Probate is the name generally given to the process of administering someone’s estate when they die. When someone dies, a formal Grant Of Probate must be obtained from a Probate Registry, which is part of the court system, to enable the estate to be collected in and divided amongst their beneficiaries. There are eleven Probate Registry Offices in England, and one in Wales.
Probate is used to describe both the Grant of Probate and the process involved in obtaining it. It includes making an Inheritance Tax return to HMRC and paying any tax due; collecting in the estate from banks, building societies and selling assets if necessary; finalising income tax affairs and pensions; preparing accounts for the estate and paying money due to beneficiaries; including making any gifts as outlined in the Will.
There are actually two types of grant: probate and letters of administration. Probate is granted when the deceased left a valid Will, and is granted in favour of one or all of the executors named in that will. Letters of administration are granted where the deceased did not leave a Will but most people still refer to this as probate because, although there are some differences in the process before the grant is issued, for all practical purposes, the two types of grant are the same.
Is probate necessary?
Where the estate is less than £5,000 and only includes cash funds held in deposit accounts, you would not normally need to obtain a grant of probate in order to obtain the money. However, where the estate is over £5,000 and includes certain assets, like property or shares, then a grant will need to be obtained before these assets can be ditributed to the beneficiaries named in the Will.
Who obtains probate?
If there is a Will, this responsibility falls to the executors named in the Will unless the executors do not want to act. Where there is not a Will, usually the next of kin are entitled to administer the estate and there are statutory rules about which family members that is.
The person who is going to obtain probate needs to access the deceased’s bank accounts, investments and other assets in order to pay their debts, inheritance tax and distribute their estate. It is worth noting that no-one who has an interest in the estate of someone who has died can receive their inheritance until a grant has been obtained.
The Probate Process
The probate process is generally carried out by the executor if there is a Will, or by a court-appointed representative if there is no Will.
The executors will need to obtain a Grant of Probate legal document by applying to their local Probate Registry office. Once the grant of probate is issued by the probate court, the executors are able to carry out their duties in dealing with the deceased’s assets.
Applying for a Grant Of Probate
There are three main stages in obtaining the grant:
1. Identifying and inventorying the deceased person’s estate.
The executor will need to investigate the extent of the estate including gathering all information about the assets and liabilities of the person who died. The executor will need to contact the relevant banks, building societies, insurance companies and any other relevant organisations to obtain proper valuations of the deceased’s home, other assets, including stocks and shares; and any liabilities, such as the mortgage.
2. Accounting and appraisal of the estate.
The executor will need to complete the inheritance tax return form, currently form IH205 or IHT207. They will also need to contact HMRC to establish the inheritance tax due. Depending upon the circumstances, an accountant or tax adviser might be helpful here to double check the numbers. Once the tax return has been completed in full and filed, the application to the Probate Registry should be made.
3. Filling Out The Probate Application Form
The Probate application form AP1 now needs to be completed. This form includes details of the inheritance tax that has been sent to HMRC. Along with the AP1 from, the executor will need to provide the original Will and three copies of the Will together with an official copy of the death certificate. A visit to the probate office is often necessary for an ‘interview’ to take place to ensure everything is in order.
After Probate Has Been Granted
There needs to be a formal distribution of the remaining estate as the Will directs. This involves collecting in the assets, and paying the debts of the person who has died, and then distributing the remaining estate to the appropriate beneficiaries in accordance with the terms of the Will (or the statutory order of distribution if there is no Will), and producing final estate accounts for the beneficiaries and a final tax return for the deceased.
The hold up here is often selling the property, as that is normally the major asset; and it oftens take longer than people expect.
The probate process is relatively straightforward and is a lot less complex than people imagine. Do not be afraid to use specialist legal and tax experts though. However, a word of advice when using solicitors. Obtain a firm fixed price from them for the work you want them to do. Do NOT agree to an open ended pay-by-the-hour arrangement as they will then be incentivised to take longer than is necessary and longer than you would want. They are solicitors, not a financial institution. Please remember to be careful here as solicitor probate fess can soon stack up and also bear in mind that most probate work is done without needing to employ solicitors, and most of the work involved with probate is administrative. Specialist probate solicitors make a lot of money whilst you do the legwork for them. It is often the case that you will be asked to provide the solicitor with extra paperwork and you will be charged £200 per hour or so for a non-qualified legal secretary to do the bulk of the work.
As previously stated, the probate process is relatively straightforward and is a lot less complex than people imagine. We hope that this probate guide has been useful, and welcome any comments.