Executor's Guide to Property in an Estate: Timelines, Costs and Common Mistakes

The Executor's Role in Property

When someone dies leaving a will, the executor (or executors) named in the will are responsible for administering the estate. Where the estate includes property, this is often the most complex and time-consuming aspect of the administration. Executors have duties both to beneficiaries and to creditors of the estate, and must act in accordance with the terms of the will, the Administration of Estates Act 1925, and the Trustee Act 2000.

It is important to understand that executors act personally and are personally liable for losses caused by their failure to properly administer the estate. Acting as executor without professional advice when an estate is complex — particularly where property is involved — is a risk that should not be underestimated.

Step 1: Secure and Value the Property

Immediately after death, the executor's first obligation is to secure the estate's assets. For property, this means:

• Notifying the deceased's home insurer of the death. Most household insurance policies have terms that modify cover for empty properties (often requiring weekly inspections after 30 or 60 days of vacancy).
• Ensuring the property is physically secure.
• Arranging for mail collection and basic maintenance (particularly during winter months to prevent frost damage to water systems).
• If the property is tenanted, understanding the tenancy obligations that now fall to the estate.

The property must be valued for probate purposes. HMRC requires a "open market value" of all assets at the date of death for the purposes of Inheritance Tax (IHT) (or, where IHT is not payable, for the purposes of the estate accounts). Most executors instruct a RICS-regulated valuer to provide a formal written valuation. Estate agents may provide a "probate valuation" but this is not a formal RICS valuation and may be challenged by HMRC.

Step 2: Apply for the Grant of Probate

The Grant of Probate is the court document (issued by His Majesty's Courts and Tribunals Service via the Probate Registry) that confirms the executor's authority to deal with the estate. Without a Grant, most third parties — including HM Land Registry, banks and conveyancers — will not deal with the executor in relation to estate assets.

The application is made using form PA1P (probate application) along with the original will, a certified copy, and the death certificate. The Inheritance Tax account (IHT400 for taxable estates, IHT205 or IHT400 depending on circumstances for non-taxable estates) must be submitted to HMRC before or simultaneously with the probate application, and any IHT due on death must be paid (at least in part) before the Grant will be issued.

The process from application to receipt of the Grant currently takes between 8 and 20 weeks at the Probate Registry, though timeframes vary. Complex estates and those with IHT disputes take longer.

Inheritance Tax on Property

Property forms part of the deceased's estate for IHT purposes and is subject to IHT at 40% on the value above the nil-rate band (currently £325,000, with the residence nil-rate band of up to £175,000 available where the deceased's home passes to direct descendants). The residence nil-rate band is tapered for estates above £2 million.

IHT on property creates a cash flow problem: IHT is due before probate is granted, but the property cannot be sold until probate is granted. The solution is typically the HMRC Direct Payment Scheme (for assets held in UK banks) or, more commonly for illiquid estates, a commercial loan bridging between the IHT payment and the property sale proceeds.

Selling Property in Probate

The executor has the power to sell property under section 39 of the Administration of Estates Act 1925 (statutory power of sale), which authorises the executor to sell any estate property without the beneficiaries' consent, subject to the terms of the will.

Before selling:

• Obtain the Grant of Probate.
• Obtain a current valuation from an estate agent. Note that HMRC will cross-reference the sale price against the probate valuation — if the property sells for significantly more than the probate value, HMRC may argue the probate valuation was understated and raise an IHT assessment.
• Instruct a conveyancer. The conveyancer will need certified copies of the Grant, the death certificate and the will.

Capital Gains Tax Risks

For beneficiaries who inherit and later sell property, the base cost for Capital Gains Tax (CGT) purposes is the open market value at the date of death. No CGT arises on the transfer to the executor or to the beneficiary on a specific gift. However, if the executor sells property before assenting it to a beneficiary, any gain between the probate value and the sale price is a chargeable gain accruing to the estate — taxable on the executor at CGT rates applicable to the estate (currently 24% for residential property after the October 2024 Budget).

Common Executor Mistakes With Property

1. **Failing to insure adequately:** An uninsured loss in a vacant property falls on the executor personally.

2. **Selling below market value:** Executors must achieve the best reasonably obtainable price. Accepting a below-market offer from a beneficiary or a connected party can be challenged.

3. **Distributing before all debts are settled:** If the executor distributes the estate and a creditor subsequently makes a claim, the executor may be personally liable.

4. **Missing CGT deadlines:** CGT on residential property must be reported and paid within 60 days of completion under the regime introduced by the Finance Act 2019. Missing this deadline results in automatic HMRC penalties.

5. **Ignoring ongoing tenancy obligations:** A tenancy does not end on the death of the landlord. The executor steps into the landlord's shoes and must comply with all landlord obligations including the right to rent, deposit protection and repair duties.