A short guide to probate

When someone dies, there are important legal steps that need to be taken before their estate can be distributed.

While it can be a difficult subject, many of us will be impacted by probate procedures at some point in our lives. If you are appointed as the executor of someone’s Will, it’s a good idea to understand how the process works. This can help avoid legal mishaps and ensure that the deceased person’s wishes are honoured.

Registering the Death

The first thing you need to do is register the death. This must be done within five days at a local register office.

Normally a relative is responsible for registering the death. This does not necessarily need to be the executor of the estate. If no relative is available, registration will normally be done by someone who was present at the time of death, a hospital employee, or the person arranging the funeral.

The register office will ask for lots of information about the deceased person and will probably need a number of documents, such as their passport, driving licence, and marriage certificate.

Once the death is registered, you will receive a death certificate. The executor will need this to be able to deal with the deceased person’s property and financial affairs.

The Importance of a Will

Before starting the probate process, you need to find out whether the deceased person left a Will. This may be stored with their solicitor or with a bank.

The Will should specify three main things:

• Who are the executors, i.e. the people responsible for administering and distributing the estate?
• Who are the beneficiaries intended to receive the proceeds of the estate, and what happens if they die before the person making the Will?
• Which assets are to be distributed and any specifications, for example whether a Trust is to be set up.

If you have a Will, it’s important to let your family know where this is stored and how they can locate it if they need to.

Intestacy Rules

If someone dies without a Will, this is known as intestacy. As no executor is nominated, the deceased person’s closest relative will normally be appointed as an administrator. If they can’t or don’t want to act, the responsibility passes to the next closest relative.

The intestacy rules vary in different parts of the UK, but broadly mean that the deceased’s family inherit their assets in a strict priority order. Beneficiaries can include spouses, children, siblings, parents, and more distant relatives. If there are no family members, the estate will pass to the Crown.

Crucially, anyone who is not related, such as unmarried partners, step-children, foster children, close friends, or carers, cannot inherit under the rules of intestacy.

Even if you have a fairly simple estate, it’s important to have a Will so that your wishes will be followed and your family have clarity over what they need to do.

Assets and Liabilities

The executor will need to gather information about the deceased person’s estate. This can include:

• Property values
• Bank statements
• Investment valuations
• Pension details
• Income and tax information
• Details of any debts or outstanding bills

Valuations should be taken as of the date of death, as these are the figures that will be used in the inheritance tax calculation.

This can be the most time consuming aspect of settling an estate, as tracking down assets and communicating with various organisations (who may all have different requirements) can take time. Most will need an original, or a solicitor-certified copy of the death certificate and the Will.

Many people appoint professional executors due to the complexity of their estate, but this is not really necessary. You can gather this information yourself, or you can appoint a solicitor or financial adviser to help you with it.

Inheritance Tax (IHT)

To work out the estate’s value, you need to take into account the value of all assets (except pensions) and liabilities. You also need to factor in any gifts made within the last seven years. If the deceased person established any Trusts, advice is recommended as the calculation can start to become complicated.

Once the value is established, the executor will need to determine if IHT is payable. This applies to estates which are valued at over £325,000. This nil rate band is transferable, which means that a couple can pass on up to £650,000 without paying IHT.

The executors must then complete the appropriate tax forms and submit them to HMRC within 6 months of death.

Applying for Probate

Once the estate is valued and all tax and bills are settled, you can apply for probate.

In England and Wales, you can apply for probate online or by post. If you live in Scotland, the process is known as ‘grant of confirmation’ and you can find more information here.

The process normally takes up to eight weeks.

Not all estates need to apply for probate. If all assets are jointly owned, and pass to a spouse, it is not required

What Happens Next?

With probate granted, the executors can start to sell the assets and distribute the estate to the beneficiaries.

If the deceased person had significant investments, it can be a good idea to seek legal and tax advice. Assets can either be sold either by the estate (which effectively acts as a Trust) or passed directly to the beneficiaries. Depending on the asset and the circumstances, one option may be more tax-efficient than the other.

If the beneficiaries decide that the assets should be distributed differently from the directions in the Will, they have up to two years to apply for a deed of variation. This can be effective if the intended beneficiary has a large estate (and potential IHT liability) and would prefer to have the assets placed in Trust or pass directly to their own children.

Probate proceedings can take several months, or even longer for complex estates. It can be an unsettling time, complicated by grief. But by being informed, and seeking advice where needed, you can help to smooth the process.

For further information or advice please contact one of our Wealth Managers or call us on 01395 207350.