What Is Estate Administration?

What happens to our wealth and possessions after we're gone? It's a question that may often linger in the back of our minds; and the answer lies in the intricate process known as estate administration. In this article, we’ll explore what estate administration is, how the process unfolds, and importantly, how it relates to the probate process that it’s so commonly associated with. After all, approximately 1 in 10 properties on the UK market is a probate sale, so understanding estate administration is an important aspect of the real estate world.

What is Estate Administration and what is its purpose?

Estate administration refers to the process of managing and distributing the assets and liabilities of a deceased person. This process typically takes place shortly after someone passes away and involves settling their financial affairs, ensuring that their debts are paid, and distributing the remaining assets to the rightful heirs or beneficiaries. The presence of a will normally decides how assets are distributed, but in the absence of a will, the division of the assets is governed by strict laws.

The estate administration process exists to serve an important purpose within the legal system. There is a primary focus on protecting assets, ensuring that a deceased person’s assets and liabilities are correctly transferred in an orderly manner. Therefore, estate administration has several key objectives to follow.

Key Objectives of Estate Administration

Legal Formalities and Compliance

Executors have a legal responsibility; to ensure that the transfer of assets is compliant with the laws and regulations of the jurisdiction in which the deceased person resided. Legal processes such as the probate system provide a structured and supervised operation for validating wills and overseeing the distribution of assets, following a will request or executor decision.

Protection of Heirs and Beneficiaries

Estate administration is designed to protect the interests of heirs and beneficiaries by providing a transparent framework for the distribution of assets. This helps prevent disputes and ensures that the wishes of the deceased are respected, in accordance with the will (if a will is present).

Settling Debts

The estate administration process involves settling any debts left behind by the deceased, in order to ensure that creditors are paid from the deceased person's assets before any distribution to heirs or beneficiaries occurs. By doing so, the next generation is not burdened with any outlasting debts, providing a fair resolution to any potential financial matters.

Managing and Valuing Assets

The main focus of estate administration is dealing with the assets in the estate, so there is a large emphasis on identifying, managing and valuing those assets. This is crucial for determining the overall value of the estate and making informed decisions about debt settlement and asset distribution. It is also used to form a fair distribution of assets to heirs and beneficiaries, ensuring that each party receives their rightful share of inheritance. However, if any of this information is incorrect, the wider probate process could be held up, or contentious probate could occur if conflicts arise.

Taxation and Financial Planning

Estate administration is important in addressing any tax obligations related to the deceased’s estate, including final income tax returns. The executors must calculate any Inheritance Tax due on the estate and this is usually paid by the executors directly from the estate before distribution. In some circumstances, the executor may discuss with the beneficiaries options for tax planning to minimise the Inheritance tax due on the estate and maximise the financial outcome for the beneficiaries. This can only be considered where all beneficiaries are over 18 and absolutely entitled to a share in the estate. Beneficiaries may also wish to take independent advice in relation to their particular share of the estate.

Preservation of Assets

Important measures are taken when preserving the value of assets during the estate administration process. These measures include the management of investments, maintenance of real estate and ensuring that assets are not unduly depleted during the settlement of debts and the distribution of the estate.

What Issues Could Cause a Delay in This Process?

Unfortunately, issues can occur within the estate administration process. These problems are very similar to the main disruptors in the wider probate process and can be avoided through careful planning, clear communication and the support of professionals, such as ourselves. If you are someone going through the estate administration process currently, you may find yourself experiencing emotions such as stress, frustration or general anxiety regarding the situation. To help reduce these emotions, identifying the issues that delay the process could be a helpful way of preventing them from happening altogether, especially if you are proceeding without a solicitor. These issues include the following:

• Lack of planning
• Incomplete asset inventory
• Outdated documents
• Family disputes
• Tax issues
• Legal challenges

How Closely Linked Are Estate Administration and Probate?

Throughout this article, we’ve mentioned probate on a number of occasions, as a close link to estate administration. However, just how closely linked are they? In short, they couldn’t function without each other. Probate is a specific part of estate administration, which focuses on establishing the validity of the final will of the deceased or, if there is no will, the person or persons entitled to administer the deceased estate. Estate administration as a wider process is interested in managing all aspects of a deceased person’s estate, including asset identifying, gathering and paying any debts and taxes. It is important to understand both processes as they are often interlinked and experience similar causes of delay. The executor will play a crucial role in both, as they are responsible for carrying out the wishes of the will (if present), managing the probate process and ensuring the debts are paid. Professional help for estate administration and probate is available to guide you, so it is recommended that you use it to ensure a smoother experience in difficult times.

Need Help? Book a free, no obligation, telephone consultation today

We appreciate that handling the estate of a lost loved one can be stressful, especially when dealing with any legalities. We offer all of our clients a free, no-obligation, telephone consultation to discuss their concerns. If you think we may be able to help you, please contact a member of our team.