Probate
What is probate?
Probate is the legal authority to administer an estate, and the process involved in doing so.
A Grant of Probate is the document issued by the Probate Court, which says that a Will is valid and confirms the appointment of the Executor. If there is no Will, or if the named Executor does not wish to act, an Administrator is someone who is appointed by law to settle an estate. The Executor or the Administrator of an Estate are called The Personal Representatives (PRs) and they are responsible for the Administration of the Estate. They will be the ones to undertake the probate process.
What is Estate Administration?
When a person dies, whether they’ve left a will or not, their estate must, according to the law, be dealt with and transferred to the beneficiaries. The process, although often referred to as probate, is correctly called Estate Administration. In most cases, the procedure begins with the application for what is generically known as a grant of representation.
Acting as an executor or administrator
After a person has died the law insists that someone takes responsibility for all their worldly possessions, and ensures that they are passed on to their new owners. The person, or more usually the people (there can be up to four), who takes on the task is called the deceased’s Personal Representative. In a Will they are usually named as the executors. If there is no will they are referred to as the administrators.
There are essentially four things that the Personal Representatives have to do:
Ascertain the value of the deceased’s estate
This is a question of scheduling all of the deceased’s assets and providing valuations of them all. This will include bank and building society accounts, shares, cars, houses, jewellery and furniture for example. Everything that the deceased owned needs to be included, although certain assets pass automatically to others on death - for example a house that is jointly owned by a husband and wife (provided they are what is known as beneficial joint tenants). Information will usually only be released by organisations to the Personal Representatives if a certified copy of the death certificate can be produced.
Obtain authority from the Probate Registry to administer the estate
Unless the estate is very small organisations will not actually hand over the deceased’s assets to the Personal Representative without an official document from the Probate Registry of the High Court, which confirms that the Personal Representatives are entitled to handle the deceased’s affairs. This is usually referred to as a Grant of Probate, if there is a Will, or a Grant of Letters of Administration, if there is not. In order to obtain either Grant, the Court will normally want to see:-
- the original Will (if there is one)
- a sworn document (the Oath), signed by the Personal Representatives, which explains how they are entitled to act, and gives a valuation of the estate
- if an account for the Inland Revenue is needed (in most cases where the estate is under £300,000 it is not), a receipted invoice from the Inland revenue that Inheritance Tax has been paid; this must be obtained beforehand from the Inland Revenue, who will issue it on being sent the Inland Revenue account and the monies due.
Pay any Inheritance Tax due
Inheritance Tax is a simple, if not well liked, concept - on death a reasonable sum (currently £325,000) is free from tax. After that tax is payable at 40% - but as with all taxes the reality is more complicated. Certain categories of beneficiaries do not have to pay Inheritance Tax, such as spouses and charities, and any gifts made by the deceased within seven years of their death can give rise to an increase in their estate’s liability for Inheritance Tax. If in any doubt you should consult a solicitor.
If Inheritance Tax is payable, then some, or possibly all of it, must be paid before the court will issue the necessary Grant. The Government do not want to take the chance that they might not get their money. This means that the Personal Representatives will usually have to borrow the money. Preferential rates can often be obtained by arranging this through your solicitor.
Distribute the balance of the estate to those who are entitled (the beneficiaries)
Once the Personal Representatives have received the Grant they can get on with gathering together all of the deceased’s assets, paying any outstanding bills, and then distributing the balance in accordance with the deceased’s Will, if there was one, or in accordance with the rules on intestacy if there was not. The Personal Representatives need to keep a formal account of all the money they have received, paid out and passed on, including interest on any money held since the deceased’s death. All the beneficiaries are entitled to see this account.
Personal Representatives do not have to deal with matters without help. They can always turn to a solicitor for help and assistance, whose fees will be payable by the estate. Often solicitors themselves will be named as the sole or joint executors in a person’s Will, so ensuring that the estate is wound up efficiently and effectively, with the minimum of delay.
Issues surrounding estate administration
What is probate?
Probate is concerned with the administration of the estate of deceased person as outlined in their Will, along with the process of authorising a person to carry out this task.
What to do when someone dies
When your loved one passes away you may be unaware of the various legal issues which need to be taken care of. Even before probate can begin there are numerous documents which need to gathered and people whom must be informed.
Executors
An executor is someone nominated in a Will to handle the administration of a person's estate after they pass away. They have a number of legal and administrative duties which they must carry out.
Inheritance Tax
Paying Inheritance Tax (IHT) can be one of the more burdensome duties associated with probate. Learn about the degree to which estates are taxed and the exemptions which exist.
What if there is no Will?
If someone has died without leaving a valid Will there are rules which determine the destination of their estate. These are known as intestacy rules.