Can an executor pay beneficiaries before probate is granted?

Written by: Norman Phillips

When someone passes away and leaves a will, a person called an executor is in charge of sorting out their property and money.

Probate is a legal process that happens after someone dies. It’s all about making sure that the person’s will is valid and that their property, money, and possessions (called their estate) are dealt with correctly.

A key question for many executors is whether they can give money or property to the people named in the will (beneficiaries) before the probate process is officially over.

This article aims to answer this question. We’ll look at the rule’s executors need to follow and the risks of giving out inheritances too soon.

Understanding the Role of an Executor

When someone writes a will, they choose an executor. This is a person who will make sure their wishes are followed after they die.

Being an executor is a big responsibility. They need to take care of the deceased person’s property, pay any bills or debts, and then give what’s left to the people named in the will (called beneficiaries).

The first job for an executor is to find all the deceased person’s financial information and keep their property safe. This might mean anything from securing a house to making sure their bank accounts are in order.

The executor also needs to find out about any debts the person had and make sure these are paid off.

Executors can’t just start giving out money or property straight away. There’s a legal process they need to follow, and this usually involves getting something called ‘probate’.

What is Probate and Why is it Important?

Obtaining the grant of probate means getting the legal authority to deal with the property, money, and possessions of the deceased after they’ve passed.

As an executor, you must apply for probate before you can sell any properties or assets.

This can be done through a solicitor, an accountant licenced to undertake probate work, or you can fill out the probate forms yourself on the government’s website.

Probate is important because it protects everyone’s interests. It makes sure that the executor is the right person to handle the estate and that they do it properly. It also helps to make sure that all debts and taxes are paid, so there are no surprises for the beneficiaries later on.

Sometimes, probate can take a while.

This is especially true if the will is complicated or if there are a lot of assets or debts to sort out. During this time, the executor needs to be careful about not giving away any of the estate’s assets until they have the official go-ahead, which is the grant of probate.

Related reading:

Legal Constraints and Responsibilities

The main rule for an executor is that they should not distribute any part of the estate to beneficiaries before getting probate.

This is because, until probate is granted, the executor doesn’t have the full legal right to deal with the estate’s assets. 

There are also other responsibilities that come before paying beneficiaries. For example, the executor needs to make sure that all the estate’s debts, like loans or bills, are paid.

They also need to pay any taxes that are due. This could include Inheritance Tax, which is a tax on the money and property of someone who has died.

It’s also the executor’s job to make sure that the will is followed correctly. If the will says that certain things need to happen before the beneficiaries get their inheritance, then the executor needs to do these things first.

Related reading: Do you have to pay inheritance tax before probate?

Exceptions and Special Circumstances

While the general rule for executors is to wait until probate is granted before distributing assets, there are some exceptions and special circumstances that might allow for earlier distribution:

  1. Specific Bequests: Sometimes, a will might include specific instructions for certain assets to be given to beneficiaries immediately upon death. In such cases, if these specific bequests do not impede the payment of debts or taxes, an executor might be able to fulfil these wishes without waiting for probate.
  2. Partial Distributions: In some cases, if the estate has sufficient assets to cover all known debts and taxes, an executor may consider making partial distributions to beneficiaries before probate is granted. However, this should be done cautiously and usually with legal advice, as the executor remains responsible for ensuring all debts and taxes are paid.
  3. Emergency Situations: In rare circumstances, if a beneficiary is in dire need, for example, facing financial hardship, the executor may consider an early distribution. However, this carries risks and should only be done after careful consideration of the estate’s ability to meet its obligations.
  4. Insurance Policies and Certain Accounts: Some assets, like life insurance policies or retirement accounts, may have named beneficiaries and can often be distributed outside of the probate process. This means these assets might be accessible to beneficiaries before the rest of the estate is settled.
  5. Small Estates: In the case of small estates, some jurisdictions have simplified procedures that might not require formal probate, allowing for quicker distribution of assets.

Accessing funds prior to sale

Most estates will include a main residence that needs to be sold.

Even though you can start advertising the property for sale before you get Probate, you can’t actually complete the sale until you have it.

This means that none of the beneficiaries will be able to enjoy their inheritance until the probate period has passed and the property sale then completes.

This timeframe could run to 6-12 months.

A beneficiary loan, or inheritance advance loan, maybe one solution to free up some cash, while the property is on the market.

The loan can be used to access a proportion of the inheritance that is due. Once the property or assets are sold, the loan and interest is repaid.

Please call us on 020 8301 7930 to see how this could work for you.

Norman has been in the financial services industry since 1987. For the first 10 to 15 years this was quite broad in scope including inheritance tax, residential mortgages and pensions, but this gradually changed such that since 2005 he has specialised in property finance. Specialisations; Property Development Loans, Holiday Let Finance, Commercial Loans.
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