To enable you to handle the financial affairs of a close relative following their death, you may need to apply for Letters of Administration.
The Grant of Representation: Probate or Letters of Administration?
A ‘Grant of Representation’ is the official document proving your legal entitlement to deal with the estate of someone who has died. This document must be obtained before you are able to, for example, close bank accounts or liquidate any assets. However, there are two different types of Grant of Representation: a Grant of Probate and Letters of Administration.
Whilst an executor of a will would apply for a Grant of Probate, in the absence of a will, or valid will, the task of handling someone’s financial affairs usually falls to the deceased’s next of kin. If that person is you, you will need to apply for a different type of grant – known as Letters of Administration. In these circumstances you will be known as the administrator or personal representative of the deceased.
The Letters of Administration will allow you to deal with the deceased’s estate in a similar way to the Grant of Probate. This will include settling any debts, taxes, funeral expenses and administration costs. The grant will also allow you to distribute any money, property and personal possessions that belonged to the deceased. Where a person has died intestate, ie; without a will, everything they own will be need to distributed under the rules of intestacy.
Where a will exists, but no executor is named in the will, or where all named executors are unable or unwilling to apply for the Grant of Probate, you will again need to apply for Letters of Administration. In these circumstances, the deceased’s estate will be distributed to the beneficiaries named under the will.
Are Letters of Administration always needed?
There are limited circumstances where Letters of Administration are not required:
The deceased didn’t own any property or assets outright. Any jointly owned asset such as the matrimonial home will pass automatically by survivorship to the deceased’s spouse or civil partner.
The deceased’s savings are held in a joint account. In these circumstances, the bank and building society may only need to see the death certificate to arrange for the funds to be transferred solely to the surviving joint owner.
The amount of savings held in any account is deemed ‘small’, irrespective of whether these funds are held jointly or in the deceased’s sole name. Not all banks and building societies apply a limit, normally £5,000. The threshold in some cases can be as much as £50,000.
Letters of Administration will however always be required in order to sell or transfer any property held in the deceased’s sole name, or where property is owned jointly but as tenants in common rather than as joint tenants.
A tenancy in common refers to property held under a shared tenancy by two or more people. Here each holder has a distinct and transferable interest. Where one owner dies, their interest does not automatically pass to any joint owner(s) by survivorship, rather it will form part of the deceased’s estate – to be inherited under the rules of intestacy where the deceased dies without a will.
Who can apply for Letters of Administration?
In circumstances where the deceased has died intestate, or where any executors are unwilling or unable to act, you can apply for Letters of Administration if you are named in the will or next of kin.
For next of kin, there is a specific order of priority running from spouse or civil partner, to children, grandchildren, parents, siblings, grandparents and uncles and aunts.
You can apply for Letters of Administration if you have separated from the deceased but were still married or in a civil partnership at the date of death. However, the surviving partner of an unmarried couple or a couple not in a civil partnership will not be entitled to apply for Letters of Administration, irrespective of how long they were in a relationship for or whether they were cohabiting at the time of death.
If more than one person wishes to apply for a grant, there will need to be a joint application. A maximum of four applicants is permitted.
How to apply for Letters of Administration
To apply for Letters of Administration in England and Wales you will need to complete and send form PA1 to the Probate Registry. First, however, you will need to value the deceased’s estate and ascertain if there is any inheritance tax liability.
Valuing the deceased’s estate
Prior to making an application for Letters of Administration you will need to value the deceased’s estate. It is important to get this right as it will determine whether or not inheritance tax is due on the estate.
The valuation of the deceased’s estate should include:
any property (or share of property) including their home
any other physical possessions including jewellery, antiques and artwork
any bank, building society or other savings
any occupational pensions that include a lump sum payment on death
any life assurance or endowment policies
any stocks and shares or other investments.
You will need to offset against the value of the estate any debts or liabilities including any mortgage, credit cards, loans, unpaid bills, plus funeral expenses and administration costs.
You should also explore whether any significant cash or other gifts have been made within the last seven years of death as these may still form part of the estate for the purposes of inheritance tax.
Inheritance tax liability
Inheritance tax will fall due on the estate if the value exceeds the current personal threshold of £325,000 (as of 2018). There are exceptions however, for example, assets passing to a spouse or civil partner are exempt.
If inheritance tax is payable, you will need to obtain permission from HM Revenue and Customs (HMRC) to proceed with the application for Letters of Administration. You will need to submit inheritance tax declaration forms with your application. Letters of Administration will not be granted unless you use the forms to declare that there is no tax to pay or, where tax falls due, HMRC have confirmed to the Probate Service that they give authority to obtain the grant.
The Letters of Administration application
Once you have valued the estate and established whether inheritance tax is payable, you will need to send form PA1 to the Probate Registry providing details of the deceased and their estate. Additional documentation that will also need to accompany the application includes:
any will, for example, where a will exists but no executors have been named, or are unwilling or unable to act
the death certificate
the relevant tax forms
the correct fee.
On receipt of your application, the Probate Registry will respond providing you with a copy of the oath that you will need to swear. This oath is to confirm that the information you have provided is true to the best of your knowledge and belief. It can be sworn at your nearest Probate Registry or, alternatively, a solicitor’s office. The oath will also set out the legal requirements expected of you as the holder of the Letters of Administration.
If the Probate Registry have no further queries of you, the Letters of Administration will be granted.
When applying for Letters of Administration should I seek legal advice?
Whilst you can apply for Letters of Administration without the assistance of a legal adviser, the rules on intestacy, ownership of property and inheritance tax liability can be particularly complex. Furthermore, the cost implications of getting a grant of representation application wrong can be significant, particularly if the deceased’s estate is subject to inheritance tax.
A legal advisor specialising in wills and probate can not only assist you with your application for Letters of Administration, but also provide you with expert advice on how to distribute and deal with the estate in accordance with the law.