What is probate?

Everything a person owns; their possessions, money and property make up their estate. When this person dies, the estate must be distributed according to their Will, if it exists. Applying for the legal right to perform the distribution is called probate.

Probate is granted to the person(s) named the executor (s) in the Will, with authority from the court. An executor is a person the deceased wished to deal with the administration of their estate after their death. It is the executor's responsibility to:

• determine what property and other assets you owned, as well as your liabilities
• arrange for current valuations of your personal possessions, property, investments, any pension or insurance entitlements due and also any debts and bills
• arrange for the payment of your funeral
• establish Income Tax, Capital Gains Tax and inheritance tax liabilities and complete the necessary tax returns to submit to the Revenue
• complete and submit the necessary Probate Registry forms
• arrange the clearance and sale of any property
• collect assets and pay any debts
• arrange for the distribution of legacies and gifts to your beneficiaries
• compile detailed accounts to give to the main beneficiaries
• in the case of minor children being beneficiaries, then your executor may act as Trustee for ongoing trusts, to hold their monies until they reach 18.

In Scotland, probate is known as Confirmation, however the process remains similar.

This guide aims to provide a basic understanding of what happens and what needs to be done if you are named an executor.

Do you need probate?

This depends on the deceased’s circumstances, but many people do not. Relevant factors include:

• Whether any accounts or properties are jointly owned – if they are, then it usually just passes onto the surviving co-owner
• The value of the estate – some institutions may let estates valued at less than £5000 pass on without sight of a Grant of Probate, however it is worth checking with the provider

If there is a property which is NOT jointly owned, then probate is always required.

HMRC will be able to advise on whether Probate is necessary

Who should apply, and for what?

Not everyone can apply for the legal right to handle the estate. The process depends on whether a certified Will has been produced, and if that Will names an executor to deal with the contents. The executor could be anyone over the age of 18 and is often a family member or a firm of Solicitors. It is not uncommon for an executor to be a beneficiary.

 There are three options depending on the situation:

• If a Will exists AND names a competent executor, then that person must get a court-ordered ‘Grant of Probate’.*
• If there is no Will, then they must apply for a ‘Letter of Administration’.
• Only the Spouse (even if separated), civil partner or child may apply.
• In this case, the rules of intestacy apply.
• Sometimes a Will either does not deal with the full estate or name an executor. There may also be reasons such as health or mental competency that mean the named executor is unable to act. In a case like this administration is required again.

*The named executor is not obliged to act – it is possible to renounce the role or reserve power for future use, often when the situation is easier to manage (such as if the executor is abroad).

So long as you are able to apply and unless the estate is very complex, probate is absolutely a process which can be done alone. People waste large amounts of money getting solicitors to do it for them. It does take time and effort, but many people find it a welcome distraction from the situation that they find themselves in.

How long does it take?

It normally takes between one and two months to file for, and then receive a Grant of Probate. After this, it can take significantly longer to perform the actual distribution, particularly if the estate is large or complex. The main piece of advice we can give while applying is to be organised and prepared. So long as you keep good records at each stage, it will be an easy experience.

We can prepare the necessary paper within five working days of receiving the full information from the executor or Administrator. We are also able to obtain the grant in as few as ten working days.

You have been named executor, what should you do?

1.Register the death and find the Will

This needs to be done within five days of death and is usually performed by a family member. Locate your nearest registry office online and phone ahead in case you require an appointment.

• You will need the correct documentation of a medical cause of death certificate and then other documentation such as a birth certificate.

It is wise to buy several copies (we suggest at least 5) of the death certificate as they are useful later and increase in price based on time after death. Initially, it costs between £8-12 per copy based on which one of the home nations the death occurs in. (£11 in England)

• The certificates are needed for the assets such as bank or credit card accounts.

The location of the Will should have been made known by the deceased before death, e.g. with a solicitor or at their house.

• If there is no Will, then the deceased has died 'interstate'. At this point, certain rules apply.

2. Report the death

Using the death certificates, report the death to any of the asset holders such as banks or building societies.

This can often be done in one go using the Death notification service. You do not have to create an account, though it is advised as they can provide updates on the progress of the application.

• Institutions are usually notified by 4 PM the next working day if you submit before 12 noon.

3. The funeral

Family members normally arrange this.

The Will may have set aside money to provide for the event, but if not, then the family and/or executor may find themselves paying BEFORE they are able to retrieve any assets.

4. Perform a valuation of all the assets and assess finances

This can be done alone, but some areas may require professional services based on the items that are being valued.

• Examples could include art or jewellery.
• Houses can be valued by the executor, but if the price begins to stray close to the inheritance tax (IHT) threshold of £325,000 then it is better to have it done professionally.

