After Someone Dies

Chapter 9 — Understanding the Estate

Before applying for a grant, paying debts or dividing possessions, the personal representatives need to understand what the estate actually contains.

This is not always as simple as listing everything associated with the deceased. Some assets belong wholly to the estate. Some were jointly owned. Some pass directly to another person without being controlled by the will. Others may not form part of the probate estate but may still need to be reported for Inheritance Tax purposes.

The safest starting point is to identify everything first and decide its legal treatment afterwards. Do not leave an item off the working records merely because somebody believes it passes automatically or has little value.

The estate in practical terms

The estate normally begins with the property, money, possessions, rights and interests that belonged to the deceased at the date of death. From these are deducted valid debts, liabilities, funeral and administration expenses, and any tax due before the balance can be distributed.

Assets may include:

<w:left w:space="0" w:sz="0" w:val="nil"/><w:bottom w:space="0" w:sz="0" w:val="nil"/><w:right w:space="0" w:sz="0" w:val="nil"/><w:between w:space="0" w:sz="0" w:val="nil"/></w:pBdr><w:shd w:fill="auto" w:val="clear"/><w:spacing w:after="0" w:before="0" w:line="271" w:lineRule="auto"/><w:ind w:left="340" w:right="0" w:hanging="227"/><w:jc w:val="left"/><w:rPr/></w:pPr><w:r w:rsidDel="00000000" w:rsidR="00000000" w:rsidRPr="00000000"><w:rPr><w:rFonts w:ascii="Georgia" w:cs="Georgia" w:eastAsia="Georgia" w:hAnsi="Georgia"/><w:b w:val="0"/><w:bCs w:val="0"/><w:i w:val="0"/><w:iCs w:val="0"/><w:smallCaps w:val="0"/><w:strike w:val="0"/><w:color w:val="000000"/><w:sz w:val="20"/><w:szCs w:val="20"/><w:u w:val="none"/><w:shd w:fill="auto" w:val="clear"/><w:vertAlign w:val="baseline"/><w:rtl w:val="0"/></w:rPr><w:t xml:space="preserve">a house, flat, land or share in property;

<w:left w:space="0" w:sz="0" w:val="nil"/><w:bottom w:space="0" w:sz="0" w:val="nil"/><w:right w:space="0" w:sz="0" w:val="nil"/><w:between w:space="0" w:sz="0" w:val="nil"/></w:pBdr><w:shd w:fill="auto" w:val="clear"/><w:spacing w:after="60" w:before="0" w:line="271" w:lineRule="auto"/><w:ind w:left="340" w:right="0" w:hanging="227"/><w:jc w:val="left"/><w:rPr/></w:pPr><w:r w:rsidDel="00000000" w:rsidR="00000000" w:rsidRPr="00000000"><w:rPr><w:rFonts w:ascii="Georgia" w:cs="Georgia" w:eastAsia="Georgia" w:hAnsi="Georgia"/><w:b w:val="0"/><w:bCs w:val="0"/><w:i w:val="0"/><w:iCs w:val="0"/><w:smallCaps w:val="0"/><w:strike w:val="0"/><w:color w:val="000000"/><w:sz w:val="20"/><w:szCs w:val="20"/><w:u w:val="none"/><w:shd w:fill="auto" w:val="clear"/><w:vertAlign w:val="baseline"/><w:rtl w:val="0"/></w:rPr><w:t xml:space="preserve">foreign property and accounts.

Liabilities may include:

<w:left w:space="0" w:sz="0" w:val="nil"/><w:bottom w:space="0" w:sz="0" w:val="nil"/><w:right w:space="0" w:sz="0" w:val="nil"/><w:between w:space="0" w:sz="0" w:val="nil"/></w:pBdr><w:shd w:fill="auto" w:val="clear"/><w:spacing w:after="60" w:before="0" w:line="271" w:lineRule="auto"/><w:ind w:left="340" w:right="0" w:hanging="227"/><w:jc w:val="left"/><w:rPr/></w:pPr><w:r w:rsidDel="00000000" w:rsidR="00000000" w:rsidRPr="00000000"><w:rPr><w:rFonts w:ascii="Georgia" w:cs="Georgia" w:eastAsia="Georgia" w:hAnsi="Georgia"/><w:b w:val="0"/><w:bCs w:val="0"/><w:i w:val="0"/><w:iCs w:val="0"/><w:smallCaps w:val="0"/><w:strike w:val="0"/><w:color w:val="000000"/><w:sz w:val="20"/><w:szCs w:val="20"/><w:u w:val="none"/><w:shd w:fill="auto" w:val="clear"/><w:vertAlign w:val="baseline"/><w:rtl w:val="0"/></w:rPr><w:t xml:space="preserve">costs reasonably incurred in administering the estate.

