Administration of Assets

General

The personal representative, whether an executor or administrator is obliged to collect in the deceased’s assets and distribute them in accordance with the terms of the will or the rules on intestacy, as the case may be.

Legislation confers a range of powers and duties on the personal representatives. They must finalise income tax returns. They must make returns to the Department of Social Welfare in some cases. They must deal with inheritance tax issues on succession.

If the will creates a trust, there may be ongoing continuing obligations. The will may provide that the executors are also trustees, in which event upon completion of administration, they vest the assets in themselves as trustees and are obliged to administer the trust. The trust may range from the trust with very clear unequivocal, unambiguous obligations and rights to discretionary trusts.

Personal representatives are required to complete administration as soon as reasonably practicable. It is a long-standing rule that, an executor may not be sued by beneficiaries for failure to distribute and administer within a year without the consent of Court. Creditors may take proceedings within the year.

Where a person appointed as executor has reserved his rights to take a grant of probate, a grant of probate may, issue from the Probate Office to him. The executor who reserved his rights may apply for a grant of double probate where the other executor is still alive.

Basic Obligations

The grant of representation authorises the personal representative to take in and secure the deceased’s assets. The production of the grant is usually sufficient authority to secure that the asset is transferred to the executor for the purpose of ultimate distribution.

Executors are obliged to keep accounts of money paid and received. Ultimately, they have an obligation to account to the beneficiaries to explain and justify the extent of the benefit received by each of them.

The executor is authorised to take physical control of assets such as cash, goods etc., provided he does so peaceably.

There is an obligation to pay the deceased’s debts and liabilities,  and funeral expenses.

Assets Abroad

If assets are situated in another jurisdiction, a grant of representation will usually be required in that jurisdiction. This commonly arises in respect of assets held in the United Kingdom, whether Northern Ireland, Scotland or England and Wales.

Certain UK assets, such as shareholdings may be obtained on proof of death and an Irish grant of probate without a separate England and Wales or Northern Ireland grant of probate. However, the thresholds are relatively low being of the order of £ 20,000.

Bank and Accounts

The proceeds of bank accounts can generally be obtained on production of the grant of representation.

In the case of a joint account, which passes on death, the production of the death certificates will usually suffice. If the account is more than a certain amount, certificate of clearance CAT was formerly required where the account exceeded a certain amount. (€31,750)

The executor will generally open an executor’s account with a financial institution. By sending the grants of representation and completion of the relevant authority and instruction, sums in the relevant bank accounts, savings account certificates, savings accounts are usually transferred to the executor’s account.

Shares

Some assets are held in certificated form, for example, shares in a private company which are usually evidenced by a share certificate.

The relevant shares may be transferred into the name of the executor for the purpose of distribution. Generally, in the case of certificated shares, this requires the production of the original of certificates or alternatively evidence that they have been lost. Where the shares are transferred, a share certificate will issue in the executor’s name.

Many public companies’ shares do not have share certificates and are held in records held by certification entities. The shares are dematerialised and held through nominees. In this case, the transfer is undertaken without the production of certificates or the issue of certificates to the new shareholder.

In the case of investments, consideration might be given to realising the investments or having them transferred in specie. The realisation of investments may trigger capital gains tax or encashment taxes. Many investments are subject to special taxation regime, separate from capital taxes. See generally the section on taxes.

Most corporate registrars require a grant of probate in the case of shareholdings over a certain minimal amount. Evidence of tax status may also be required in some cases.

Insurance Policies and Investments

Insurance policies may have been taken out for the benefit of the estate. Grants of representation will generally be required to have the assets transferred to the executor. The policy will usually be encashed and paid into the pool of estate assets. If the policy is an asset of the estate, there should be no tax consequences in this payment itself.

Some assets will be income bearing and create obligations for the executor to account for income tax. This applies to rental properties, shares and investments that are not rollup investments.

Certain investments may be used in payment of inheritance tax on favourable terms. Government stock may be tendered at par for this purpose. It may be an advantage when face value is less than the par value.

Social Protection and Pensions

If the deceased was in receipt of a social welfare payment, it is necessary to communicate the particulars of the death at an early date to the Department of Social Protection. Nearly all social welfare payments are personal and cease upon death. It is required that the relevant claims books etc where applicable are returned.  A death gratuity may payable.