You will need to contact a variety of institutions such as:

• Banks for accounts and cash assets. Make sure that details of all accounts, investments and ISAs are included. Check whether the accounts are joint or single as this will affect the valuation.
• Lenders in relation to mortgages, loans, or credit cards
• Pension providers
• Various government offices to check for outstanding tax payments (council, income ect…) which will have to be settled BEFORE anyone named can receive anything from the Will.

The institutions may require a death certificate to stop any payments and you should also check that any protection or insurance policies do not lapse after death.

When it comes to life insurance, you should also check for any policies that you can start the process of claiming on at this point.

• Sensible management would have put these into Trust. If so, then they can be accessed without probate. Bluebond specialises in dealing with estate planning via the use of trusts.
• If it has not been put into Trust then the policy forms part of the estate and must be included in the valuation.

5. Obtain the Grant of Probate (or Administration) and pay inheritance tax

inheritance tax forms 205 or 400 (IHT205/400)

Watch our video on inheritance tax to see how we can help!

Before you submit a Grant of Probate application, forms must be submitted to see if the deceased is liable to pay inheritance tax.

• If there is any tax to pay, there is a 6-month window from the point of death to in which to pay.
• A Grant of Probate will not be given if the tax is not paid.

There is a £325,000 allowance which is tax-exempt, alongside a possible further £175,000 allowance depending on the individual's circumstances. Using the previously performed valuation, one of two forms needs to be filled out based on whether the estate falls above or below the taxable boundary:

• Use form IHT205 if the valuation indicated an estate of LESS THAN £325,000
• If it is valued at greater than the threshold then you must instead fill out form IHT400

Either form can be filled out on paper or online and should list:

• All valued assets
• Any gifts made by the deceased less than 7 years before their death (after 7 years these gifts become tax exempt)

Fill out the form EVEN IF THERE IS NO TAX TO PAY.

IHT must be paid in advance. This is easy if there is enough money in the deceased’s bank accounts – all the banks need is an IH423 form. It gets more complex if items such as property must be sold.

• Often the executors may have to initially pay out of their own pocket or get a loan before they can recoup the money from the estate

PA1P

Once any IHT issues have been sorted, the executor (s) must complete a Probate Application form (PA1P) which can be downloaded and submitted online. (Google: ‘apply for probate’ and select the first .gov option)

• The executor will need an original copy, no photocopies, of the Will.
• If multiple versions exist then only the most recent may be used, but previous versions should not be destroyed at least until probate is granted.
• If there is more than one executor, then the group must work out who applies. Up to 4 executors can be named on an application.
• For further help, the government operates a helpline on 0300 123 1072.

The process costs £155 with a solicitor, or £215 if applying by oneself, regardless of the size of the estate.

• The fee is waived below £5,000
• At least 5 extra copies should be ordered for £1.50 each, as they are vital to the process

The application will only be successful if the relevant inheritance tax forms have been submitted (see below) and any resulting tax is paid. Once successful, a notice should be placed in The Gazette to encourage other creditors to come forward, otherwise the beneficiaries may be liable.

In total, the following must be submitted to the Probate Registry/HMRC:

• PA1P form
• IHT205 or 400 form
• An official death certificate
• The original Will and three copies
• The fee

6. Pay of any debts

If the deceased had any other debts besides IHT, then these must be paid off before the remaining estate can be distributed.

• Only the estate is liable for these debts, not the family.
• There is a complex order in which they must be paid which becomes relevant if the estate is not large enough to cover everything.

A notice should be placed in The Gazette to encourage other creditors to come forward, otherwise, the beneficiaries may be liable.

• At least two months must pass before the estate is distributed before this rule takes effect

Debts in a joint name become the responsibility of the survivor of the pair.

7.Distribute the contents of the estate in accordance the Will

So long as you know the value of the remaining assets, they can now be divided in accordance with the Will.

Key words

Probate – the process of applying for the right to deal with someone’s estate after they die.

Executor – someone who is able to apply for probate, as they are named executor in the Will.

Estate – all a person’s available possessions and assets (money, property ect..)

Beneficiary – a party (e.g. a relative) who will gain assets from the Will

Grant of Probate – the legal authority granted by a court, allowing an executor to settle and distribute the estate in accordance with the Will

Grant of Letters of Administration – the path taken by a relation if there is no Will, or it is incomplete

Death certificate – a signed and certified document proving the death of an individual

The Gazeette – the Government website of the official public record for announcing deaths

IHT – Inheritance Tax

PA1P – the form that must be filled out in order to apply for probate, along with the associated fee

IHT400 – the online form for declaring assets to HMRC to see if there is any IHT due

IHT423 – the form that can be sent to institutions such as banks to authorise payment to creditors and HMRC out of the deceased’s accounts