If you are dealing with the estate of someone who has died, you may be wondering how long it will take to wind up their affairs. We take a look at the process and how long each stage is likely to take.
After a death, the executors named in the Will have the responsibility of finalising the deceased’s affairs. If the deceased did not leave a Will, then someone who will inherit the estate will usually deal with the winding up process. They are referred to as an administrator.
Time limits for winding up an estate
It is generally expected that an estate should be wound up within one year of the date of death. This is referred to as the executor’s year. However, it can sometimes take longer, particularly if there is property to sell or the estate is large or complex. Provided there are good reasons for taking longer than a year, this is not usually a problem, although it may be necessary to pay interest on cash gifts.
There is also a deadline in which Inheritance Tax must be paid. This is the end of the sixth month after the date of death. If the estate does not have sufficient liquid assets to pay the tax, then you can ask HM Revenue & Customs (HMRC) if it can be paid in instalments. If this is acceptable, the first instalment must be paid by the deadline.
Stages in winding up an estate
The main stages in winding up an estate are as follows:
- Valuing the estate
- Calculating and paying Inheritance Tax
- Applying for a Grant of Probate or Grant of Letters of Administration
- Liquidating the estate assets and clearing all liabilities
- Preparing estate accounts
- Distributing the estate
Valuing the estate
The first step is to value the estate. You need to ascertain how much the estate assets are worth. You can write to ask banks and other asset holders for a figure and obtain valuations of other assets such as property, cars and furniture.
You also need to ask creditors such as mortgage lenders and credit card companies how much they are owed. Once you have a figure for the value of the net estate, you can calculate whether Inheritance Tax is payable.
This stage can take around eight weeks, depending on the range of assets held and how long it takes holders to provide valuations.
Calculating and paying Inheritance Tax
Inheritance Tax is generally payable on the portion of an estate over £325,000. There a range of allowances and exceptions available however, so you may want to speak to a probate solicitor to make sure that you arrive at the correct figure.
You will need to fill in a range of forms detailing all of the estate assets and liabilities.
Inheritance Tax is then paid to HMRC. If the deceased held enough money in a bank, building society or National Savings account, you can ask the account holder to pay the tax directly to HMRC.
It can take around two to three weeks for the tax to be paid in this way.
Applying for a Grant of Probate or Grant of Letters of Administration
Around three weeks after the tax has been paid, an application can be made for the Grant of Probate or Grant of Letters of Administration. This is a document that gives authority to the executor or administrator to deal with the estate. The application is sent to the Probate Registry who will usually take at least two to three months to process it.
Liquidating the estate assets and clearing all liabilities
Once the grant has been received, the asset holders can be asked to close accounts and property can be sold. Debts and other liabilities should also be cleared.
This can take around two months, depending on the asset holders. It may take substantially longer if a property needs to be sold.
Preparing estate accounts and distributing the estate
The final steps are preparing detailed estate accounts and distributing the estate to the beneficiaries.
In total, a relatively straightforward estate may take around 10-12 months to wind up.
There is a substantial amount of paperwork involved in administering an estate and it takes many hours. The suggested timescale assumes that everything is handled promptly. If you are not sure whether you have the time to devote to the process, you can choose to ask a probate solicitor to handle it for you. This will avoid delays in dealing with the paperwork and the estate will be wound up as quickly as third parties allow.