‘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.
'Probate' is used to describe both the Grant of Probate and the process involved in obtaining it. It includes making an inheritance tax return to HMRC and paying the tax due; finalising income tax affairs and pensions; collecting in the estate from banks, building societies and selling assets; paying money due to beneficiaries; making any gifts of items to beneficiaries; preparing accounts for the estate.
There are actually two types of grant: probate and letters of administration.
Probate is granted when the deceased left a valid will, and is granted in favour of one or all of the executors named in that will.
Letters of administration are granted where the deceased did not leave a will but most people still refer to it as ‘probate’ because, for all practical purposes, the two types of grant are identical. There are some differences in the process before the grant is issued.
Whoever is entitled to obtain a grant (there may be more than one person) can apply to the local Probate Registry – a part of the court system. Once the grant is issued, anyone else is entitled to take it as proof that they are the people entitled to deal with the deceased’s assets.
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.
1. 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.
2. Who obtains probate?
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.
If there is a will, those persons must be the executors of the will unless the executors do not want to. 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.
Use our interactive tool for more information about who can administer an estate where there is no will.
3. What is the probate process?
There are 3 main stages to obtaining the grant:
- 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.
- Whose responsibility is it? 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.
- Why use a professional firm? 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.
Alternatively, give our friendly solicitors a call. Our team will be happy to discuss the process with you.