The gross estate is broadly the value of the relevant assets before deductible liabilities. The net estate is what remains after the allowable liabilities have been taken into account. Different forms and organisations may use these terms for slightly different purposes, so follow the wording of the question being answered.

Probate estate and tax estate are not always the same

An asset can be relevant for Inheritance Tax even though the personal representatives do not need the grant to collect or transfer it.

A jointly owned asset passing by survivorship is a common example. The surviving owner may receive legal ownership automatically, but the deceased's share or interest may still need to be valued and included when establishing the tax position.

Lifetime gifts, trust interests and some other arrangements can also affect the tax calculation without becoming property that the executors distribute under the will.

For that reason, avoid saying that an asset is “outside the estate” without explaining what is meant. It may be outside the property controlled by the grant, outside the will, outside the distributable estate, or outside the Inheritance Tax calculation. Those are not necessarily the same thing.

Solely owned assets

An asset owned solely by the deceased will normally fall into the estate unless a separate legal arrangement determines how it passes.

Examples include a bank account in the deceased's sole name, a solely owned vehicle, personal possessions and a property registered only to the deceased.

The fact that another person used an asset, held a spare key, possessed a bank card or helped pay expenses does not by itself transfer ownership.

Equally, registration in one name may not always settle beneficial ownership. Another person may claim an interest because of a trust, agreement or financial contribution. Do not reject or accept such a claim without evidence and, where the value matters, legal advice.

Jointly owned property

Land and buildings can be owned as joint tenants or as tenants in common.

If the deceased and another person owned property as joint tenants, the deceased's interest normally passes automatically to the surviving joint owner by survivorship. It does not pass under the will. The survivor will usually need to update the Land Registry records, and the deceased's interest must still be considered for valuation and tax.

If they owned as tenants in common, the deceased's beneficial share normally forms part of the estate and passes under the will or intestacy rules. The size of that share may be stated in a declaration of trust, transfer document, restriction, agreement or court order.

Do not assume that married couples are always joint tenants or that unequal contributions automatically mean unequal ownership. Obtain the title documents and any declaration of trust. A Land Registry restriction may indicate that the property should not be treated as a straightforward sole-survivor transaction, but the full legal and beneficial position may require interpretation.

A joint tenancy may also have been severed before death, converting the beneficial ownership into a tenancy in common. Evidence may include a notice of severance, agreement, court proceedings or dealings showing a mutual intention to sever. Take legal advice if severance is alleged or uncertain.

Joint bank and savings accounts

A joint account will often continue in the survivor's name, but that does not end every question about ownership.

The bank's mandate controls how the bank operates the account. It does not always prove who beneficially owned all the money. Relevant evidence may include who paid money in, why the account was opened, how it was used, whether the funds were intended as a gift and whether the joint holder was added only to help manage finances.

This is particularly important where an adult child was added to an elderly parent's account for convenience. The balance should not automatically be treated as the child's personal money merely because the account was joint.

Notify the institution, obtain the date-of-death balance and record the source of the funds. If the ownership is disputed or a substantial amount is involved, obtain legal advice before excluding it from the estate or asking the survivor to repay it.

Joint possessions and other jointly held assets

Cars, furniture, collections and household goods can also be owned jointly, although there may be no formal document recording this.

Consider purchase records, gifts, family agreements, insurance schedules and the way the item was used. The fact that an item was kept in a shared home does not necessarily mean it was jointly owned.

Record the deceased's probable share and the evidence supporting it. If ownership is contested, preserve the item and do not sell or distribute it until the issue has been resolved.

The family home does not automatically belong to the spouse

A surviving spouse or civil partner may inherit a property automatically through joint ownership, under the will or under the intestacy rules. These are different legal routes.

Marriage or civil partnership alone does not prove that the survivor already owns the whole property. The title, beneficial ownership, mortgage and will must all be checked.

