When somebody dies, their Assets must be collected in, any Liabilities paid and the Estate then distributed amongst the Beneficiaries. This is called administering the Estate.
This is a job for the Personal Representatives (PRs). The PRs may be set out in the deceased’s Will (if there is one) or, if there is no Will, depend on who is entitled to inherit under the Intestacy rules.
The PRs must write to all Asset holders to get valuations of the deceased’s Assets on the date they died. For bank accounts, this will be a statement. For property, they will need three professional valuations. For specific assets, like collections and shares, there are special valuation rules.
The PRs must also ascertain the extent of any Liabilities of the deceased.
Once the value of the Estate is known, the PRs must decide which IHT Forms and Probate Forms need to be completed to obtain the Grant of Representation.
Once the Grant of Representation has been obtained (but before the PRs can pay out anything to the Beneficiaries), the PRs must pay any Inheritance Tax (IHT) but also consider if there is any Capital Gains Tax or Income Tax to pay on the increase in value or income received since the date of death. Any tax due and Administration Costs incurred can then be deducted from the Estate before it is distributed amongst the Beneficiaries.