When someone dies, it falls to loved ones to deal with their property, money and possessions – known as their estate.
The legal administration of someone’s estate is commonly known as probate. This involves gathering together assets, paying debts, and distributing what is left to beneficiaries.
Applying for a Grant of Probate
If the person who has died has written a Will, this document will usually name the executor who is responsible for dealing with the estate.
If this is you, then before you can start dealing with the deceased’s property and money, you need to establish your authority to act as the deceased’s executor.
To do this, you will need to apply for what is known as a Grant of Probate.
This is a document which gives you the legal authority to access the person’s bank accounts and finances.
It also means you can distribute the deceased’s estate according to the instructions in the Will.
Send the original Will to the Probate Office
To establish your authority you will need to get hold of the original Will; this must then be sent to the Probate Office.
Assessing the estate
Prior to applying for a Grant of Probate, there are host of administrative tasks that you need to undertake.
You need to go through the deceased’s financial paperwork and set down all their assets and debts.
This includes any money held in bank and building society accounts, as well as money held with insurance firms, pension funds and in investments.
You will need to send a certified copy of the death certificate to each institution and must then request a final statement.
Pay attention to property
As part of this process, you will need to provide a property valuation (if there is a house or flat included within the deceased’s estate).
Crucially, you need to work out whether the estate is likely to be worth more than £325,000, as this is the current threshold at which inheritance tax (IHT) kicks in.
What is inheritance tax?
If IHT is likely to be an issue, it is well worth providing a written valuation from an estate agent or surveyor, as this should make your dealings with HM Revenue & Customs more straightforward.
Without a written valuation, HMRC may challenge the figure you provide as being too low.
Fill in probate forms
Once you are happy that you have reached a figure on the size and composition of the estate, you can then proceed to the next stage; this involves you completing a host of probate forms and sending these to the Probate Registry.
The main probate form to apply for probate is a PA1 Probate Application Form.
You will also need to submit paperwork to HMRC to establish whether inheritance tax needs to be paid.
If you don’t expect IHT to be due on the estate, you need to complete IHT 205. But if the estate is above the current IHT threshold of £325,000, you will need to fill out IHT 400.
In addition, you will need to provide details of cash gifts made by the deceased in the seven years prior to their death, as these can increase the value of the estate for IHT.
Grant of Probate
As long as HMRC is happy with your valuation of the estate, you are ready to apply for Grant of Probate.
However, if IHT is due, this must be paid first. You can ask banks or building societies to pay some or all of the IHT due from the deceased’s estate via the “Direct Payment Scheme.” To do this, you will need to fill in form IHT 423.
Once you have completed the relevant forms, you need to make copies of all the probate forms and send them to the Probate Registry as part of your application for Grant of Probate. You will also need to send the original will plus three copies, the death certificate and any codicils along with these forms.
The application fee for probate is £215 (although there is no fee if the estate is under £5,000).
Once you have been granted probate, you should purchase additional copies, as you will need these when you administer the estate. It is worth paying for at least five copies.
Think about using a third-party legal service
As an executor, you may take the view that you can carry out your responsibilities without seeking professional help.
However, you need to be aware that there is a lot of time and work involved in administering someone’s estate; without the support of a third party legal service, there is also a risk you could be held accountable for any unintended errors.
Given the range of legal, tax, administrative – and often property-related – matters involved, it may be worth enlisting help from someone who is experienced in probate.
Seek help with a complicated estate
If the estate is in any way complicated, it’s even more important to seek professional help. This may be the case if, for example, the terms of the will are not clear, or if anyone is likely to dispute the will.
This can save you a great deal of work, risk and stress.
Paying for third-party help
If you do decide to purchase a probate option, legal fees can be paid for from the estate.