An unmarried partner has no automatic inheritance right under the intestacy rules merely because the couple lived together for many years. They may own a share, receive an asset by survivorship, benefit under a will or have a possible claim against the estate, but none of those outcomes should be assumed.

Assets passing outside the will

Some assets may pass under a separate legal mechanism rather than under the will. Common possibilities include:

<w:left w:space="0" w:sz="0" w:val="nil"/><w:bottom w:space="0" w:sz="0" w:val="nil"/><w:right w:space="0" w:sz="0" w:val="nil"/><w:between w:space="0" w:sz="0" w:val="nil"/></w:pBdr><w:shd w:fill="auto" w:val="clear"/><w:spacing w:after="60" w:before="0" w:line="271" w:lineRule="auto"/><w:ind w:left="340" w:right="0" w:hanging="227"/><w:jc w:val="left"/><w:rPr/></w:pPr><w:r w:rsidDel="00000000" w:rsidR="00000000" w:rsidRPr="00000000"><w:rPr><w:rFonts w:ascii="Georgia" w:cs="Georgia" w:eastAsia="Georgia" w:hAnsi="Georgia"/><w:b w:val="0"/><w:bCs w:val="0"/><w:i w:val="0"/><w:iCs w:val="0"/><w:smallCaps w:val="0"/><w:strike w:val="0"/><w:color w:val="000000"/><w:sz w:val="20"/><w:szCs w:val="20"/><w:u w:val="none"/><w:shd w:fill="auto" w:val="clear"/><w:vertAlign w:val="baseline"/><w:rtl w:val="0"/></w:rPr><w:t xml:space="preserve">certain nominations made under a valid statutory or contractual arrangement.

Each arrangement must be checked. A nomination or expression-of-wish form may guide a pension scheme but may not create an absolute entitlement. A life policy may be payable to named trustees, a beneficiary or the estate depending on how it was arranged.

Ask the provider to confirm in writing who is entitled, whether the grant is required, what value must be reported and what forms are needed.

Pensions and death-in-service benefits

Pension benefits vary considerably.

A scheme may pay a surviving dependant's pension, a lump sum, a refund of contributions or nothing further. The scheme trustees or provider may have discretion over a lump-sum payment, even where the deceased completed an expression-of-wish form.

Some pension benefits may fall outside the property administered under the grant, but their tax treatment depends on the scheme, the type of payment, the deceased's age, the recipient and the law applying at the relevant time.

Contact every present and former employer and pension provider. Ask for a written explanation of the benefit, who decides the recipient, whether it forms part of the estate and what tax applies. Do not include or exclude a pension merely because another estate was treated in a particular way.

Life assurance

Find the policy schedule and ask the insurer who is entitled to the proceeds.

If the policy was written in trust, the trustees may claim and distribute the proceeds according to the trust without the money passing through the executors' hands.

If the policy is payable to the estate, the proceeds normally become an estate asset and may require the grant before payment.

A policy linked to a mortgage may be intended to repay the loan, but check the assignment, trust and policy terms. Do not assume that the mortgage is cleared until the lender and insurer confirm the figures and payment arrangements.

Trust property

Property held by the deceased purely as a trustee does not belong beneficially to their estate. It must be kept separate and passed to the continuing or replacement trustees under the trust arrangements.

The deceased may also have been a beneficiary of a trust. Their interest could end at death, continue for their estate or give rise to tax consequences depending on the trust terms and type.

Locate the trust deed, later appointments, accounts, tax records and details of the other trustees. Do not place trust money in the estate account or distribute it under the will unless professional advice confirms that it belongs there.

Lifetime gifts

A valid gift completed during the deceased's lifetime will not normally remain theirs merely because the recipient had not used or collected it.

However, saying that an item was promised is not the same as proving a completed gift. Relevant questions include whether the deceased clearly intended an immediate gift, whether the recipient accepted it and whether the legal steps needed to transfer the asset were completed.

Lifetime gifts can remain important for Inheritance Tax. Personal representatives may need details of gifts made in the years before death, and some earlier arrangements can remain relevant where the deceased continued to benefit from what they had given away.

Examples include giving away a home but continuing to live there without paying a proper market rent, or transferring an investment while continuing to receive its income.

Record the date, recipient, asset, value at the time, source of the information and any benefit the deceased retained. Gifts made from normal income, gifts to spouses or civil partners and other exemptions may receive different treatment, but they should not be assumed without checking the conditions.

