everything-you-need-to-know-about-probate-a-complete-guide

Everything You Need to Know about Probate: A Complete Guide

When someone dies it is a difficult time for obvious reasons. If the person who has died made a Will then the Executors appointed by the Will must act to wind-up the affairs of the deceased. Only the Executors are entitled to deal with the estate, although they can appoint a legal professional to assist them as administration of an Estate is a legal process and can be complicated.

Likewise, if there is no Will then it will need to be established who is entitled to administer the Estate, this will be in accordance with the rules of intestacy. Again an Administrator can appoint a legal professional to assist them.

An Executor, who is not a professional, can find the administration process confusing – what steps do they need to take – is a Grant of Probate required? The whole process is the administration of the Estate, and dependent on the deceased’s assets (what they own including their cash) it may be necessary to obtain a Grant of Probate (when there is a Will) or Grant of Letters of Administration (when there is no Will).

Under the Will the beneficiaries are entitled to receive what has been left to them, however, the Executors or administrators will not be able to distribute the Estate until they have established all assets and liabilities and if a Grant of Probate will be required. For property and certain cash assets a Grant will be required to enable the Executors to collect in these assets and distribute as per the terms of the Will.

If the liabilities exceed the assets then the Estate is insolvent and there will be no Estate to distribute, but the creditors will need to be contacted and agreement reached as to payment – Executors should seek professional advice on how to deal with an insolvent Estate.

What is probate?

Probate is a general term used when administering a deceased’s Estate when a Grant has been obtained.

Executor or Administrator

An Executor is the person named in a Will who has responsibility of administering the Estate and ensuring that the provisions in the Will are carried out.

An Administrator is the person who is entitled to deal with the Estate when the deceased died intestate (there is no Will). There is strict guidance as to who can apply to be administrator under the rules of intestacy which follow the deceased’s bloodline.

Personal Representatives is a general term for both Executors and Administrators.

What is a Grant of Probate?

A Grant of Probate or Letters of Administration may be required dependent on the type or value of a deceased’s Estate. A Grant is always required where the deceased own a house or land in their sole name. A Grant may also be required to collect in cash, investments or stocks and shares, this will depend on their value. All financial institutions set their own financial limits on when they will deal with Executors or Administrators personally or if they require a Grant to be produced.

Grants are issued by the Probate Registry and they prove to third parties, such as banks, building societies and the Land Registry that the Will is valid – it has been proved at the Probate Registry, and it also identifies the Executors.

A Grant of Probate is an official Court document and it assures third parties that they are dealing with those correctly entitled to administer the Estate.

Do you need a solicitor?

Dealing with the administration of an Estate, whether or not a Grant is required, can be complicated. Executors are under a duty to ensure that they understand the terms of the Will, or the rules of intestacy, if there is no Will. They must adhere to the provisions of the Will and not change those provisions. There are strict rules around who inherits in place of someone else and when gifts fail.

The role of Executor has no time limit, so if something occurs in the future after the Estate has been administered and distributed the Executor will still be under a duty to deal with the matter.

An Executor can be held personally liable for any mistakes made on administration and may be liable to pay compensation if a beneficiary has not received their entitlement.

By using a Solicitor an Executor is still in control of the administration process, but is guided by a professional as to the rules. Our legal experts are covered by indemnity insurance and are regulated by the Solicitors Regulation Authority. In the unlikely event of a mistake occurring, the Executor is able to claim for recovery of any losses.

What to look for in a probate solicitor

Here at Best Value Probate we understand that it is a difficult time and you may think it is easier to use the services of the Solicitor who holds the Will. However, not all Solicitors deal with Probate matters and if they do, they may not be experts. What to consider when appointing a Solicitor to assist you:

  • Have you spoken to them – how did they come across – were they sensitive, understanding, supportive and trustworthy?
  • Do they offer a fixed fee and are they good value?
  • How much experience do they have? Do they specialise in probate or are they a “jack of all trades?
  • Are you happy that you can work together?

At Best Value Probate we know everyone’s circumstances are individual and we tailor our services to your needs. We only work with specialists in this area of law, thereby ensuring that Clients who use our services receive the best possible advice, delivered by specialists at a reasonable cost and in a timely manner.

How to choose an executor

When someone writes a Will they choose who they would like to act as Executor or Executors when they die – this is usually someone they trust and believe capable of taking on the administration process.

The role of Executor should not be under estimated – the administration of an Estate is a legal process and can be complicated dependent on a number of issues. The Executor is under a legal duty to ensure that the provisions of the Will are carried out and are not varied. The Executor should ensure that they understand the Will as they can be personally liable for any mistakes. As well as ensuring the Estate is distributed in accordance with the Will, they will need to ensure that any Inheritance Tax is paid and if the deceased paid income tax, that there is no money due to the Estate or owing to the Revenue.

A Solicitor can be appointed as Executor or as a Co-Executor with an Executor who is not a professional – they work together to administer the Estate.

