The term ‘Probate’ is commonly used to describe the whole process from obtaining the Grant to estate administration and distribution. The Grant is the legal document that proves the Will is valid (if there is one) and allows the Executor named in the Will to administer the estate. Probate is sometimes not required if the estate is small and in these two main scenarios:
Jointly owned assets such as land, property, shares, or money will pass to the surviving owners through the ‘Right of Survivorship’. If the deceased had only a small amount of savings or premium bonds, probate might not be needed. However, each asset source (bank, mortgage provider, etc.) may have its own rules, and probate may still be required in some cases. Probate will definitely be needed if the deceased owned a property in their sole name and likely, if they held stock and shares in their sole name and they need to be sold or transferred to the beneficiaries.
The probate process can be intricate, and executors, whether they are professionals or individuals designated in the Will, typically adhere to certain key stages. It is common for individuals to appoint solicitors to act on their behalf, due to the potentially distressing, time-consuming, and complex nature of the process.
The Stages of Probate
Stage one – Making contact with the asset holders
This process can be time consuming and involves identifying and contacting banks, building societies, life assurance companies, utilities, pension providers, and other relevant entities to inform them of the death and request a valuation of the assets held with their organisation. Insurance companies should also be notified appropriately to ensure assets remain protected. These valuations are necessary for income tax and inheritance tax purposes. Once all valuations are obtained, the inheritance tax form will need to be prepared.
Stage two – Apply for the grant of probate/letters of administration
To administer an estate, it is necessary to apply for the appropriate grant. If the deceased left a Will, you must apply for a Grant of Probate. If there is no Will, a Grant of Letters of Administration is required. When applying for either Grant and determining that an estate is ‘excepted’ with no tax liability because the estate does not exceed the Inheritance Tax Threshold of £325,000, full details of the estate are no longer required by HMRC. The IHT205 and IHT217 forms are no longer needed. Applicants should complete the probate application online, which will generate a statement of truth for executors or administrators without a Will, to accompany the application.
If the estate is taxable, the form IHT400 should be used for estates exceeding £325,000. Inheritance Tax (IHT) is paid on the net assets of a UK estate at 40%. Various exemptions and reliefs apply depending on your circumstances and the beneficiaries set to receive your estate. Before the Probate Registry will issue the Grant of Probate or Letters of Administration, any inheritance tax due must be paid. At the very latest, it must be paid by the end of the sixth month after the person died. For example, if the person died in January, you must pay Inheritance Tax by 31 July. HMRC will issue a stamped summary of the tax calculated and paid along with a unique code, which is required to apply for the grant of probate or letters of administration.
The executor, or administrator if there is no Will, must confirm to the Probate Registry that all information provided in their statement is accurate to the best of their knowledge. After receiving the stamped receipt from HMRC for the payment of inheritance tax, they can apply for the grant of probate or letters of administration.
Stage 3 – Notifying the asset holders and applying for funds
In order to release assets, a copy of the grant of probate or letters of administration must be sent to the banks, mortgage provider, building societies, and other relevant institutions. This will enable the funds to be disbursed. The released funds will then be forwarded to the solicitor acting as a professional executor, or in the administration on behalf of the named executor or administrator, or directly to the executors via an executor’s account.
Liabilities and debts must be paid first, these could include:
- Funeral and estate administration fees
- Tax owed
- Utility bills, care accounts, credit card debts etc
- Benefit overpayments made after death or incorrectly claimed during the lifetime of the deceased
Only once these have been paid can the estate be distributed.
Stage 4 – Distributing the estate
After taxes and debts are settled, the estate may be distributed to the beneficiaries.
Stage 5 – Prepare the estate accounts
The final accounts must include documents detailing the distribution of money and other assets from the estate. All beneficiaries should receive a copy of the accounts. It is important to maintain thorough records, including evidence of payments such as inheritance and income tax, as these may be requested by HMRC for up to 20 years.
Last Words
The probate process can be daunting and so if you would like to speak to one of our experts in relation to the probate process or any other related services, including making a Will or Lasting Power of Attorney please call us on 03330 14 24 24 or email us at hello@myprobatesolicitors.co.uk. Let us support you throughout the journey.