Winterborne Legal Services

WHAT IS PROBATE?

If you have recently lost a family member or close friend, you may have been told that you need to get Probate. If you don’t know what Probate is or why you need it, you may be feeling confused and overwhelmed.

Please read through this guide, which will answer some of your questions.

When a person dies, someone has to deal with his or her money and property. The name of the person taking on this role is the Personal Representative.

If you are the Personal Representative, you will either be:

• An executor, if you have been appointed by the deceased in their Will
• An administrator, where the person who died did not leave a valid Will, or the named executors do not wish to act.

The purpose of the Grant of Representation is to prove to third parties, such as banks and other financial institutions, that you as executor or administrator are entitled to deal with the estate.

If you are an executor, you will obtain a Grant of Probate.

If you are an administrator, you will obtain a Grant of Letters of Administration if the deceased person dies without a Will.

If the deceased person left a valid Will but there are no executors able or willing to take a Grant of Probate, you will be an administrator and obtain a Grant of Letters of Administration with Will annexed.

If you are to be the administrator, you will need to be sure that there is nobody who has a greater entitlement to take out the Grant. Please see section 11 – ‘Who can get probate without a Will’ which explains the order of entitlement, or contact us if you are unsure.

Depending on the assets in the estate and the value and complexity of the estate, you could find yourself spending many months dealing with the affairs of the person who has died.

You will be responsible for paying all taxes due and settling all debts and liabilities. If you do not follow the correct procedures, you could find yourself personally liable, meaning your own money could be called upon to make up a shortfall if you have distributed money to the beneficiaries too soon, or to the wrong beneficiaries.

When the Grant of Probate or Letters of Administration has been issued, you will be able to close the deceased person’s bank accounts and encash their investments, using this money to settle debts and liabilities and pay the beneficiaries. You can ask for our help with this aspect too, so everything can be dealt with for you.

So, if you instruct us to help you obtain a Grant of Probate or Letters of Administration and administer the estate, you’ll be relieved of the burden of responsibility for identifying the assets, paying the correct Inheritance Tax, settling the liabilities, and identifying and paying the correct beneficiaries.

You’ll see are fixed at the start and are not based on the value of the estate. Click here for our guidance on costs

HOW LONG DOES PROBATE TAKE?

It is difficult to provide a simple answer to this question, as it very much depends upon what is in the estate of the person who has died, and what needs to be done.

• It could be as straightforward as taking a copy of the death certificate into the bank, so that all joint accounts will be transferred into the name of the survivor.
• On the other hand, it can take several weeks to collect all the information needed to complete the Inheritance Tax forms and Probate Application form, depending upon how quickly the various financial institutions provide the information you need.
• It could be that there are a lot of assets to be located and valued. Some personal possessions may require specialist valuations. There could be a house and land to be valued, unquoted shares, a share of a business, agricultural land, stocks and share and investments.
• As a general rule, you should allow up to three months for all enquiries to be made and responses to be received. If the estate consists only of a house and a couple of bank accounts, the enquiries should be completed in a much shorter time.
• The values received from these enquiries will provide the details needed to complete the application for a Grant of Probate (or a Grant of Letters of Administration).
• If the value of the estate means an IHT400 needs to be completed, any Inheritance Tax will need to be paid before the application for a Grant can be made. HM Revenue & Customs will send receipt for payment of Inheritance Tax direct to the Probate Registry. You should expect this to take at least three weeks.
• The staff at the Probate Registry are currently working their way through a significant backlog of applications, although new applications appear to be issued reasonably quickly.

You’ll get as much or as little help as you need to get Probate and administer the estate if you ask for our assistance.

DO YOU NEED A GRANT OF PROBATE?

Banks, building societies and other financial institutions have specific requirements for the release of funds although you will not usually be asked to provide a Grant of Probate if the balance in the account is less than £5,000.

YOU WON’T NEED A GRANT OF PROBATE FOR:

• Pension death benefits, which pass outside the deceased person’s estate although the Pension Trustees may ask to see a copy of the Will.
• Life assurance benefits expressed to be for the benefit of a spouse or children.
• Any money in a joint bank account will pass automatically to the surviving joint owner.
• A home that the deceased person owned with another person as a beneficial joint tenant, as this will also pass automatically to the surviving joint tenant.