Some pension schemes including civil service pension schemes may provide for a lump sum on death. Income from pension schemes may end upon the death of the deceased. Some types of schemes will have continuing pensions income for the benefit of spouse and children. There may a lump sum.  In other cases, a pension scheme may provide for payment on death together with a refund of contributions made.

Insolvency

The executor’s first obligations are to pay the debts funeral expenses and administration expenses. They have priority over other expenses. Where the estate is insolvent, this remains the case.

Where the estate is insolvent, the executor must administer the estate in accordance with the rules of bankruptcy. He must pay the relevant categories of creditor. If there are insufficient funds, the sums paid to the relevant categories abate proportionately. Each must be paid the same proportion.

The implication of this is that it may not be an attractive option to take out a grant representation in the case of an insolvent estate, as the insolvency process must be undertaken for the benefit of the creditors. In this case, the beneficiaries may refuse to take out a grant, in which event creditors may need to apply to take a grant.

See the sections on insolvency. Certain expenses have priority after the funeral, testamentary and administrative expenses. They include certain taxes due and payments due to employees arising in respect of a certain period prior to death.

Order of Entitlement

Where there are sufficient assets, beneficiaries are ultimately entitled. However, that is an order of entitlement in accordance with the nature of the benefit. Debts may be primarily payable out of one category of assets over another. This may have an effect on the benefits received.

The following is the order of entitlement. Debts and liabilities are primarily payable out of the following property in the following order provided it is available.

• undisposed of property subject to retention of a fund to pay pecuniary /monetary legacies,
• property not specifically disposed of by either a specific or general description or a  residuary gift subject to retention of money sufficient to any pecuniary legacies;
• property of the deceased specifically appropriated or devised or bequeathed for the payment of debts;
• the funds to meet pecuniary legacies if any;
• property specifically devised and bequeathed proportionately according to value;
• property appointed by will under a general power proportionately according to value.

The order of application may be varied. The above rules do not apply to liability to land on which inheritance taxes may be charged.

Debts, Expenses and Creditors

In effect, and in most cases, the residuary assets(remaining after specific legacies and bequests) bear the debts and testamentary funeral expenses. These funds will be reduced down to zero before specific legacies are called upon or reduced.

Where the funds available for the relevant class are insufficient to pay the debts and liabilities, each person receives a proportionate or ratable amount. The relevant benefits abate proportionately. Therefore, if there is insufficient monies to pay legacies, the amount of each legacy is reduced proportionately and each person gets the same fixed percentage of the legacy.

Third parties dealing with executors are generally authorised and protected. Notwithstanding, for example, that the grant is later revoked, they get a valid discharge for payments made to the representative in good faith.

Section 49 of the Succession Act allows personal representatives to obtain a measure of protection by advertising for creditors and claims. The types of notice required are not specified in the legislation. Generally, advertisements in the national newspaper for two consecutive weeks and appropriate advertisements in a local newspaper where the deceased lived, would suffice.

This should call on the persons with claims to contact the personal representative or his solicitor, generally, within a month. This will protect the executors in the event that they distribute assets without providing for claims of which they are unaware.

Selling Assets

A purchaser of assets from a personal representative in good faith obtains good title to them notwithstanding that the grant is invalid. The third-party must act in good faith and must have no good reason to doubt the personal representative’s status.

If assets are distributed incorrectly, such for an example as, where debts later emerge, the personal representative and persons claiming may be entitled to recoup the assets and trace them from beneficiaries to whom they have been distributed.

Real Property

There is provision in the registration of title legislation whereby a person entitled to registered estate, may apply to have it vested in him where without an assent, where the executor has since died, more than six years must have passed since the date of death of the deceased and the personal representative is dead or out of the jurisdiction.

A personal representative may make an assent vesting real estate i.e. land and buildings in the person entitled. An application and assent must be lodged in the Land Registry to deal with registered title land. The Land Registry does not look behind the exercise by the personal representatives of his powers, unless there is a patent lack of entitlement. An assent may be made and registered in the Registry of Deeds. An assent formally vests the asset in the person entitled.