Gary O’Brien

7 January 2021

4 reasons executors should seek financial advice after the death of a client

When a client dies, the executor of their estate faces the complex duty of winding up their legal and financial affairs.

Being an executor can be extremely challenging, especially if they’re also suffering the pain of losing a loved one.

An understanding and proactive financial adviser can make a real difference to the ability of executors to carry out their newfound responsibilities.

Here are four reasons why executors should seek financial advice after the death of a client.

1. A financial adviser can assist in the probate and estate administration process

For executors, the probate and estate administration process can be lengthy, stressful and confusing. Executors are usually responsible for carrying out a wide range of tasks – from arranging a funeral to dealing with property and calculating any Inheritance Tax (IHT) that may be owed.

If the client’s wealth, investments and property assets are especially complex, it may feel like an enormous burden.

Directing the executor to the deceased client’s financial adviser can make the process easier. The financial adviser will be able to explain which investments the clients had and where they are held. They’ll also know whether the client had accessed their pension, which property they owned, and the types of insurance they had in place.

By having in-depth knowledge of the client’s financial situation, the financial adviser is best placed to provide support during a difficult time.

2. A financial adviser can identify potential IHT relief

Calculating how much IHT a deceased person’s estate owes is an extremely complex task that many executors may struggle to get right.

The IHT nil-rate band of £325,000 is fairly easy to grasp. But things get more complicated if the estate qualifies for the additional Residence Nil-Rate Band or is worth more than £2 million and subject to tapering restrictions. A financial adviser can provide invaluable support by calculating IHT on the executor’s behalf.

A financial planner can also advise as to whether the client held investments that qualify for Business Relief. This can reduce IHT by up to 100% on certain shares, property, and machinery. The financial adviser can direct the executor to the right forms for making a Business Relief claim.

3. A financial adviser can help settle the IHT bill

Named executors are usually responsible for arranging the IHT bill payment. HMRC normally requires IHT to be paid within six months, but probate can take a lot longer than this and usually isn’t granted until IHT has been paid.

Sometimes, there may not be enough cash in the estate to settle the IHT bill. The executor may need to take out a short-term loan to pay it off.

Any executor who is struggling to settle an IHT bill upfront should speak to a financial adviser. The adviser might find other ways of paying the bill, such as using the client’s whole of life policy or paying IHT on property in instalments.

4. A financial adviser can advise beneficiaries on their newly inherited wealth

If the executor is also a beneficiary of the client’s estate, they may stand to inherit significant wealth. A financial planner can help beneficiaries understand their options.

When it comes to specific investments, beneficiaries may need help with:

  • Accessing investments – by setting up withdrawals or selling them
  • Inheriting an ISA as a spouse
  • Putting assets into a trust
  • Deciding what to do with Business Relief-qualifying shares.

A financial planner can also give advice on how the beneficiary’s inheritance could support their own financial needs and goals. For example, they may need help on deciding whether to use the money to save or pay off debts. They might also need support on where to invest their money.

By carefully planning where the inheritance is invested, a financial planner could help the executor grow their wealth, secure a comfortable retirement, and leave their own legacy when they die.

Get in touch

At Ardent, we can guide executors through the challenging process of settling a client’s affairs and investing an inheritance. As Chartered financial planners, we’re committed to delivering the highest standards and ethical behaviour.

To find out more, please email or call 01904 655330.

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