When someone dies without a will the formal term is intestate. A will usually names someone as executor and the executor is responsible for administering the affairs of someone’s estate after they have die.
Obviously, in the absence of a will, there is no executor named so someone must be chosen to fulfil this role and must apply to the Sheriff Court to be appointed as an executor dative. Usually, the executor dative will be the surviving spouse or civil partner or another close relative. In some cases you will need to get a bond of caution (pronounced kay-shun). This is a guarantee that the executor will carry out his or her duties and it is normally provided by an insurance company.
Once an executor dative has been appointed, he or she must apply for Confirmation. This is a legal document issued by a Sheriff Court which gives the executor or dative executor the legal authority of to administer all the affairs of the estate.
This requires the submission of forms with information about the estate to both the Sheriff Court and to HMRC so that it can assess whether any tax is due. Only estates with a net value of more than £325,000 will be due to pay inheritance tax. Inheritance tax is paid at a rate of 40% on that value of the estate in excess of the £325,000 threshold. If any inheritance tax is due from the estate, this must be paid before the Court will grant Confirmation.
The executor must calculate the net values of the estate. This is done by working out the value of property and possessions contained within the estate. Property will not be liable for taxation as part of the estate if a house was jointly owned and the second joint owner is a surviving spouse or civil partner of the deceased. In that case the surviving spouse or civil partner is entitled to inherit the deceased’s s share of the property without paying inheritance tax.
Once the Sheriff Court has granted Confirmation, the executor can deal with all the affairs of the estate. This will include paying any debts owed by the estate to banks, building societies, utility companies or tradesmen. The executor should also collect any money that is owed to the estate.
After Confirmation is granted and liabilities and debts have been paid from the estate, the executor can pay out what is due to those entitled to inherit. A surviving spouse or civil partner has prior rights to the estate meaning they can inherit any house that was jointly occupied and the furnishings in the house up to a value of £24,000.
If the house is worth more than £300,000, the surviving spouse or civil partner is entitled to its value up to £300,000. The surviving spouse is also entitled to the first £42,000 from the estate if there are children, and £75,000 if there are none. After prior rights have been satisfied, surviving children and other descendants have a right to the share of the estate under a set of intestacy rules.