Probate - what you need to know
'Probate' is the term commonly used that means the right to deal with someone’s affairs after their death. Alongside organising the funeral, one of the first steps will be to find out whether there’s a will. If the answer is yes, dealing with finances and the estate will be much easier. Where there’s a will, there should be one or more executors named, including relatives and/or friends. If you're an executor - otherwise called a personal representative - you’ll need a legal document called a 'grant of probate' that gives you the right to sort out the deceased person's affairs. But if their estate is less than £5,000 or everything was owned jointly with someone else and passes automatically to them, then probate is not needed.
With a will
The first thing is to find out whether probate is required. At a glance, the process to do that looks pretty straightforward.
- Value the estate, which includes property, investments and pensions, jewellery, art, antiques, cars and other possessions, in the UK and abroad. It may also include gifts above a certain value from the deceased made in the seven years prior to their death, according to the threshold for inheritance tax.
- Once, you’ve got an idea of the estate’s value, talk to the deceased’s bank and other financial organisations to establish whether you need to apply for a grant of probate. Property and bank accounts over £15,000 will almost always need probate.
- If you do, complete the relevant application and inheritance tax form.
- Send the forms to the relevant government bodies (in England and Wales, that’s the Probate Registry and HM Revenue & Customs (HMRC)). In Scotland, there are variations to the process or ‘grant of confirmation’ and you have to apply to the Sherrif Clerk.
- Pay whatever inheritance tax is due.
- Attend in person at the Probate Registry or local Probate Office to swear an oath.
- Wait for the grant of representation or probate to arrive in the post. The whole process can be lengthy but varies according to the value and complexity of the estate and the will.
- Pay any debts owed by the estate and then distribute what’s left, according to the will.
Proof of probate is essential for dealing with banks and other financial institutions, local authorities, tax and pensions, estate agents, insurance and utility companies. In most cases, the bank or relevant institution will need to see the grant before transferring control of the assets but may release funds to pay for funeral, mortgage or rent and home insurance directly.
Inheritance tax
Here’s the Catch 22 of probate because it won’t be granted until some or all inheritance tax has been paid. In some cases, it’s possible for inheritance tax to be paid direct to HMRC from the deceased’s bank or building society accounts or for other arrangements to be made. As a rule of thumb, the greater the value of the estate, the more complex the financial and legal issues involved. Unfortunately, the same rule of thumb doesn’t apply to the scale of family squabbles and tensions that even a tiny estate can provoke.
If there's more than one executor, usually one will apply for the grant of probate and sort out the will but up to four executors can apply jointly and deal with the estate together. You can apply directly to the Probate Registry or through a solicitor but it’s worth noting that executors are personally liable for the administration of the assets, completion of formalities and paying debts. Some of these things have to be done within a certain deadline, take up a considerable amount of time and often add to an already stressful situation, which is why many people opt for a solicitor to deal with probate. It’s worth checking the cost of probate services as some solicitors and banks will charge a percentage of the whole estate as well as their normal hourly rates.
Without a will
Clearly, the single most useful thing is to have a will as if there isn’t one, it all becomes more complicated and can take much longer to sort out someone’s affairs after their death. First, someone has to prove they’re entitled to deal with the estate. In most cases this will be a close relative but they would still need to apply for what’s called a Grant of Letters of Administration that offers proof to banks and other organisations that they have the authority to access and distribute funds. However, there are rules of intestacy, laid down by government for deciding who inherits the estate with a strict pecking order:
- Spouse or civil partner (not common law)
- Children, grandchildren, great grandchildren
- Parents
- Brothers or sisters or their children
- Half brothers or sisters or their children
- Grandparents
- Uncles or aunt or their children
- Half Uncles or aunts or their children
- The Crown or Duchy of Cornwall or Lancaster
These rules don’t take into consideration the personal circumstances or wishes of the deceased, however frequently or strongly those wishes might have been expressed. In fact the rules can give control of the estate to people who immediately benefit from the estate, even if the deceased hadn’t spoken to them for years (for example separated but not divorced partners). The rules don’t recognise common law partners, lovers, fiancés or fiancées. The rules do not exclude certain family members in favour of others and there’s no scope for gifts to charity or friends, which could be bad news for the cat’s home but a windfall for evil uncle Ebenezer.
Useful websites
www.direct.gov.uk/en/Governmentcitizensandrights
www.justice.gov.uk