So, what is Probate? Simply put, Probate is the Personal Representative’s (‘PR’) legal right to manage the deceased’s property, assets, possessions, and money in the death estate.
Understanding the probate process
Understanding the probate process makes it easier to make the right decision for you and your family, as the probate process in the UK can be quite complex, especially if there are multiple beneficiaries or a large estate. The probate process includes:
Step one: The first step in the probate process includes identifying the deceased assets, such as all the savings, investments, lands, and properties, along with any debts they have. After the assets have been identified, the relevant tax must be paid to HM Revenue & Customs (HMRC). At this point the PR can make the application for the relevant Grant of Representation.
Step two: After obtaining the Grant, the next step is to liquidate the deceased’s assets to settle their liabilities. If the deceased has a large number of assets, this can be a time-consuming process. After all the debts have been paid, it is time to prepare the estate accounts for the beneficiaries’ approval.
Step three: Once the estate accounts have been finalised and all the deceased’s accounts and liabilities are settled, and there are no disputes over the estate, the residual estate will finally be ready for distribution to the beneficiaries.
What is the Grant of Representation?
The Grant of Representation is the document that grants the PR the legal right to handle the deceased’s estate. If the deceased left a Will, an Executor will be appointed as the PR who will apply for a Grant of Probate in order to deal with the estate. If the deceased died without a Will, an Administrator would act as the PR instead and they will need to apply for a Grant of Letters of Administration. The Grant is a legal document necessary to present to the bank, Land Registry, Building Societies, and other institutions as proof that you are legally authorised to access the deceased’s assets.
When the Grant is approved, the PR is legally authorised to close any accounts, pay off debts, and distribute the residuary estate accordingly. There are some institutions that will release some assets to the PR without a Grant, for example, some banks or building societies may release funds under a certain amount. If the estate is simple and there is no property involved, PR’s can often deal with the estate without the need to apply for a Grant. However, where there is property involved, a Grant will be required for the PR to deal with this.
How do I deal with property in the probate process?
Property is usually the most significant asset that needs to be dealt with in a death estate. Sometimes there are little to no liquid assets in the estate to settle the liabilities and inheritance tax as most of the deceased’s equity is tied up in property. This means that the PR will need to consider selling the property in order to pay the relevant tax and settle any debts. The PR can begin to involve estate agents and arrange for property valuations during the estate administration process, but they will not have the legal right to authorise sale of the property until the relevant Grant of Representation is received. In the meantime, the PR can get advice from the agents and explore the best price to market the property based on the valuation.
Dealing with a property without a Grant of Representation
In the following situations, you do not need a Grant of Representation to deal with the property:
Property in trust: If the deceased has transferred their property into Trust, this now belongs to the Trust and the Trustees have the power to distribute the property to the relevant beneficiaries without the need for a Grant. This is because the authority for the Trustees to deal with the deceased’s property is provided by the Trust itself.
Joint ownership: There are two forms of joint ownership of a property; Joint Tenants and Tenants in Common. In the case of Joint Tenants, when one Joint Tenant dies, the property is automatically transferred to the sole ownership of the surviving Joint Tenant.
Dealing with a property with Grant of Probate
The following situations need a Grant of Probate to sell properties.
Complex estate: If the estate is complex, including multiple assets, debts, and beneficiaries, then a Grant of Probate is important. It will ensure all the legal procedures have been taken into account.
Sole ownership: If the property is solely owned by the deceased, obtaining a Grant of Probate is needed to legally transfer the property ownership to the beneficiaries or to sell the property.
Mortgage and debts: In the case of a mortgage or liabilities, a Grant of Probate may need to adjust the legal matters to sell the property.
Third-party necessity: Banks, financial institutions, or property dealers may require a Grant of Probate to deal with the deceased’s property as part of their legal process.
Dispute property: If the property has a legal dispute, which questions the property’s validity or conflict claim to the property, a Grant to probate is necessary before selling the property.
What if the property is sold at a negative equity?
Before the PR markets the property for sale, they should consider the value of the property and the consequences if the property is sold at a lower price than the outstanding mortgage or other debts, as the estate will be responsible for paying off the shortfall.
Moreover, if it is foreign property, the PR might be unsure about how to manage the sale, in which case they should speak to a solicitor or legal expert before making any decisions.
Last thought
Dealing with a property in the probate process can be time-consuming and tricky. If you require any support, please do not hesitate to contact My Probate Solicitors for our expert advice. For more information, visit our LinkedIn page call 03330 14 24 24 or contact hello@myprobatesolicitors.co.uk.