Administering an Estate

 

What is a Personal Representative?

A Personal Representative is the person who is responsible for dealing with the deceased’s estate.  There are two types of Personal Representative:

  • Executor
  • Administrator

Executor

When a person makes a will, they must appoint at least one Executor.  An Executor is a person whom they trust to manage and distribute their estate in accordance with their will when they die.  A person may appoint up to four (4) Executors in their will.  The Executors share responsibility, and all decisions must be made jointly.

If the deceased left a will, there is a statutory order of priority for a Grant of Representation.

Executors are the first in the order of priority.  If the Executor(s) renounce, or cannot be located, the following people may apply for a Grant of Letters of Administration with the Will Annexed in the following order of priority

1) Any residuary legatee or devisee holding in trust for any other person

2) any other residuary legatee or devisee (including one for life) or where the residue is not wholly disposed of by the will, any person entitled to share in the undisposed of residue (including the [Official Administrator] when claiming bona vacantia on behalf of the Crown), provided that—

      a) unless a registrar otherwise directs, a residuary legatee or devisee whose legacy or devise is vested in interest shall be preferred to one entitled on the happening of a contingency, an

      b) where the residue is not in terms wholly disposed of, the registrar may, if he is satisfied that the testator has nevertheless disposed of the whole or substantially the whole of the known estate, allow a grant to be made to any legatee or devisee entitled to, or to share in, the estate so disposed of, without regard to the persons entitled to share in any residue not disposed of by the will

3) the personal representative of any residuary legatee or devisee (but not one for life, or one holding in trust for any other person), or of any person entitled to share in any residue not disposed of by the will;

4) any other legatee or devisee (including one for life or one holding in trust for any other person) or any creditor of the deceased, provided that, unless a registrar otherwise directs, a legatee or devisee whose legacy or devise is vested in interest shall be preferred to one entitled on the happening of a contingency;

5) the personal representative of any other legatee or devisee (but not one for life or one holding in trust for any other person) or of any creditor of the deceased.

 

Administrator

If a person dies without leaving a will, a person who applies to administer the estate will be an Administrator.  An Administrator is also a person who applies to administer an estate with a will if there is no Executor able or willing to administer the estate.  There are rules about who is able to apply to administer the deceased’s estate in these circumstances.  The order of priority is as follows:

…the person or persons having a beneficial interest in the estate shall be entitled to ta grant of administration in the following classes in order of priority, namely –

  • The surviving husband or wife; (this includes civil partners but not unmarried cohibiting partners)
  • The children of the deceased and the issue of any deceased child who died before the deceased;
  • The father and mother of the deceased;
  • Brothers and sisters of the whole blood and the issue of any deceased brother or sister of the whole blood who died before the deceased;
  • Brothers and sisters of the half blood and the issue of any deceased brother or sister of the half blood who died before the deceased;
  • Grandparents;
  • Uncles and aunts of the whole blood and the issue of any deceased uncle or aunt of the whole blood who died before the deceased;
  • Uncles and aunts of the half blood and the issue of any deceased uncle or aunt of the half blood who died before the deceased.

 

Unrepresented Estates

If there is no Personal Representative for an estate who is able or willing to make an application, the Official Administrator may make an application or a creditor of the estate.

 

Absentee Personal Representatives

If a Personal Representative for an estate is going to be absent from the Falkland Islands for a period of one year, an interested person may make an application to the court to act as Administrator of an estate in the absence of the Personal Representative.  An application under this provision must demonstrate that ‘the interests of the parties concerned in the estate have suffered, or will suffer’ due to the absence of the Personal Representative.

 

What must a Personal Representative do?

A Personal Representative must do a number of things:

  • They must ensure that all property, possessions, bank accounts and cash assets are secured as soon as possible after death[1]. If at the time of death, the deceased was being cared for under any orders (such as an Enduring Power of Attorney, Power of Attorney or Receivership) you must contact the person with the authority under that order and ensure they take no further action.
  • Search for and secure any will and codicils.
  • Make an application for a Grant of Representation before taking any substantial steps dealing with the estate.
  • Once a Grant of Representation is made, establish all liabilities (debts) of the estate and ensure this paid before the estate is distributed to beneficiaries.
  • Ensure the will, or statutory inheritance, is complied with and the estate is distributed correctly.
  • File accounts and an affidavit with the court.

It is important that a Personal Representative understands that they are personally liable for any maladministration of the estate.  There are steps that may be taken to protect themselves against liability. 

As part of their responsibilities, a Personal Representative is required to report to the Court and the Beneficiaries of the estate.

 

Protection from Liability

Personal Representatives of an Estate take on personal liability when they take a Grant of Representation.  This personal liability means that a beneficiary or creditor may take action against a Personal Representative if a debt is not paid or distribution is not carried out correctly.  This also extends to unknown beneficiaries and creditors.  There are a few ways a Personal Representative may protect themselves against liability.  The three most common ways are:

  1. A Notice pursuant to Section 27 Trustee Act 1925.
  2. Waiting 10 months from the date of the Grant of Representation before distributing the estate.
  3. A Benjamin Order.