YOU WILL NEED A GRANT OF PROBATE:

• If you need to sell or transfer a house or other property that was owned in the sole name of the person who has died, including their share of a property held as tenants in common
• To sell or transfer shares, unless they are of a very low value
• To close investment accounts.

If you’re still not sure if you need a Grant of Probate, please get in touch.

HOW MUCH DOES PROBATE COST?

Read about our pricing options here.

HOW WE CAN HELP WITH PROBATE

If you are faced with having to close down the financial affairs of somebody who has died and don’t know where to start, please get in touch.

You will receive sympathetic personal help and advice. We can be contacted six days a week and can explain the probate process and the steps that need to be taken.

We understand that the person who has died is likely to have been someone close to you, and dealing with their affairs is of great personal importance to you.

If you have not dealt with probate before, you are likely to be uncertain and need information and advice about each stage of the process.

We will explain how we can help you, the likely timescale for each stage of the process, and what is included in the fixed fee quote.

Listening to you and understanding your fears and concerns is important.

At our first meeting, we should be able to clarify your objectives and the way to achieve them.

You should be able to feel that you understand what needs to be done, how long it will take to do it, and what the cost will be.

An outline of what will be included in your fixed fee quote can be accessed here.

Please get in touch if you like to have an initial, no obligation, conversation.

We visit all our clients in their own homes at no extra cost, so whether you’re in the areas of Wimborne, Bournemouth, Poole, Dorchester, or Yeovil, we’ll be pleased to come to see you.

WHAT IS ESTATE ADMINISTRATION?

This is the process of settling the financial affairs of the person who has died.

This will include:

• Collecting in the assets
• Paying any debts and liabilities
• Distributing the proceeds to the entitled beneficiaries

If you would like to know how to avoid the personal risks of acting as an executor (or if you didn’t realise there was a personal risk) you can read more about that here.

We can provide straightforward, no fuss, help if you need to obtain a Grant of Probate or a Grant of Letters of Administration and understand that each matter arises because of the loss of a friend or family member.

A face-to-face meeting is not always needed for us to be able to provide you with friendly local support, although we always prefer to meet with you where possible and answer your questions in person.

If you instruct us to obtain probate for you or deal with the estate administration, you will receive friendly professional advice and assistance. We don’t charge you for calling to speak with us when you have questions or need support.

WHAT ARE THE DUTIES OF AN EXECUTOR?

As an executor, you will need to:

• Establish what assets are in the estate (house, bank accounts, investments, personal possessions, etc.)
• Obtain details of what those assets were worth on the day the person died
• Obtain details of any liabilities (funeral account, mortgages and loans, credit card debts, Council tax, bank overdraft, etc.)
• Establish who is entitled to benefit from the estate and what they are entitled to receive. This will be relevant for calculating any Inheritance Tax payable
• Complete the relevant Inheritance Tax forms and sign the declaration
• Pay any Inheritance Tax that is due, ensuring you meet the appropriate deadlines
• Complete the Probate application and submit it to the Probate Registry with the original Will
• Collect all monies due to the estate
• Settle all debts and liabilities
• Pay any income tax or capital gains tax which has arisen during the administration of the estate
• Pay all legacies
• Distribute the remainder of the estate to the correct beneficiaries.

Placing Statutory Advertisements and carrying out legal searches will help to protect from you any claims against your own assets.

WHAT IF YOU DON’T WANT TO BE AN EXECUTOR?

Occasionally, people find themselves surprised with the role of executor. Many of these people will have this responsibility placed on them at a time where they are grieving the loss of a loved one. It is also likely to be the first time they have ever acted as an executor and the road ahead may look daunting. If you find yourself in this situation and don’t want to act then there are a couple of options available to you.

One option is to keep on the role as executor but appoint a specialist as your attorney to apply for probate for you or assist you with the probate process. This will often be a solicitor or accountant, or the professional who drafted the will if they offer this service. Note that this will incur fees that will be payable out of the estate.

The other option open to you is to renounce. An executor who doesn’t wish to act is not forced to do so. As long as you have not ‘intermeddled’ in the estate you can formally step down. Intermeddling is carrying out any duties that an executor would usually perform to administer the estate, such as settling debts and selling assets. Don’t worry if you have already taken steps to collect in assets for protection or arranging the deceased’s funeral though. While these tasks are an executor’s duty they are not considered intermeddling.

