Later life planning is full of essential documents – Wills, trusts, and Lasting Powers of Attorney, to name just a few. Letters of Administration are another vital document you may need, but what are they used for? Read on to find out more about this potentially vital document.
Letters of Administration Explained
Simply put, Letters of Administration are documents that give you the authority to deal with someone else’s estate. Also known as a grant of Letters of Administration, this document allows you to administer the estate, so you can close bank accounts and distribute assets.
Letters of Administration are needed if:
- Someone has passed away without a Will
- There are no Executors for the Will
- The Will left behind has been declared invalid
- The Executors named cannot deal with the estate themselves
When Letters of Administration are needed despite a Will being in place, the document is called a grant of Letters of Administration with Will annexed.
In some cases, when a person passes away without a Will, you may not need Letters of Administration if the estate’s total value equates to less than £10,000. If the estate is only made up of assets such as cash, jointly owned property, bank accounts, or life insurance policies, Letters of Administration may also not be needed. Each bank has its limit for probate, so it is worth checking with your bank to see how much the threshold is.
The Rules of Intestacy
Most cases requiring Letters of Administration happen when a person dies intestate. This means that they have died without a Will, and their estate must be distributed via the rules of intestacy.
These rules affect who benefits from the estate and may lead to some people benefitting who may not have otherwise been considered. Spouses and civil partners inherit solely owned assets and joint assets up to the value of £270,000, along with half the remaining estate over £270,000. For example, if an estate was valued at £500,000, the spouse would inherit £270,000 and £115,000 of the remaining £230,000, with a total inheritance of £385,000. The remaining portion of the estate is then shared between any children or grandchildren.
However, the rules vary depending on the circumstances. For those who are unmarried and have children, their estate is parcelled out between their children and, if one or all of the children have passed away, their grandchildren. The estate of those who pass away, both unmarried and without children, is shared between parents, brothers and sisters, and other close family members.
These rules can often see many people left out of Wills and not benefiting from the estate of a loved one. For this reason, it is vital to have a Will in place to avoid the rules of intestacy from dictating where your estate goes.
With a Will, you can outline your wishes for your assets and provide for people who would not benefit from the estate under the rules of intestacy, such as:
- Unmarried partners
- Good friends
Applying for Letters of Administration
It can take around thirty days to receive Letters of Administration, although this can be longer with complex estates. Usually, the person who will inherit the majority of the estate under the rules of intestacy is the person to apply for Letters of Administration. This person could be the spouse or child of the person who has passed away.
The probate registry deals with applications for Letters of Administration. This can be done by yourself or through a solicitor. Once granted, your letters will be sent via the post.
It costs £215 to apply for Letters of Administration, although this falls to £155 if you use a professional probate service. However, using a probate service can incur additional case handling fees, costing hundreds of pounds. Despite this cost, using such a service is preferable to many people, as it provides peace of mind that everything is being dealt with swiftly and correctly.
Letters of Administration vs. Probate
It is easy to mistake Letters of Administration with probate. The two effectively do the same job, but there are a few key differences. Probate is granted to those named the Executor of an estate in a valid Will, provided that they are comfortable managing the estate themselves.
On the other hand, Letters of Administration are usually issued under the rules of intestacy. If someone has passed away without writing a Will, their estate still needs to be parcelled out to those who benefit according to the rules of intestacy. In this instance, Letters of Administration are required to close assets such as bank accounts. They are also usually issued to the next of kin rather than a named Executor, setting them apart from probate.
Letters of Administration operate as an alternative to probate and are only needed when a person dies without a Will. In some cases, they are not needed to distribute an estate, but it is vital to check whether this is the case before deciding not to apply for them.
The person who deals with Letters of Administration is often the deceased’s next of kin, who will administer the estate according to the rules of intestacy. These rules can lead to many people being accidentally disinherited, so it is crucial to have a Will to avoid this possibility.
Contact The Planning Bee today for more information about Wills, probate, and later life planning. Our team is available for a free, no-obligation chat to discuss your options today.