Dealing with the estate of a loved one can be extremely difficult for those who have been bereaved. Senior Solicitor, Paula Warburton answers some questions about the probate process and how it works.
Q: What does probate mean?
Probate means dealing with the estate of someone who has died. In simple terms, this means encashing any assets, paying off any debts and inheritance tax and paying what is left to the beneficiaries of that person’s estate.
A grant of probate is a legal document issued by the court which gives the executors of a person’s will authority to deal with their estate. If a person dies without making a will, then the legal document is called a grant of letters of administration. This is usually granted to the closest relative of the deceased.
Q: How do I apply for probate?
In order to obtain a grant of probate or letters of administration, the executors (or administrators if there is no will) need to declare the assets and liabilities in the estate. This is done either by way of a return of estate information for more straight forward estates, or by way of an inheritance tax return if the estate is more complicated and/or subject to inheritance tax.
If a full inheritance tax return is needed, this is sent to HMRC who will issue a form to confirm that the grant of probate or letters of administration can be issued and some or all of the tax has to be paid immediately.
The executors or administrators will also need to sign a legal statement in which they confirm they are the person, or persons, who are legally entitled to administer the estate of the person who has died.
Those documents are then submitted to the probate registry, a government office who deal with the issuing of grants of probate and grants of letters of administration. They will consider the papers and if they are satisfied that the will (if any) is valid, that all the documents are correctly completed and that any tax owed has been paid, they will issue the grant of probate or letters of administration.
The executors, or administrators, then take that document and use it to encash or sell the assets belonging to the deceased, pay off any liabilities that exist and pay whatever is left to the beneficiaries.
Q: Do I need probate if the deceased has left a will?
This will depend on the assets in the estate of the person who has passed away. The grant of probate is authority to deal with the assets and is required even if there is a will.
The person may not have any assets which need a grant of probate. For example, if the estate is comprised of only jointly owned assets then these will pass to the surviving owner automatically and there will be no need for an application for a grant of probate.
Q: Do I need probate for a small estate?
Again, it really depends on how much money there is in the estate. If the amount of money held by a financial organisation is under a certain amount, they might release it without needing to see the grant or probate or letters of administration. Financial organisations set their own limits and so whether or not you would need a grant of probate or letters of administration for a particular asset would depend on that organisation’s own policy.
If deceased owns property in their sole name, you will always need a grant of probate or letters of administration.
Q: How long does probate take?
The time it takes to obtain a grant of probate or letters of administration varies depending on the circumstances of that person’s estate. For example, if the estate is straight forward and won’t be subject to inheritance tax, you can submit a return of estate information as opposed to a full inheritance tax return. The return of estate information does not need to go to HMRC for consideration and so reduces the amount of time to obtain a grant of probate or letters of administration significantly. The grant of probate could be issued as quickly as 8 weeks in those circumstances, but you would need to factor in time for assembling all the financial information from the organisations and obtain valuations of any other assets.
If you do need to submit a full inheritance tax return, then the process can take much longer.
Q: I have been left some inheritance from a relative and want to pass it on to my children, what is the process for this
If you have received an inheritance and you would like to pass this onto your children, it is generally advisable to consider doing this by way of deed of variation. A deed of variation is a document which legally re-routes your inheritance to your new chosen beneficiaries. This means that the money they receive is treated as a gift from the deceased, as opposed to a gift from you and therefore it will not be subject to inheritance tax should you die within 7 years of making it.
Deeds of variation must be made in writing with a particular form of words and signed by the person varying their entitlement and must be entered into within two years of the death of the person to be effective for tax planning purposes.
Minors cannot vary their entitlement so anybody under the age of 18 would need court approval for any variation. A deed of variation can vary your entitlement under a will, or under an intestacy e.g. if there is no will.
Q: My late mother gave me cash gifts, does this need to be disclosed for inheritance purposes?
Yes, if they were made within the last 7 years. As detailed above, when a person dies the value of their estate is declared either by way of return of estate information or an inheritance tax return. If their estate is above a certain limit, then the estate will pay inheritance tax. When calculating the value of the estate, HMRC require that the value of any gifts made in the 7 years leading up to a person’s death are included. It is therefore very important to keep records of any gifts and to disclose them when the person who made the gifts passes away.
Q: The Deceased appointed a Solicitor as an Executor, does the Solicitor have to arrange the Probate?
If a solicitor is appointed as an executor then they will make the application for the grant of probate and administer the estate. If a person has chosen to appoint a solicitor as their executor, there will usually have been a good reason for doing so and the solicitor will respect their wishes.
Sometimes the beneficiaries of an estate will ask the solicitor to renounce their appointment as executor so that they can administer the estate themselves. Whether or not the solicitor would agree to renounce or not will depend on the particular circumstances and would be decided on a case by case basis.
The Wills, Probate and Trusts team are on hand to help ease the pressure of the probate process by dealing with the administration efficiently.
For more information contact the team.