Personal possessions

Household contents are estate assets unless they belonged to somebody else or were validly given away before death.

Low-value everyday items can usually be grouped for recording and valuation. Valuable, unusual or disputed items should be listed separately. Jewellery, watches, art, antiques, collections, vehicles, firearms, precious metals and designer goods may require specialist attention.

Sentimental value does not replace financial value. An item worth little on the open market may matter greatly to the family, while something that looks ordinary may be valuable.

Do not allow relatives to take items before they have been recorded and authority has been confirmed. If an item is specifically gifted by the will, keep it safe until debts, tax and the legal position have been considered.

Detailed valuation of personal possessions is covered in Chapter Thirteen. The property-clearance process is covered in Chapter Seventeen.

Money owed to the deceased

Money owed to the deceased is an asset even if there is no formal loan agreement.

Look for loan documents, messages, standing payments, account entries and notes. Record the amount outstanding, repayment terms, security and whether the borrower disputes the debt.

Do not write off a family loan simply because the borrower is also a beneficiary. The will may forgive the debt, require it to be deducted from the beneficiary's share or say nothing about it. The wording and evidence must be considered.

The estate may also be entitled to salary, holiday pay, rent, dividends, tax refunds, refunds from service providers or compensation relating to events before death.

Businesses and partnerships

A sole-trader business does not have a separate legal identity from its owner. Its assets, liabilities, contracts and tax affairs therefore need to be examined as part of the estate.

A partnership interest may be governed by a partnership agreement. Shares in a company remain assets, but the company itself owns its bank accounts, vehicles and equipment. Those company assets should not be treated as the deceased's personal possessions merely because they controlled the company.

Check shareholder agreements, articles, partnership agreements, business loans, guarantees, payroll, VAT, leases, insurance and succession arrangements. A business may lose value quickly if nobody is authorised to operate it, so obtain specialist legal and accounting advice promptly.

Digital assets and online accounts

Digital assets can include cryptocurrency, online payment balances, domain names, websites, monetised content, intellectual property, cloud-stored work and accounts containing saleable credits or rewards.

An online account is not necessarily an asset that can be transferred. The provider's terms may grant only a personal licence and may restrict access after death.

Preserve devices, recovery information and account records. Do not impersonate the deceased or bypass security. Contact the provider through its bereavement procedure and obtain specialist advice for cryptocurrency or valuable digital rights.

Social-media pages, photographs and messages may have emotional importance even where they have no market value. Agree who will preserve, memorialise or close them, subject to the provider's rules and the deceased's recorded wishes.

Foreign assets

Property, accounts, investments or business interests outside England and Wales may require action in more than one country.

The English grant may need to be recognised abroad, or a separate local procedure may be required. The foreign asset may also create tax and reporting duties in both jurisdictions.

Record the country, institution, ownership, estimated value and any local adviser. Obtain advice from professionals familiar with both systems before selling, transferring or paying tax. Do not assume that the English will controls every foreign asset.

Assets discovered after the grant

An overlooked asset does not cease to belong to the estate.

If something is discovered later, record it, obtain a date-of-death value and consider whether the probate or tax information must be corrected. Additional tax, interest or reporting may be required.

Keep the administration records open long enough to deal with refunds, late statements and unknown accounts. Use an asset-search service where appropriate, but check its fees and data-handling terms.

Debts and liabilities

The estate is responsible for the deceased's valid debts. Relatives do not normally inherit those debts personally unless they were jointly liable, acted as guarantor or become liable through their own conduct.

Joint debts may leave the surviving borrower responsible for the full balance under the agreement. Secured debts remain attached to the relevant property. A mortgage is not removed by death, although insurance or other funds may become available to repay it.

Do not distribute the estate until reasonable steps have been taken to identify liabilities. Paying beneficiaries too early can leave personal representatives personally exposed if a creditor or tax liability later appears.

Chapter Twelve explains how to identify and verify debts. Chapter Twenty covers payment and priority.

Insolvent estates

An estate is insolvent when its assets are insufficient to pay its debts and expenses in full.

Do not pay ordinary creditors, family loans or beneficiaries selectively. Insolvent estates are subject to a legal order of payment, and dealing with one incorrectly can create personal liability.

Stop, preserve the assets and obtain specialist advice before making payments other than those clearly necessary to protect the estate. Beneficiaries receive nothing unless all higher-priority liabilities have been met.

