Probate & Estate Administration
When a person dies, someone must deal with their affairs. This is called “administering the estate”.
If there is a Will
If the person who has died leaves a will, it will usually name one or more people to act as the executors of the will – that is, to administer their estate. If you are named as an executor of a will then you may need to apply for a grant of probate. A grant of probate is an official document which the executors may use to administer the estate. It is issued by a section of the court known as the Probate Registry.
If there is no Will
If there is no will (known as dying ‘intestate’) the process is more complicated. The Administration of Estates Act 1925 sets out who can act as administrator – that is, who has the legal right to deal with the affairs of the person who has died. The administrator will usually be a close relative of the person who has died, if there is one. There may be more than one person with 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.
Responsibilities of personal representatives
Once an executor has applied for a grant of probate, or an administrator has received a grant of letters of administration, they become a Personal Representative. They have heavy responsibilities and must:
- Safeguard the assets in the estate,
- Collect the assets into their control,
- Sell or transfer estate assets to the beneficiaries,
- Pay any outstanding debts and/or liabilities,
- Cancel subscriptions, passports etc,
- Ensure compliance with H M Revenue and Customs requirements in respect of income tax, inheritance tax, and capital gains tax,
- Prepare a full Estate Account setting the full extent of estate assets, liabilities, and expenses,
- Distribute the assets to the correct beneficiaries, either according to the Will or intestacy rules.
Personal representatives have a legal duty to carry out these tasks with due diligence and will be held personally liable if the estate is not administered correctly.
Our Fees
We will provide you with a firm quote for the costs involved in dealing with the estate after an initial consultation with you and once we have all the necessary information to hand.
FAQs
What is an estate?
All the money, property and other assets owned by a person on their death.
How is an estate valued?
The estate is valued by obtaining date of death valuations of assets of the deceased held from by various asset holders, such as the value of property, the value of any money in bank accounts including interest, and the value of any stocks and shares, etc. From this any liabilities of the deceased can be deducted such as the funeral bill, testamentary expenses, and bills or other debts outstanding at the date of death. This then gives the net worth of the deceased as at the date of death.
Do I have to pay inheritance tax?
Whether Inheritance Tax needs to be paid can depend on:
- how much the property and belongings of the deceased were worth when they died;
- the value of any gifts that they gave before they died, and who they gave these gifts to;
- the value of certain trusts from which the deceased benefited; or
- which people benefit under the will or under the rules of intestacy (the beneficiaries) – for example, gifts passing to the deceased person’s spouse or to charity will be exempt from inheritance tax.
- There are also certain reliefs available for qualifying assets known as business and agricultural property relief.
At present, each person has a tax free “nil rate band” of £325,000. Everything within this is taxed at 0%. In addition to this, depending on the size of an estate, there may also be a “residential nil rate band” available, currently £125,000. This may be available if residential property is left to direct descendants of the deceased. In certain circumstances, a surviving spouse on their death may be able to claim the nil rate bands of their deceased husband or wife.
When do I pay inheritance tax?
Inheritance tax (IHT) is payable before the grant of probate/representation can be obtained. If the IHT which is due is paid in full (within 6 months of the month within which the deceased died) there will not be any interest payable to HMRC. If it is not paid within this time frame then interest will accrue on the amount of IHT due and outstanding, currently set at 3%. You can elect to pay the IHT due on property (houses, buildings and land) on a 10 year instalment option basis. The 1st instalment is due immediately and as set out above.
What is a grant of probate?
If the deceased has a will, the executor or administrator will apply for a grant of probate. The grant is a legal document which confirms that the executor has the authority to deal with the deceased person’s assets (property, money and belongings).
If the deceased died leaving no will (or a will which does not name executors, or the executors named are unable to act) the laws of intestacy will determine who can apply to the court (the “administrators”) and the court will issue a grant of letters of administration. The phrase “grant of probate” is often used even if the deceased did not leave a will as a general term.
What is probate?
The term “probate” is used to describe the process of administering the estate of the deceased and dealing with their affairs, from death to obtaining the grant of probate to distribution of the estate to those entitled under the will or laws of intestacy (the “beneficiaries”). The process also includes dealing with any inheritance tax, or income tax due by the deceased.
What are the laws of intestacy?
These are the laws which govern what happens to the estate of the deceased when they do not leave a will, including who can apply to the court for the grant, and who is entitled to the estate.
Do I need a grant of probate?
Usually, a grant of probate will be needed when the deceased left:
- more than £5,000 (some financial organisations may agree to pay funds without a grant of probate if the estate is small, each organisation will have their own level up to which they will release funds without a grant of probate);
- stocks or shares;
- a house or land; or
- certain insurance policies.
How long does probate take?
Dealing with the affairs of someone who has died can take a long time. It is not unusual for it to take up to a year, perhaps longer if things are not straightforward. Many organisations may be involved in the process, for example, banks, building societies, insurance companies and H M Revenue and Customs.
The estate cannot be fully dealt with until all claims on it have been received. Individuals have six months from the date when probate was granted to make claims against the estate.
Other things that may affect the time taken are:
- whether the financial affairs of the person who died were in order;
- what the person who died owned and where it is;
- whether the person who died had an interest in a business or a farm;
- what the will or the rules of intestacy say;
- whether there are any legal disputes (claims against the estate or claims by the estate);
- whether the estate is insolvent;
- whether inheritance tax needs to be paid; and
- making sure that all H M Revenue and Customs files are closed and that matters relating to income tax, benefits agencies and pensions have been sorted out.
Arguments between family members, beneficiaries or personal representatives can also delay matters. Any disagreements must be sorted out before the affairs of the person who died can be settled.