 

Section 27 Notice

The purpose of a Section 27 Notice is to inform the general public that an estate is being administered and provide them a period of time (2 months) from the publication of the Notice to make themselves known to the Personal Representatives that they have a claim or an interest in the estate. It provides a way for the Personal Representatives to demonstrate to the court that they have taken all reasonable steps to administer the estate correctly.  If a claim is received from a person with a claim or an interest in the estate after the expiry of the 2 months’ period and after the estate has been distributed, the claimant will have a claim against the beneficiaries of the estate rather than the Personal Representative. A Section 27 Notice should be published in the Gazette and may also be published in a newspaper.

An example of a Section 27 Notice is available in Probate Administering an Estate.

 

10 Months Waiting Period

Up to 6 months after the Grant of Representation a person may make a claim against the estate if they are a close family member or a person who was financially dependent upon the deceased.  Waiting 10 months before distributing the estate will ensure that there has been time to issue proceedings.  If a Personal Representative distributes the estate and there is a successful claim, the Personal Representative may be liable to the claimant if they did not wait to distribute the estate.

 

Benjamin Order

Whilst administering an estate, a Personal Representative may identify a beneficiary who cannot be found.  In these circumstances, a Personal Representative may apply to the court for an order (a Benjamin Order) to distribute the estate to the beneficiaries they are able to trace.  This does not prevent the beneficiary who cannot be traced from making a claim for their inheritance, but it does mean that any potential claim would be against the other beneficiaries rather than the Personal Representative.

 

Assets

Property, Post & Emails

Personal Representatives should locate and secure the deceased’s property and post and personal belongings as soon as possible.  These will all need to be accounted for to the court and beneficiaries as part of the administration of the estate. 

It is important to secure post as this may assist in the identification of assets and liability. 

 

Finances

Personal Representatives will need to locate and secure all of the deceased’s finances.  This may include ensuring any pension or welfare payments are stopped or paying back any overpayments.  It may also include securing payment of any debts owed to the deceased.

Possible institutes who will need to be informed of the deceased’s death:

  • Banks
  • Building society
  • Insurers
  • Credit Card companies
  • Utilities supplies (electricity, telephone, fuel)
  • Pensions Office
  • Tax Authorities
  • Trustees of any trust which the deceased was a beneficiary of.
  • Debtors of the deceased

All of the deceased’s financial assets will need to be accounted for to the court and beneficiaries as part of the administration of the estate.

It is essential that all debts and liabilities of the estate are met before distribution takes place and all debts that are owed are collected. 

If the value of the liabilities of the estate exceeds the value of the estate, the estate may be insolvent and the Personal Representative should seek independent legal advice on how to manage this.

 

Digital Assets

Personal Representatives need to be alert to the deceased’s digital assets[1].  These may include social media, loyalty accounts with benefits, cloud accounts which store videos and photos or streaming accounts for digital media. It may also include cryptocurrency, such as Bitcoin.  Some of these assets may form part of the estate.  Please seek independent legal advice about the deceased’s digital assets.

 

[1] There is currently no legal definition for ‘digital assets’ within English or Falkland Islands’ law.

 

Joint Property & Finances

Joint bank accounts will not form part of the deceased’s estate – the account will pass to the remaining account holders.  Personal Representatives should speak to the responsible banking authority for advice about what documentation is required for their purposes.

The deceased may have owned property in joint names.  Enquiries should be made to establish how that joint ownership operated to determine if the property forms part of the estate or not. 

 

Assets Overseas

The deceased may have had bank accounts or property overseas which form a part of the estate.  Each overseas jurisdiction will need to be approached to determine how to appropriately manage these assets.

It is permissible for a Grant of Representation made in the Falkland Islands to be ‘resealed’ by the High Court of England and Wales.  This will mean that Personal Representatives in the Falkland Islands may use that Grant to administer the deceased’s estate in England and Wales.  It is also permissible for a Grant made in England and Wales to be ‘resealed’ by the Supreme Court of the Falkland Islands.

Please note, this option only operates in the Falkland Islands between the Falkland Islands and England and Wales.  It is not permissible between the Falkland Islands and other territories.

 

Distribution

Once all the assets of the estate have been established and liabilities of the estate have been paid, the estate may be distributed to the beneficiaries.  As part of the distribution process, an estate account should be made and given to the beneficiaries.  This will include details about the finances of the estate, and where relevant, substantial assets of the estate. 

Distribution in accordance with a will (and codicil): The Personal Representatives should distribute in accordance with the terms of the will.  Please note that where there is any gifts/inheritance for a person under the age of 18 there will need to be 2 trustees (or Personal Representatives).    If a beneficiary is bankrupt, the Personal Representative should seek independent legal advice before distributing.

Specific Gifts: these are items which are ‘bequeathed’ to a person.  The Personal Representatives will need to ensure a record of the date the gift is given to the beneficiary is kept for the final accounts.

Distribution in accordance with the Statutory Inheritance: The Personal Representatives should distribute in accordance with the law.  If there is any uncertainty about the distribution of assets, independent legal advice should be sought.

Please note that if there is a beneficiary under the age of 18 years, there will need to be 2 trustees (or Personal Representatives).

 

Filing Accounts

There is a legal requirement to file accounts in the Falkland Islands.

Six months after the Grant of Representation is made, the Personal Representatives are required to file an inventory of the estate. 

12 months after the Grant of Representation is made, the Personal Representatives are required to file and affidavit and distribution account of the estate.

If these deadlines cannot be met, the Personal Representatives should contact the court and provide an update about the administration of the estate.