An Executor can also appoint a Solicitor to deal with the administration on their behalf , the Executor still has control of the process, but is guided as to what steps need to be completed – the Will provides for payment of a Solicitor’s fees from the Estate.

How does the administration process work?

An Executor or Administrator needs to establish all assets held by a deceased, this includes property, land, cash in banks, building societies, investments, bonds, stocks and shares, car, caravan, jewellery, antiques, etc and get a total value – at this point the Executor or Administrator will know if inheritance tax is payable (£325,000.00 for a single person or £650,000.00 if transferring the Nil Rate Band on the second death of a couple who have left whole Estate to each other).

If inheritance tax is payable this must be paid before application for a Grant is made. A Grant of Probate will not be issued until the tax has been paid. If the tax is not paid within six months from the date of death, then interest will start to accrue on the tax due until payment.

The Executor or Administrator also needs to establish all liabilities and debts due to be paid by the Estate, such as mortgages, loans, council tax, utility bills, funeral etc – these must be settled from the Estate before any payments are made to beneficiaries. It may be necessary to place advertisements asking unknown creditors to come forward. Executors can be personally liable to pay any liabilities or debts not properly dealt with during the administration.

At this stage it will also be evident whether it is necessary to apply for a Grant. A Grant is the means by which the Executor or Administrator will collect in certain assets and it will be required in order to sell or transfer a house.

The Executor or Administrator will also need to check that all income tax has been paid or if a refund is due to the Estate.

Once all assets have been collected in, liabilities and debts paid the Executor or Administrator will need to prepare Estate Accounts to show the residuary beneficiaries (those entitled to share in the remainder of the Estate after the payment of specific gifts) the transactions which have taken place and how their inheritance is arrived at.

What is DIY probate?

Although it is possible for an Executor or administrator to apply for Probate personally, there is far more to do when administering the Estate than might first appear. The Grant is the document which gives the right to administer the Estate. The administration itself is far more complicated. Executors or Administrators should be confident that they understand the process and are able to deal with the Estate. Mistakes can be costly!

If you have started the administration process but have become bogged down, then you can still seek professional help and advice.

How much does probate cost?

Probate costs can depend on the value of the estate left in the will. Some solicitors or banks will charge fees and also take 1-5% of the estate value, which can be expensive. Your best bet is to opt for a fixed fee service where you agree on the amount you will pay up front, and no more. This way you can guarantee that you won’t be faced with a huge and unexpected bill at an already sensitive time.

How long does probate take?

From taking instructions to receiving a Grant of Probate is usually around 8 – 12 weeks. It is not possible to say how long the administration process will take – it depends on the assets in the Estate. If there is a house to sell, then finalising the administration will depend on how soon the house sells. If it is collecting in of cash assets then the estate can be finalised usually in around 6 months.

If there is a possibility of a claim being made against the Estate, then the Estate cannot be distributed until 10 months has elapsed after the issue of the Grant, as a person making a claim has six months in which to issue proceedings after the Grant has been issued and a further four months in which to serve the proceedings.

What if the deceased left no will?

When someone dies without leaving a will, this is called ‘intestate’ and the estate will pass to the next of kin, or will be decided by courts according to the rules of ‘intestacy’. If you don’t leave a will, your family could miss out on their inheritance, particularly if they are stepchildren, you are separated but not divorced, or have other complicated family situations. This is why it is so important to leave a will.

How much inheritance tax will I have to pay?

Currently the inheritance tax threshold is £325,000.00 for a single person – above this amount inheritance tax is charged at 40%. There are exemptions to this rule, for example, if money is left to Charity.

For married couples the Estate is exempt from inheritance tax where the whole estate passes to the surviving spouse.

On the death of the surviving spouse it is possible to transfer the inheritance tax allowance which was not used on the first death, thereby increasing the threshold to £650,000.00.

If gifts were made to others, such as children on first death, then these have to be taken into consideration when transferring the unused part of the inheritance tax allowance on second death.

What is a charitable legacy?

A charitable legacy is when someone leaves money or assets to charity in their will. This can be any charity – children’s or animals’ for example, or even political parties. While this is usually done with good intentions, there are also some personal benefits to donating money to charity in your will.

When you leave a charitable legacy of over 10%, your inheritance tax will be reduced from 40% to 36%, which could save thousands off your beneficiary’s tax bill.

What is a trust fund?

A Trust fund is an amount of money or property left to a beneficiary or a group of beneficiaries. A Trust is managed by the Trustees named in the Will. It is the Trustees’ role to ensure that the trust is managed as per the provisions of the Will.

There are different types of trust, some of which are quite simple and others which are more complicated and are put in place to protect a vulnerable beneficiary or to reduce a tax liability. The trust is created by the Will but needs to be formalised under the administration process. In order to preserve the Trust professional advice should be sought.

Hopefully this has helped you to understand the process of probate and eased the situation at a very difficult time. If you would like more information or to get a quote for probate from us, give us a call on 0207 406 5875.

About the Author Ellie Pierpoint

Ellie is a resident writer for Best Value Probate, covering topics such as Probate, wills and other legal proceedings.