If there are other executors appointed then they may carry on acting and apply for probate. If you were the only executor then someone who is entitled to act will need to make an application to the court to be appointed as an administrator.

If you find yourself thrust into the role of an executor and for one reason or another you aren’t willing to act then it’s important that you act quickly, especially if you wish to renounce.

RAISING MONEY TO PAY INHERITANCE TAX

Before you can obtain a Grant of Probate, you will need to pay any Inheritance Tax which is due. This often creates a difficulty, as the deceased person’s bank or building society will normally wish to see a Grant of Probate before giving you access to the deceased’s account.

If the deceased person had sufficient money in their account, their bank or building society would release funds directly to HM Revenue & Customs. However, you will need to provide the bank with an Inheritance Tax reference number, so that the payment can be identified when it is received by HM Revenue & Customs. It takes around three weeks for HM Revenue & Customs to provide an IHT reference number.

If there are not sufficient funds in one account or held by one bank, you can arrange for the balance of Inheritance Tax to be paid from one or more other bank or building society accounts in the name of the deceased person.

A less attractive means of paying the Inheritance Tax is to take out a loan as executor. The loan will, of course, carry interest and should be taken out for as short a time as possible.

If it is not possible to obtain a loan from a bank, you may wish to ask a beneficiary if they would be willing and able to lend the money to settle the Inheritance Tax liability. This would allow the application for a Grant of Probate to be made more speedily than would happen if a bank loan was needed.

If none of these avenues are open to you, it may be possible to obtain a Grant ‘on credit’. HM Revenue & Customs accepts that exceptional circumstances may mean that this is the only way that the Grant can be obtained but will expect you to be able to demonstrate that all other avenues have been exhausted.

WHO CAN GET PROBATE WITHOUT A WILL?

If the person who died did not leave a Will, they are said to have died ‘intestate’, and the intestacy rules set out who is able to apply for a Grant of Letters of Administration (the name for a Grant where there is no Will), and who is entitled to share the estate.

If there is a surviving husband or wife (a ‘spouse’) but no children, the spouse is entitled to the entire estate and would be the appropriate person to apply for a Grant of Letters of Administration.

If the deceased has been survived by a spouse and children or grandchildren, they will share the estate (depending upon the value).

The surviving spouse will be entitled to receive the deceased person’s personal possessions and a ‘statutory legacy’ of £270,000. If there is anything left in the estate, the surviving spouse will receive half of what’s left. The children will share the other half equally between them.

If there is no surviving spouse, the children will be entitled to share the estate equally between them. If any children have died before the deceased, their own children will be entitled to their parent’s share.

Any of the adult children of the deceased can apply for a Grant of Letters of Administration.

If there is no surviving spouse and no adult children but there is a minor child or grandchild, then an application for a Grant can be made on behalf of that child.

If there is no surviving spouse and no children or grandchildren, then the following order of priority applies:

• Parents, equally if they are both alive. Either parent would be able to apply for Letters of Administration. If there are no parents living then
• Brothers and sisters who share the same parents as the deceased. Any of the brothers or sisters would be able to apply for Letters of Administration and the eldest does not have the first right to take out the Grant. If there are no full brothers and sisters, then
• Brothers and sisters who share one parent with the deceased. Any of these half-brothers or sisters would be able to apply for Letters of Administration and, again, the eldest does not have the first right to take out the Grant. If there are no half-brothers and sisters then
• Grandparents, equally if they are all alive and any would be able to apply for Letters of Administration, but if there are no living grandparents then
• Uncles and aunts of the whole blood (that is, full brothers and sisters of one of the parents who have died) but if there are none then
• Uncles and aunts of the half-blood (that is, those who shared one parent with one of the parents of the person who has died)
• To the Crown, Duchy of Lancaster or Duke of Cornwall as ‘bona vacantia’.

Please get in touch if you have any questions about who can apply for a Grant where there is no Will.

COPING WITH BEREAVEMENT

If you were very close to the person who has died, you may be struggling to cope with your bereavement. The NHS provides a guide to grief after bereavement or loss, which you can find here.

