what if a grant was obtained and nothing else happened?

If a grant was obtained, but no action taken to distribute the estate, the situation is not particularly different from that where no grant was obtained, as above. The primary difference will be to identify who has the right to administer the estate.

If the grant was a grant of probate, and the grant holder has died, an executor acting in their estate will also be executor of the Deceased’s estate by chain of representation. This could come as a nasty surprise for them. If they are aware of the fact before applying for their own grant, they might consider renouncing. A person can renounce their right to take probate, and then apply for a grant of letters of administration with will annexed on the basis of their beneficial interest in the estate. This would break the “chain”.

Should the grant to the estate of the Deceased have been other than probate, there is no “chain of representation” and those with a beneficial interest in the estate of the Deceased would be entitled to apply for a grant of letters of administration de bonis non administratis in order to complete the collecting in and distribution of the estate.

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