Estate & Probate
What is Probate?
Probate is the process of estate administration. Estate being the collection of assets left behind, after all debts have been taken into account, when someone passes away. Essentially probate is the term applied to the whole process of settling someone’s estate, and the permission of carrying out the wishes of someone’s Will.
Executors are the people named in a Will who will be responsible for administering the wishes of the deceased in regards to the estate they have left behind. In most cases this will be a family member or close friend, but is also possible for a professional executor to be appointed; for example a solicitor.
Commonly, more than one executor is appointed, and together they will arrange all affairs, such as funeral arrangements and paying any debts.
How probate is administered
In order to administer someone’s estate after they have passed away, you will need to obtain a grant of probate. This is the legal authority, or permission, to settle any affairs and distribute any assets to the conditions of the deceased wishes.
What is a Grant of Probate?
If you are named as an executor of a Will, you may need to apply for a grant of probate. A grant of Probate is an official document which the executors may need to administer the estate. This will be issued by the Probate Registry section of the court.
What is a beneficiary?
People who eventually benefit from the estate. They are either named in the Will of the deceased person or are entitled to benefit under intestacy laws. Beneficiaries don’t come to own anything until it is passed on to them by the Personal Representatives. The rights of the beneficiaries at this stage are to have the estate properly administered for their benefit.
When is probate required?
In the high majority of cases, grant of probate will need to be obtained to act as the executor of someone’s estate especially when the person who has died left:
- More than £5,000
- Stocks and shares
- Property or land
- Certain insurance policies
However there may be some circumstances where probate is not required; cases of small estates and where no property is owned, or at the discretion of banks and other financial institutions involved. To find out, executors will need to write to each institution (e.g. banks or investment brokers) to inform them of the death and provide a certified copy of the death certificate.
This may be the case when estate left is less than £5,000 in total, or if everything was owned jointly with someone else; therefore ownership will be transferred upon their death. In other cases, some financial organisations, such as banks, may agree to pay funds to a Personal Representative without a grant of representation if the estate is very small. It’s always worth asking!
What if no Will is left?
If someone dies without leaving a Will, this is known as dying intestate. This makes the process of Probate more complicated.
The Administration of Estates Act 1925 sets out who can act as administrator i.e. who has the legal right to deal with the affairs of the person who has died. The chosen administrator will usually be a close relative of the deceased, if there is one. There could be more than one person who has an equal right to do this. Anyone who has this right can apply to the probate registry for a grant of letters of administration. This is an official document, issued by the court, which allows administrators to administer the estate.
There are some cases where the law says that more than one person must act as administrator e.g. when the person who benefits is a child.
What is Grant of Representation?
This includes both grant of probate (when there is a Will) and grant of letters of administration (when there is no Will). Although, people often just refer to a ‘grant of probate’ even if there is no Will.
What are Personal Representatives?
These are executors or administrators. If there’s more than one Personal Representative, they must work together to decide matters, but disagreements can cause delays.
- Safeguarding assets in the estate
- Collect the assets into their control
- Settle all the debts of the estate
- Correctly distribute the assets to the beneficiaries named in the Will, or those entitled to benefit under intestacy laws
- Finding out whether or not inheritance tax (IHT) is due upon the death of a person. If so, it is down to the Personal Representatives to make sure that it’s paid to HMRC
How to obtain Grant of Representation
We will apply for the grant of probate on your behalf, through the post. You will not need to attend at the court.
When full details of the estate are known:
- The Personal Representatives will either swear on oath in front of an independent solicitor, which we will arrange for you or sign a statement of truth for which there is no fee payable.
- There’s a small fee for swearing an oath - usually £5-£10.
- The oath or statement of truth and the Will are then sent to the Probate Registry for probate to be granted.
- There’s a court fee of £155 for this, and 50p extra for each office copy of the grant of probate.
- An inheritance tax form is completed, and this will either be short-form or long-form, depending on the size of the estate. This is then signed by the Personal Representatives. This form gives HMRC information such as; valuations of all assets and debts of the estate and a calculation of any inheritance tax liability.
It is very important that the Personal Representatives carry out full investigations into the deceased person’s estate and that all assets are declared in the inheritance tax return. Failure to make complete disclosure can lead to precise financial penalties being imposed on the Personal Representatives.
What happens once grant has been obtained?
Once grant of representation has been obtained, the Personal Representatives are then able to deal with:
- Any sales of assets
- Collection of assets
- Payment of any outstanding debts
This may include the following examples:
- Closing bank accounts
- Selling the house or transferring it into the names of the beneficiaries
- Selling shares or transferring them to beneficiaries
- Claiming any money which is due under life insurance policies
- Collecting pension arrears
- Checking or transferring insurance cover
- Selling personal effects
- Refunds on season tickets
- Cancelling subscriptions
- Cancelling passport
- Dealing with uncashed cheques
The collection of some assets can be more difficult than others. It may be wise to get some advice when dealing with shares in a private company, family business or assets situated abroad.