Age UK also provides a guide to coping with bereavement, which you can find here.

The Low Income Tax Reform Group produces a factsheet entitled ‘Tax at Bereavement’ which you can find here.

If you would like a copy of either of these guides but don’t have a printer, please contact us and we’ll get a copy in the post to you straight away.

CHANGING A WILL AFTER DEATH

If you are the beneficiary of an estate, you may be considering giving away a legacy.

There could be various reasons why you would choose to do this. Some people are keen to pass on assets to their children or grandchildren, to give them a good start in life, or provide a deposit for a property.

Others are concerned that the gift they are receiving will increase the value of their estate to the level where Inheritance Tax could be payable.

If you do not want your legacy, you are not compelled to accept it. You can disclaim the legacy, or divert it to somebody else by executing a Deed of Variation.

DEED OF VARIATION
The effect of a Deed of Variation is that the gift is treated as having been made by the person who has died, and not by the person who is re-directing the gift. This means that it does not affect the Inheritance Tax position of the person who did not want to receive the legacy.

For the Variation to be effective for Inheritance Tax purposes, it must be executed within two years of the death of the person who left the original gift, and signed by everybody who is giving away some or all of their legacy. The person who is giving away the legacy must not receive payment in compensation for giving away their gift.

BENEFICIARIES AND EXECUTORS
Changing a Will after death can only be done by the beneficiaries and not by the executors, who cannot give away somebody else’s gift. The executors do not need to approve the variations but do need to be made aware of them, so they can pay the money to the correct beneficiary.

Executors who are also beneficiaries can give away their own legacies.

If you are wondering whether a Deed of Variation could be useful in your circumstances, or if you have any unanswered questions, please get in touch.

INHERITANCE TAX AND THE RESIDENCE NIL RATE BAND

I just thought I’d say a few words about unmarried couples and the Inheritance Tax residence nil rate band.

If you and your partner live together but are not married (or Civil Partners) your financial affairs do not benefit from some important tax allowances. In particular, the Inheritance Tax allowances available to married couples.

If your other half dies and leaves their share of your jointly owned property to you for your lifetime and afterward to their children, their estate will be taxed in the normal way but the residence nil rate band will not be available for their estate.

On your death, your estate will include the value of your partner’s property for the purpose of calculating Inheritance Tax. The Inheritance Tax payable will be split between your own estate and the share belonging to your partner’s estate.

The residence nil rate band will be available for your executors to claim if your share is passing to your own children (or stepchildren) but only up to the value of your half of the property (or the value of the residence nil rate band, if this is lower than the value of the half share of the property).

Your partner’s residence nil rate band will have been lost.

For many couples, the issue of Inheritance Tax is of less concern than the issue of care home fees, and I will write about that separately.

CLEARING THE HOME OF A PERSON WHO HAS DIED

One of the first things families rush to do after a death is to arrange for the property to be cleared.

There are several reasons to avoid making it a priority to clear the property.

1. Cost
If you need to hire skips to empty the property, and are relying on being reimbursed from the estate, you are likely to have a long wait.

At the present time, you will be waiting around 12 weeks, from the time they receive the application, for the Grant of Probate to be issued by the Probate Registry. You will then face a wait of another four weeks for the bank or building society to release the funds.

During this time, it will not be possible to access the funds of the person who has died.

2. Value of the contents
As far as the taxman is concerned, everything has a value. If you need a Grant of Probate, you will need to provide details of the value of the contents of the property, even if you have already disposed of them.

Some items are easily valued and others require a specialist. Please ask if you’re not sure where your items need a specialist valuation.

3. Gifts
Make sure you have seen a copy of the most recent Will of the person who has died, as they may have left gifts of specific items of their property.

Jewellery is the most usual gift, but people also leave gifts of their china or porcelain collection, books, cameras, pictures and paintings, musical instruments, medals, and military items.

A disappointed beneficiary will not be pleased to learn you have thrown away a gift that they were expecting to receive.

4. Documents
If you want to make any legal claims on behalf of the estate, you will need to retain documentary evidence to support your claim.

Shredding historic documents too soon could leave you at a disadvantage if you wish to take legal action or pursue any claims. It is not always easy, or even possible, to obtain duplicates of all historic documents.

Find more information about house clearance here.