Probate is a widely used term and, although there is a general understanding that it relates to what happens to a person’s estate on death, the process and terminology is often shrouded in mystery. By answering the 7 questions that we are most frequently asked, we aim to dispel some of the confusion and shed light on the process.
- What is Probate?
Probate is generally thought of as the legal and financial process of dealing with a person’s estate. However, the technical term relates to the application to the Probate Court by the executor in order to prove the will of the person who has died. A Grant of Probate is a legal document which confirms the validity of the will and the executor’s authority to act. The executor can then collect in the assets of the estate, pay off the liabilities and ensure that the balance is distributed as per the provisions of the will.
- What happens when someone dies without a will?
This is called intestacy. If someone dies intestate, the intestacy rules decide how their estate is to be shared out. In the majority of cases, one of the people entitled to the estate can apply to the Probate Court for a Grant of Letters of Administration. This is the equivalent to a Grant of Probate. Once the Grant has been issued, the applicant (known as the administrator) has authority to deal with the estate.
- Do I need a Grant of Probate?
This will largely depend on the value and composition of the assets in the estate. In certain cases, where a bank account is below a prescribed threshold, the bank may be willing to close the account and pay the balance to the executor without the need for a Grant of Probate. Each bank and financial institution will have their own policy and threshold so it will be necessary to contact the bank and ascertain its individual requirements. If the person who has died owned property in their sole name, it is generally necessary to obtain a Grant of Probate.
- How long does it take to administer an estate?
Obtaining Probate and dealing with a person’s estate can take anywhere between six to twelve months to complete. In certain cases, an estate can be particularly complex and the process can potentially take longer. How long it takes will depend on a variety of factors, including (but not limited to), the number and type of assets in the estate, whether the estate is taxable, the number of beneficiaries and whether there is any dispute.
- How do I know if the estate will be subject to Inheritance Tax?
Broadly speaking, every person’s estate has a nil rate band – currently £325,000 – which is the amount that can be gifted without tax becoming payable. The nil rate band may be less than £325,000 if the person who has died made significant gifts in the 7 years before their death. Any gifts under a will or the intestacy provisions to a spouse or civil partner will be fully exempt for inheritance tax purposes.The nil rate band is transferable between spouses and civil partners. Therefore on the death of the second spouse or civil partner, their estate can potentially benefit from 200% of the current nil rate band (currently £650,000). In addition to the nil rate band, there is a new residential nil rate band which provides an additional tax free amount where certain conditions are met. In very broad terms, in order to qualify, the person who has died must be leaving a share of residential property to their descendants. The residence nil rate band will be £175,000 from 6 April 2020 and is also transferable (potentially £350,000 being available on the death of the surviving spouse or civil partner).During your lifetime, it is possible to plan and mitigate against the amount of inheritance tax that will be paid on your death.
- I am appointed as an executor in someone’s will, what are my responsibilities?
As an executor, you are expected to act reasonably and fairly in the best interests of the estate and its beneficiaries. It is a significant and somewhat onerous responsibility. You need to ensure that an accurate Inheritance Tax account is submitted to HM Revenue & Customs, that all debts and liabilities are settled, assets are paid to the correct beneficiaries in accordance with the terms of the will and that the value of the assets are maximised (e.g. property is sold for its best price). An executor can potentially be liable for failing in any of these duties, even if the mistake made was a genuine error. By instructing professionals, such as RRL, you are afforded peace of mind and we will ensure that all of your duties are fully discharged.
- Can a claim be brought against the estate?
Disappointed family members and partners have different avenues in the event that they are unhappy with the terms of the will. Certain family members and partners can potentially bring a claim against an estate under the Inheritance (Provision for Family and Dependents) Act 1975 if they believe that the person who has died has not made reasonable financial provision for them. This claim must be brought within 6 months of the grant of probate being issued. The will itself may be challenged on the grounds that the person who has died did not have the capacity to make a will or was placed under undue influence when the will was made. It is generally thought to be more difficult challenging a professionally drawn will, where the solicitor or other legal professional has assessed the person’s capacity, provided rounded advice and recorded their dealings with the client properly.
Why use RRL?
We provide a unique offering of legal, tax and accountancy expertise that can guide clients through the myriad of responsibilities of acting as an executor and finalising the estate. We can provide a package tailored to your requirements and provide you with a fixed fee at the outset so you know exactly how much our charges and the related costs will be.
Get in touch for an informal chat to see how we can help.