Finalising the estate
If the estate has received any untaxed income during the administration period, income tax may be due. This could be things like interest, dividends, rent or business income. You may need to complete a tax return. There are no personal tax allowances to use if the income was received since the date of death.
Capital Gains Tax (CGT)
If any assets were sold and they increased in value since the date of death, CGT may be payable.
You will not need to pay any CGT out of the estate on any assets that were not sold.
If assets were transferred to beneficiaries, they inherit the asset at the date of death value (as listed in the grant of confirmation if applicable). This means they will have to pay CGT if they sell or transfer the asset and the assets gained in value from the date of death/confirmation value.
If there have been any changes in the value of assets or debts, there may be more tax to pay or the estate may be due to a refund from HMRC.
If you have any questions about any of this, contact HMRC on 0300 123 1072 first, or you may want to hire a lawyer if you are still unsure.
You should provide a document or spreadsheet showing all the money flowing in and out of the estate to the residual beneficiaries. This is to prove you have dealt with the money properly.
You should get residual beneficiaries to sign a copy and keep it for your records as a receipt that they accept what you have done before paying out any money.
Get a copy of our free executor spreadsheet
You can get a free copy of a spreadsheet we've put together by clicking the purple button in the bottom right-hand corner. If you have any problems, email: email@example.com
Now is the time to pay out any legal rights claims and then the rest of the money in the estate in accordance with the will, or the rules of intestacy if there is no will. You should get signed receipts for your records.
If the will says that a trust should be set up then it’s a good idea to hire a lawyer.
Bankrupt, mentally disabled, or underage beneficiaries
If a beneficiary is bankrupt you should pay their inheritance to their trustees.
If there is a mentally disabled beneficiary you may need to pay the money to a guardian and have them sign the receipt.
In the case of young beneficiaries, you should be careful how this money is paid out and it may be worth hiring a lawyer if there are special provisions in the will or if there was no will.