Probate and Estate Administration: An Executor’s Guide

The executor named in a will (or the administrator where there is no will) takes legal responsibility for winding up the estate. In practice that means a sequence of tasks that have to happen in roughly the right order. You identify and value every asset and every debt as at the date of death. You work out whether inheritance tax is due and report it to HMRC on the correct account. You arrange to pay any tax. You apply for the grant of probate, the legal document that proves your authority to deal with the estate. Only then can you collect in the assets, settle the remaining debts, distribute to the beneficiaries, and prepare estate accounts showing exactly what came in, what went out, and who received what.

The part that surprises most people is personal liability. If you under-report the value of the estate, miss a gift the deceased made in their final years, or distribute money to beneficiaries before HMRC is satisfied, you can be held personally responsible for the shortfall. HMRC can charge penalties for an inaccurate account, and interest runs on tax paid late. None of that falls on the beneficiaries; it falls on you. That is why accurate valuations and a correctly completed inheritance tax account matter so much, and why many executors of anything beyond the simplest estate bring in a specialist.

Probate is not always required. Whether you need a grant depends on what the deceased owned and how it was held. Property owned as joint tenants, and joint bank accounts, usually pass automatically to the surviving owner by survivorship and may not need probate at all. Small bank balances can often be released without a grant under each institution's own threshold, which varies. Assets held in certain trusts pass under the trust rather than the estate.

A grant is generally needed where the deceased owned property in their sole name or as tenants in common, or held investments and bank balances above the institutions' release thresholds. Most estates that include a house in the deceased's sole name will need probate. Even where a grant is not strictly required, an inheritance tax account may still have to be filed if the estate is large enough or includes lifetime gifts. The two questions, does this estate need probate and does it need to report inheritance tax, are separate, and an executor has to answer both.

Here is the trap that catches executors out. Inheritance tax is generally due by the end of the sixth month after the month in which the person died. HMRC will normally not allow the grant of probate to be issued until the tax due on delivery of the account has been paid or arranged. But the executor often cannot get at the money to pay the tax, because the assets are frozen until probate is granted. Tax is owed before the grant, and the grant is needed to release the cash that pays the tax.

There are established routes round this. Tax on land and property, and on some business assets, can be paid in ten annual instalments rather than as a single lump sum, which spreads the burden (interest applies to the outstanding balance, and the option works best where the asset is not being sold immediately). The Direct Payment Scheme lets banks and building societies pay inheritance tax straight to HMRC from the deceased's accounts before the grant is issued, releasing frozen funds for exactly this purpose. Some providers will also release funds to settle the tax directly. A specialist will usually map which of these routes fits the estate before the account is even filed, so the cash to pay the tax is lined up rather than scrambled for at the deadline.

The inheritance tax account is built on values as at the date of death, and every category has to be captured. Property is valued at open-market value at the date of death, which for anything other than a modest estate usually means a formal valuation from a surveyor rather than an estate-agent estimate, because HMRC scrutinises property figures closely. Bank and building society accounts are taken at the cleared balance plus any interest accrued to the date of death. Investments, shares, and ISAs are valued at the date of death. Life policies are included unless they are written in trust, in which case they fall outside the estate. Personal possessions, vehicles, and household contents are included at what they would realistically fetch, with valuable items such as jewellery, art, or antiques valued specifically.

Two things are easy to miss and both move the tax. First, gifts made in the seven years before death are brought into the inheritance tax account, because they can reduce the available nil-rate band and may themselves be taxable. Reconstructing seven years of gifts from bank statements is one of the more time-consuming parts of the job. Second, debts and reasonable funeral costs are deducted from the gross estate to reach the net figure on which tax is assessed: outstanding mortgages, loans, credit cards, and unpaid bills all come off. Getting either side of this wrong, overstating assets or missing a gift, is what triggers HMRC enquiries.

Timelines vary enormously with the complexity of the estate, but a realistic picture helps executors set expectations with beneficiaries. A straightforward estate, one home, a few accounts, no business interests, no complicated gifting history, often takes six to twelve months from death to final distribution. The early months go on gathering valuations and information; the inheritance tax account and payment have to be dealt with by the sixth-month deadline; the grant follows; then assets are collected, debts settled, and the estate distributed.

Complex estates run considerably longer. Estates with business or agricultural assets, foreign property, trusts, disputed wills, or a tangled gifting history can take well over a year, sometimes two or more. A prudent executor also waits before making final distributions, because creditors and certain claims against the estate can surface after the obvious debts are settled. Distributing too quickly, before you are confident the tax position is final and no claims remain, is exactly the kind of step that exposes an executor personally.

The inheritance tax account is a formal declaration to HMRC, and its accuracy is the executor's responsibility. An account with an undervalued property, a missing seven-year gift, or an arithmetic error invites an HMRC enquiry. Enquiries delay the grant, hold up distributions to beneficiaries, and can lead to penalties on top of the additional tax and interest. Property valuations are the most common flashpoint, because a figure pitched to minimise tax can be challenged, while an over-cautious figure leaves the estate paying more than it owes.

This is where a specialist estate-planning accountant earns their place. They make sure the valuations are defensible, the seven-year gift history is reconstructed properly, the available reliefs and bands are claimed correctly, and the account is internally consistent before it goes to HMRC. They also plan the cash flow so the tax can actually be paid by the deadline using instalments or the direct payment route. If you want to understand the tax itself in more depth, our complete guide to inheritance tax sets out the bands and reliefs, the lifetime gifting and seven-year rule guide explains how gifts feed into the account, and where an estate holds a company or trading assets the business relief and succession guide covers the relief that can apply. For help with estate administration, see our estate planning services.