Applying for probate: What you need to know

When a person dies, someone has to deal with their affairs. This is called ‘administering the estate’. The process to be followed varies depending on 2 things:

1. Whether a person has died leaving a Will or if they have died ‘intestate’; and
2. The assets in the estate and their value.

Chris Hopkins, Head of Private client at Butcher & Barlow, explains the steps to follow.

Is there a Will?

If the deceased left a Will the person who will deal with administering the deceased’s affairs will be the named Executor. If required, it is the Executor who will apply for a Grant of Probate.

If there is no Will, the deceased’s closest relative will be responsible for the application and will be called the Administrator. If required, they will apply for Letters of Administration.

For ease when referring to applying for probate, we are also including the process for applying for Letters of Administration.

Is applying for probate necessary?

Whether you need to apply for probate is dependant on the value and ownership of the deceased’s estate.

Probate is unlikely to be required if:

1. The estate is small meaning that there are few assets in the deceased’s sole name and there is cash less than approximately £5,000; and / or
2. If all the deceased’s assets are jointly owned. This is because jointly owned assets will automatically pass to the surviving owner without any need for a formal transfer.

There may be assets in the estate which appear substantial but a grant of probate may still not be required. Each banks and investment provider have different policies with some banks allowing accounts with up to £50,000 in them to be closed without a Grant of Probate. Furthermore, some investment companies and registrars have a small estate procedure which prevents the need to be applying for a grant of probate if there are no other assets in the estate requiring it be obtained.

Probate will always be required when dealing with buildings and land registered in a person’s sole name.

The probate specialists here at Butcher & Barlow have dealt with the administration of many estates and come across a whole range of assets. They will therefore be able to consider the assets in the estate and advise you whether or not you need to be applying for a grant of probate.

Applying for a Grant of Probate

Although using a solicitor for the probate process is not compulsory it is well worth considering. The process of applying for probate can be a lengthy and time consuming. It can take many hours of your time and can be emotionally draining. As an Executor or Administrator you are under certain duties when you administer the estate and if you make any mistakes you could be held legally and/or financially responsible.

The first step in applying for a grant of probate is to establish the value of all assets and liabilities in the estate.

Assets include solely or jointly owned property, belongings, money held in accounts, pensions or trusts.

Each institution holding some or all of the deceases assets will need to be contacted asking for a valuation of that asset at the date of death. They will require a certified copy of the Will (if there is one) and the death certificate. A certified copy is a copy of a document signed by a solicitor or other qualified person confirming that it is a true copy of the original.

A formal valuation should be obtained for any property or any belongings with a value of over £500.

Debts and liabilities include mortgages, loans, credit cards, unpaid bills, uncashed cheques and funeral expenses.

Any gifts made by the deceased in the preceding 7 years will also need to be recorded.

It is important to get the valuation process right since the final figures will determine whether or not Inheritance tax is payable.

When is Inheritance Tax payable?

Inheritance tax (IHT) is payable on estates over a certain value or threshold. The threshold – called the Nil Rate Band (NRB) – for 2020/2021 in England and Wales is £325,000.

If the value of the Estate is within the NRB then it may not be liable to pay Inheritance Tax but you will need to factor in any gifts which have been made in the 7 years preceding the date of death. We will be able to advise you whether these gifts have a bearing on the value of the estate.

If the value of the estate is above the Nil Rate Band, there may be other allowances or exemptions available which reduce the amount of tax payable. This can be a complex area depending the deceased personal circumstances and business interests and therefore it is essential that if an estate appears to be taxable, professional advice is sought early on.

Completing and submitting the Probate Forms

Which forms you need to use when applying for probate depends on whether or not the estate is taxable. For a non-taxable estate this is IHT205 and for a taxable estate this is the much longer and more complex IHT400. Further forms are needed if you are claiming any allowances.

Although not complicated, the forms can be daunting, and therefore using a probate specialist who is used to completing these forms can save time and stress.

The completed forms, original Will, death certificate and court fee will then be sent to the Probate Registry.  The process for solicitors acting in these matters is now moving towards an online system of filing the relevant forms and documents. This will help to speed up applications and allow the Probate Registry to issue grants in the quickest possible time.

Any errors or missing information on the application will cause a delay in the return of the Grant.

Once the Grant has been obtained

Once the Grant has been issued by the Probate Registry, you will receive the original Grant of Probate, or Letters of Administration (if there is no Will). The original will is stored at the Probate Registry and becomes a public document which anyone may obtain a copy of.

The next steps are:

1. To collect in the assets;
2. To pay out liabilities; and
3. To distribute the estate

Prior to collecting in the assets, it is advisable to open a separate bank or building society account in the name of the Executors. This ensures that there can be no confusion as to what money belongs to the estate and what belongs to the Executors personally.

Each institution which holds money due to the deceased will require sight of the Grant of probate before releasing the monies to the estate.

When all the monies have been received, any debts will need to be settled. There is a strict order for paying off debts and it may be that there are debts you are not aware of. To protect yourself from debtors coming out of the woodwork at a later date, you can formally publish notices giving creditors the opportunity to come forwards within a prescribed timescale. We can advise you how to do this.

If you think there may not be enough money in the estate to pay the debts, you should seek legal advice immediately.

You may need to complete an income tax return and again, a professional adviser can help you with this.

Once all taxes and debt have been paid, and prior to distributing the estate, you must prepare estate accounts which should be approved and signed by the Residuary beneficiaries (those getting the balance of the estate once any specific gifts have been made).

You should obtain a receipt from all beneficiaries for any gifts or money.

If you would like to talk to one of our probate specialists about the processes involved, please click here to contact a member of the team.

In line with Government guidelines, we are now working remotely.  Chris can be contacted at chopkins@butcher-barlow.co.uk or on 0161 764 4062.

To view Butcher & Barlow’s own working practices, please visit www.butcher-barlow.co.uk/news.