Payment of Debts
The PRs are responsible for paying all debts owed by the deceased before distributing the estate to the beneficiaries. The PRs may be personally liable for any debts if they distributed the estate without making sure that the creditors have been paid first. You should use the statutory notice procedure to advertise for creditors - if you need help with this, get in touch with us.
If the deceased person’s debts are insufficient to cover the debts, the estate is insolvent and special rules apply - we can also advise you on this.
HM Revenue and Customs will agree the extent of any liability for IHT after examining the IHT return that was filed by the Personal Representatives.
This might take many months because HMRC may wish to negotiate with us over values. However, we will always do our best to keep things moving forward as quickly as possible for you. Once the IHT liability is agreed and paid, a clearance certificate is issued by HMRC.
Any income that the assets earn during the administration period (period between day after death to the day the Personal Representatives finish distributing the assets) will need to be declared for income tax purposes. If any assets are sold, there could be capital gains tax to pay.
Once all of the assets have been realised and the debts, administration expenses and tax have been paid, the rest of the estate can be transferred to the beneficiaries. The PRs should also prepare certificates for the beneficiaries, displaying the income received during the administration period and the resulting income tax which has been deducted from it.
If the beneficiary is a non-taxpayer, they can recover all or part of the tax paid by the Personal Representatives.
If the beneficiary is a higher-rate taxpayer, they will have to pay additional tax via their own tax return
How long does Probate take?
Dealing with the affairs of someone who has died can take a while, as the Probate process is dependent on the complexity of the estate in question. It’s not unusual for the process to take as long as a year, possibly longer if things aren’t straightforward. Several organisations may be involved in the process (e.g. banks, insurance companies, building societies and HMRC), which can all cause delays.
The estate cannot be dealt with until all claims on it have been received. If individuals wish to make claims against the estate, they have six months from the date probate was granted.
These are some things that may affect the time it takes:
- Whether the financial affairs of the person who died were in order
- Whether the person who died had an interest in a business or a farm
- What the person who died owned and where it is
- What the Will or intestacy rules say
- Whether there are any legal disputes e.g. claims against the estate or claims by the estate
- Whether the estate is insolvent
- Whether inheritance tax needs to be paid
- Ensuring that all HMRC files are closed and also making sure that matters relating to income tax, benefits agencies and pensions have been sorted out.
Arguments between family members, beneficiaries or Personal Representatives can also cause delays. Any disagreements must be sorted out before the affairs of the deceased can be settled.
Why do I need a solicitor?
The use of a solicitor is recommended to assist and protect Personal Representatives throughout the process. A solicitor can ensure the estate is administered correctly, with all applicable exemptions (such as debts) taken into account, and relevant taxes (such as IHT) are paid correctly.
When there is no will a solicitor can be used to ensure the Personal Representatives find out the correct beneficiaries; and can even instruct a specialist genealogist to trace family members if appropriate.
Sharing the burden after a death
When someone dies, an executor or administrator deals with their estate. This might mean anything from selling a house and distributing the proceeds to paying debts and inheritance tax. It may also be necessary to obtain a Grant of Probate. When you’re also experiencing the emotional upheaval of bereavement this can seem complex and daunting.
As solicitors with experience of all aspects of probate and estate administration, we can remove the burden from you, completing the legalities and paperwork quickly and efficiently, taking care of everything on your behalf.
We will collect money owed, sell or transfer assets, deal with possessions, pay inheritance tax, settle other debts and distribute the remainder of the estate so everything is managed to the very highest professional standards.
Some clients choose to name us in their will as an executor or joint executor. It is something we are happy to do to give added peace of mind.
Our Fixed Fee Probate Service
Traditionally, solicitors have charged on a time basis according to hourly rates for the time spent dealing with the administration of an estate and in addition many also make a charge – known as the value element – based on a percentage of the value of the estate. Banks are known to charge significantly more - typically a flat fee of 4% of the gross value of the estate. There are also other non legal firms offering probate services and may appear cheaper than solicitors but we pride ourselves on our quality of service in this field and at a difficult time, it is important that you can rely on your advisers. Every single member of our team has extensive experience in dealing with administration of estates.
We are able to offer a fixed fee for our probate services. This will give you peace of mind knowing at the outset what our costs will be. Please also see our Probate Guide for further information on why a Grant is required and what the process involves.
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