Ownership claims and disputed assets

Somebody may claim that an asset in the deceased's name was really theirs, that they contributed to its purchase or that the deceased was holding it for them.

The personal representatives should ask for the claim and supporting evidence in writing. They should preserve the asset, remain neutral and avoid distributing or selling it while a genuine dispute is unresolved.

Useful evidence may include contracts, receipts, bank records, declarations of trust, correspondence, witness evidence and the way the parties treated the asset during the deceased's lifetime.

Mediation may help where the disagreement is factual or relational. A legal ruling may still be necessary where ownership cannot be agreed or the personal representatives need protection before acting.

Build one working estate schedule

Create a single master schedule and update it throughout the administration.

For each possible asset, record:

<w:left w:space="0" w:sz="0" w:val="nil"/><w:bottom w:space="0" w:sz="0" w:val="nil"/><w:right w:space="0" w:sz="0" w:val="nil"/><w:between w:space="0" w:sz="0" w:val="nil"/></w:pBdr><w:shd w:fill="auto" w:val="clear"/><w:spacing w:after="60" w:before="0" w:line="271" w:lineRule="auto"/><w:ind w:left="340" w:right="0" w:hanging="227"/><w:jc w:val="left"/><w:rPr/></w:pPr><w:r w:rsidDel="00000000" w:rsidR="00000000" w:rsidRPr="00000000"><w:rPr><w:rFonts w:ascii="Georgia" w:cs="Georgia" w:eastAsia="Georgia" w:hAnsi="Georgia"/><w:b w:val="0"/><w:bCs w:val="0"/><w:i w:val="0"/><w:iCs w:val="0"/><w:smallCaps w:val="0"/><w:strike w:val="0"/><w:color w:val="000000"/><w:sz w:val="20"/><w:szCs w:val="20"/><w:u w:val="none"/><w:shd w:fill="auto" w:val="clear"/><w:vertAlign w:val="baseline"/><w:rtl w:val="0"/></w:rPr><w:t xml:space="preserve">what has happened to it.

Keep a separate liability schedule showing the creditor, account reference, date-of-death balance, later interest or charges, whether the debt is secured or disputed, and when it was paid.

If the correct treatment is not yet known, mark it as unresolved. Do not force an answer simply to complete the table.

Questions to ask about every asset

1. Did the deceased own it legally, beneficially or both?

2. Was it owned solely, jointly, through a company or through a trust?

3. What evidence proves the ownership?

4. What was it worth at the date of death?

5. Is there a mortgage, loan, charge or other liability attached to it?

6. Does it pass under the will, intestacy rules, survivorship, trust terms or provider rules?

7. Is a grant required before it can be collected, sold or transferred?

8. Must it be included when assessing or reporting Inheritance Tax?

9. Is anybody claiming an interest in it?

10. Does it need immediate protection, insurance or professional advice?

Estate-definition checklist

1. List every possible asset before deciding whether it belongs to the probate estate.

2. Separate legal ownership from beneficial ownership.

3. Check whether land is held as joint tenants or tenants in common.

4. Investigate the source and purpose of money in joint accounts.

5. Confirm pension, insurance and death-in-service arrangements with each provider.

6. Keep trust property separate from estate property.

7. Record lifetime gifts and any benefit retained by the deceased.

8. Include personal possessions, debts owed to the deceased and digital assets.

9. Obtain advice for businesses, foreign assets and disputed ownership.

10. Record all liabilities and stop distributions if the estate may be insolvent.

11. Keep one master asset schedule and one liability schedule.

12. Correct the probate or tax position if further assets are discovered.

Understanding the estate prevents assets from being overlooked, taxed incorrectly or given to the wrong person. Once the likely estate has been identified, the next priority is to protect it.

The next chapter explains how to secure, insure and monitor the property and its contents before valuation, clearance or sale begins.

← Previous Chapter Back to After Someone Dies Next Chapter →⭐ Leave a Google Review

Reader Comments

We would love to hear your thoughts on this chapter.

About Harry Georgiou

Harry Georgiou is the owner of Swifty Clearances, a waste clearance business. He writes about responsible waste disposal, fly-tipping prevention, and the practical steps households and businesses can take to avoid inadvertently funding illegal waste operations.

Author Page

Chapter 9 — Understanding the Estate

Reader Comments

Leave a Comment

About Harry Georgiou