Frequently asked questions about probate
‘Probate’ is the name generally given to the process of administering someone’s estate when they die. When someone dies owning significant assets, a formal 'grant' must be obtained from a court to enable their estate to be collected in and divided between their beneficiaries.
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Do I need probate?
There are circumstances where a grant is not needed. Where the estate is less than £5,000, for instance, and only includes cash funds held in deposit accounts, you would not normally need to obtain a grant in order to obtain the money. However where the estate includes certain assets – like land or shares – you will always need to obtain a grant.
When someone leaves assets over £5,000, one of the types of grant is usually required before those assets can be obtained and distributed. Some assets, for instance bank accounts, can be closed where the cash within them is around £5,000 (sometimes more, depending on the bank)., though administrators should note that where a person dies intestate, the administrator obtains their authority from the actual grant. A grant is required to deal with other assets, like shares in a company or a house.
Anyone who needs to sort out the affairs of someone who has died and needs to access their bank accounts, investments and other assets in order to pay their debts, inheritance tax and distribute their estate. They cannot do so without a grant of probate or (where there is no will) letters of administration. Those persons must be the executors of the will. Where there is no will, usually the next of kin are entitled to administer the estate and there are statutory rules about who those people are. No one who has an interest in the estate of someone who has died can receive their inheritance until such a grant has been obtained.
There are 3 main stages to obtaining probate or administration:
- Investigating the extent of the estate. This includes all information about the assets and liabilities of the person who died, even relatively insignificant ones. This involves contacting the relevant banks, building societies, insurance companies and any other relevant organisations to obtain proper valuations of the other assets, including stocks and shares, the deceased’s home and any liabilities in order to prepare the documents described in stage 2.
- Completing tax returns and applying to the court for the grant. The form which must be completed depends on different circumstances, including the size of the estate. The longer form requires a detailed breakdown of the valuation of the estate. At this stage the executors will need to work out any allowable deductions, tax reliefs and, if that value exceeds £325,000, calculating the amount of inheritance tax due. Once the tax return has been completed in full and filed, the application to the probate registry should be made. Both HMRC and the probate registry may raise issues with the return or the application for probate.
- Collecting in the assets, paying the debts of the person who has died and distributing the remaining estate. This distribution should be made to the appropriate beneficiaries in accordance with the terms of the will or the statutory order of distribution if there is no will, and producing final estate accounts for the beneficiaries and a final tax return for the deceased.
The executors of the deceased’s will are responsible for obtaining probate. In cases where the person dies without a will, the next of kin will usually take on the responsibility. Whoever applies for probate is responsible for correctly collecting in and properly distributing the estate of the deceased after paying all taxes and other debts due. (see Executor’s duties ). It should be noted that where someone begins to administer an estate and choose to stop - either because they wish someone else to or because they find out that they are not entitled to - they may still attract some of the liabilities of an executor/administrator.
The probate process can be complex and time consuming. Tax returns must be made to HMRC on the basis of information that is collated from the holders of all the deceased’s assets and liabilities, including bank accounts, investments, pensions and all other assets. Once probate has been obtained the assets must be collected in and the liabilities of the estate must be paid before the estate is distributed in accordance with the terms of the will or the statutory order for payment where there is no will. As an executor or next of kin who applies for a grant you are personally liable for any mistakes or incorrect distributions.
The process relies on specialist legal and tax knowledge and there are a number of complications that can arise. For example, issues with the validity of the will can be dealt with quickly and efficiently by an experienced professional.
We are a professional firm of experienced probate solicitors who offer a personal, efficient service. You will have the peace of mind of knowing that your affairs are being dealt with in a sympathetic, efficient manner at a price which offers excellent value for money and which is fixed at the outset.
Failure to carry out the legal duties and procedures can result in an executor being personally liable to the estate – for instance:
- Failing to safeguard assets, for example neglecting to take necessary action to preserve the value of a property.
- Misappropriation of assets: where for example an executor uses an asset of the estate for his own use rather than for the benefit of the estate.
- Failing to submit tax returns correctly within the statutory timescales or with the correct information and supporting paperwork.
- Paying the wrong people, or paying the right people but the wrong amount.
- Paying money to bankrupts rather than their trustee in bankruptcy