When dealing with the administration of an estate, distributing the gifts is one of the final stages. It is important that executors do not make distributions too soon, to protect themselves and the estate against debts or claims. Executors are advised not to pay out gifts before obtaining the Grant of Probate as time limits for claims against an estate usually run from the date of the grant, rather than the date of death.
‘Often executors and beneficiaries alike do not realise exactly how many different steps are required to administer an estate, but there are several parts of the process before distribution will be possible,’ says Tom Calder, an associate solicitor in the wills and probate team with Wollens in Troquay. ‘Once you are in a position to make distributions from the estate, there are various considerations that will need to be made.’
Even though you will not be able to distribute the estate until late in the process, you should already have located all the beneficiaries and notified them that they are due to receive items or money from the estate. You should, at this stage, check that their contact details remain the same and check their bank details in readiness for payment of the sums due to them.
If you have not yet attempted to locate any beneficiaries, now is the time to do so. If you have been unable to locate any beneficiaries, or you are now unable to re-establish contact with them, you will need to hold onto any items or money due to them until they are found, or until you have taken satisfactory alternative steps.
You must take all reasonable steps to locate beneficiaries. If you cannot locate a beneficiary yourself, you should seek help from a reputable tracing agent. If the tracing agent is also unable to locate the beneficiary, there are options available to you to ensure that you are not forced to hold on to that beneficiary’s share of the estate forevermore. Some of these options involve reaching an agreement with other beneficiaries, some will involve making an application to court. A solicitor can help you to identify the most suitable option for your circumstances and help facilitate the process.
Beneficiaries often do not understand why things take so long, so proactive communication with beneficiaries is key to the prevention of frustration.
You should let them know as soon as the grant of probate has been received and when they can expect to receive their gift.
No beneficiary is obliged to accept a gift left to them in a will. It is always worth checking with beneficiaries if they actually want what has been gifted to them, especially if it is a particular item.
Before distributing gifts to beneficiaries, make sure you check how they would like to receive the gift. For example, if the beneficiary is due to receive shares, they might prefer to receive the shares themselves so that they can retain these as an investment. Alternatively, they may not wish to deal with the complexities of shareholdings and simply prefer for the estate to sell the shares and then to receive the monetary value instead. You should always be led by the beneficiary’s preferences and wishes. If a beneficiary has no preference as to whether they receive a gift of shares as shares or as money, you should consider whether selling would be disadvantageous. For example, if the shares have recently dropped significantly in value but they may well go back up, it might be more advantageous to transfer the shares to the beneficiary so that they can retain them until they increase in value.
If the beneficiary does not wish to receive it, they can disclaim their gift, which could then leave the item available for another beneficiary who does wish to receive it as part of their share.
Disclaiming a gift requires a formal written document, which a solicitor can help you to arrange.
Practical distribution of gifts
Where specific items are to be shipped to a beneficiary, the will should specify who is to pay the cost of the shipping. This is particularly important if the beneficiary is based overseas or when the shipping would be more expensive than usual for any other reason.
Until gifts can be distributed, the executor should keep these somewhere safe and should insure items of significant monetary value.
For gifts of shares, the cost of selling or transferring these would be borne according to the terms of the will. If the will does not specify who should pay the costs, it will be for the beneficiary of the shares to bear the burden.
If some assets are taking a long time to realise, you may be under pressure from beneficiaries to distribute whatever you can. Specific gifts, such as jewellery or artwork, can be passed on to the recipients as soon as it is available, so long as the gift is not under dispute. You can also make interim distributions to those beneficiaries who are due to receive the residue of the estate whilst you are awaiting receipt of any remaining assets.
How can we help?
As with all stages of estate administration, any distribution must be in accordance with the will (or intestacy rules) and in the best interest of all the beneficiaries. If you are unsure about what you are allowed to distribute, or if you find yourself dealing with any difficult beneficiaries, our solicitors can help.
For further information, please contact Tom Calder in the wills and probate team on 01803 396603 or email [email protected]. Wollens has offices in Torquay, Exeter and Barnstaple in Devon.