When you die, someone needs to deal with the administration of your estate. The administration of the estate involves discovering and listing all your property, assets and investments and their value, then finding out about the extent of your debts to arrive at the net value of your estate. The person who does this is called ‘the executor. Where you’ve made a Will, this appoints an executor to deal with your estate. If you die without a Will, known as dying intestate, no Executor is appointed and therefore further legal work is required to have an Executor appointed by Court. As a result dying intestate in Scotland means higher costs and potential delay in dealing with your estate.
The first challenge faced by those you leave behind is working out who should be appointed executor of your estate.
Appointing an executor
Appointing an executor to deal with the administration of your estate isn’t always straightforward. There is a priority in the selection of executor the courts must follow:
- Next of kin (usually the surviving spouse or civil partner);
- Someone who is entitled to share in the estate under the law of succession;
- Creditors;
- The procurator fiscal (in the case where there are no relatives or creditors)
There are important things to note. First, if you are unmarried and cohabiting, your surviving partner has no right to be appointed executor. Second, your executor cannot begin dealing with the administration of your estate until after the court appoints them.
Bond of Caution
Once an executor has been appointed, they must establish the estate’s extent. This means contacting all debtors and creditors of the estate and assembling an Inventory of Estate. This inventory lists the property, assets and investments owned by the deceased and all debts due by the deceased at the time of their death. The executor must also establish whether the deceased made any gifts, their value, and to whom they were made. There may be a requirement to include gifts in the Inventory of Estate.
When the Inventory of Estate has been completed, it will provide the net value of the estate. This will indicate whether there is likely an Inheritance Tax liability.
With the Inventory of Estate completed, the executor can move to the next stage. However, before that can happen, the executor must arrange a Bond of Caution (pronounced kayshun). This insurance policy protects the beneficiaries against fraud, embezzlement, or incorrect estate distribution by the executor. The executor must complete a proposal form and sign the Bond of Caution document. The estate is liable for the premium for the Bond of Caution.
This takes time and is another expense that could have been avoided if the deceased had made a Will.
Exceptions
There are two exceptions to the requirement for a Bond of Caution when dealing with an intestate estate. These are:
- When the surviving spouse or civil partner will inherit the entire estate, or
- When the estate is a small estate with a value of less than £36,000,
A Bond of Caution is not required if the estate falls into either of these categories.
Applying for Confirmation
After navigating the challenges of applying to the courts for the appointment of the executor and then obtaining a Bond of Caution, the executor can now obtain Confirmation. When granted, Confirmation will allow the executor to gather the estate and distribute it to the beneficiaries.
Being an executor is much simpler – and cheaper – when there’s a valid Will
Dying intestate means higher costs and potential delay. When there’s a Will, you don’t need to apply to the courts to appoint an executor, and you don’t need to apply for a Bond of Caution or to pay the associated legal fees, court dues and insurance premium. This means you can immediately obtain Confirmation once you’ve completed the Inventory of Estate.
Experienced Estates and Executry Solicitors, Glasgow and Livingston
Our solicitors have many years of experience dealing with estates for clients. We can explain the concepts of Prior and Legal Rights in detail and advise you on how best to obtain Confirmation and ingather and distribute the estate.
If you would like to discuss how we can help you deal with an Estate, please get in touch with us.