Administering 2 estates upon a second death
Being the executor of an estate is not a simple task and obtaining a grant of probate can be a long and complex process. It is almost impossible to predict what complications are going to be uncovered during the administration. One of the more complicated but unfortunately relatively common issues that we come across in this industry is that the deceased was the recipient of an Estate that was never administered and only discovered by executors upon the second death.
Unfortunately this is not a complication that can be ignored it and it needs to be handled proactively. The first estate needs to be administered in order for the second estate to be administered correctly.
Why does this situation happen?
This problem most commonly arises between couples/spouses, although not exclusively, there are other circumstances in which this scenario occurs. When the people involved are spouses it is not uncommon for them to name each other as executors and as beneficiaries of their Wills. When there are no wills at all the Laws of intestacy state that the spouse should inherit the first £250,000 of the estate.
As there is not normally inheritance tax between spouses, there is a common misconception that a spouse will just inherit their partners estate without the need for any administration, in reality this is rarely the case. Unfortunately it is even more common for the surviving spouse to bury their head in the sand about the whole situation and put off doing any administration at all, this is normally due to grief and feeling overwhelmed or not knowing administration is required. Although this reaction is understandable it does cause complications at the point of second death for the executor of the second spouse’s estate.
What complications can this cause?
If a Person (Person A) passes away leaving a will stating that their estate should be inherited by Person B (this could be a spouse, child, friend etc), it is the executor of Person A’s estate that is responsible for ensuring the correct actions have been taken and the estate administration is completed.
If Person A only held assets in joint names with Person B these assets must be transferred from joint ownership to sole ownership. For bank accounts and other financial institutions this should be a relatively simple process of supplying the death certificate and will to the institution and having the deceased’s name removed, leaving only the sole surviving owner. It is a similar process with property; HM land registry must be informed so that they can update their ownership records for the property to correctly show it is now owned by one person.
However if Person A’s name was not removed from the joint assets it, more often than not, only becomes apparent upon Person B’s death. Correcting this upon the second death although an additional step that can be time consuming, should not be overly complicated and would be a case or creating a paper trail to show the correct ownership of the assets, from joint to sole and then to the estate/beneficiaries.
Where professional assistance is advised is if Person A owned assets in their sole name that were never transferred or collected by Person B while they were alive, for example a property held in sole name or tenants in common or shares and bank accounts in sole names. In order for Person B’s estate to be administered completely Person A’s assets must be collected into Person B’s estate so that they can be distributed to the beneficiaries of Person B’s will.
This may sound simple, but assets held in a person’s sole name are more likely to require probate. Whether you will need to obtain a grant of probate for Person A will depend on the types of assets Person A held and their value. Where Person A had assets of a low value it is sometimes possible to collect them by using both Person A’s and B’s death certificates, wills and marriage certificate (if applicable). When there are certain types of assets, especially those of high value, held in Person A’s sole name a grant of probate will be needed for Person A’s Estate.
If probate wasn’t obtained for Person A’s Estate before the second death, it would need to be done retrospectively so that their assets can be transferred or collected. Applying for a grant retrospectively can be very difficult especially if Person A passed away some time ago. This is because locating the necessary paperwork needed to gather information about person A’s estate is normally not as easily obtainable. The more time that passes from their death the more likely it is that documents have been moved, gone missing or disposed of completely.
It is possible to apply for both Person A and B’s grants at the same time. Once a grant of probate has been obtained for person A their assets can be collected into Person B’s estate and distributed according to the wishes in their Will.