Family Services

Probate: A Step-By-Step Guide

By May 31, 2019 June 10th, 2019 No Comments

Probate and administration of estates can be a daunting task, with those responsible having a considerable number of tasks to undertake as well as dealing with a particularly difficult time in life.

probate

You may be going through probate for the first time, in which case it may feel overwhelming. We’ve outlined below the process of receiving probate, so you have a clear idea of what lies ahead.

We strongly recommend that you appoint a specialist professional to take away the responsibility and liability, and deal with matters quickly and efficiently. Our team of experienced probate accountants can guide you through it, taking on as much or as little of the process as you need. Get in touch today for a free, no-obligation consultation.

What is probate?

‘Probate’ is a legal term generally used when talking about applying for the right to deal with a deceased person’s affairs (called ‘administering the estate’). Different terms are used in practice, depending on whether or not the deceased person left a will.

How does it work?

You’ll need to have registered the death If you are the person responsible for administering the estate, your first job is to check if there’s a will. There are slightly different processes depending on whether the deceased person left a will or not – we’ll outline both below.

If there’s a will

If the deceased person left a will, you’ll be applying for a ‘grant of probate’. If there’s more than one will, only the most recent one is valid – but don’t throw any older versions away until you’ve received probate.

Step 1: Valuing the estate

You need to first value the estate of the person who’s died. This will dictate many other things along the process so it’s a key first step.

The estate consists of the person’s assets:

  • Assets held by other organisations, such as savings, pension, investments
  • Possessions, such as properties, vehicles, jewellery
  • Payments due upon death, such as from life insurance or pension plans

You also need to consider joint assets. Anything owned jointly with the person’s spouse or civil partner can be divided by two. For property or land shared with others, you divide the value by  the number of owners then take 10% off the share of the person who died (except for in Scotland where you take £4,000 off before working out the person’s share).

Then it’s time to check for gifts – these could have been in cash, or through other assets . You’ll need to find gifts from the seven years before the person died if they totalled £3,000 per year or more (not including exempt gifts) and gifts from any time if the person who’s died continued to benefit from a gift afterwards (e.g. giving a house away but living in it rent-free) or put it into a trust. Checking bank statements and contacting family members is the best way to go about this process, and you’ll need to estimate the value of each gift either through the market value when it was given or the realistic selling price of the gift when the deceased person stopped benefitting from it.

If the person gave away more than £325,000 before they died, the recipients may have to pay Inheritance Tax on their gifts. You’ll find this out when you report the value of the estate to HMRC.

Estates under £5,000: At the time of writing, there is no legal requirement to apply for probate if an estate is valued at less than £5,000, and no fees apply. All you will need are copies of the death certificate and to arrange an appointment with the deceased person’s bank. The government is looking to increase this threshold to £50,000 in the near future, but we do not currently have a date for this change.

Step 2: Reporting the value to HMRC

Once you have worked out the value of the deceased person’s estate, you will need to report it to HMRC. Only then will you be able to apply for probate – so don’t try to apply for probate before you’ve completed these first two steps. Reporting the value to HMRC will also tell you if there’s tax to pay and when to pay it.

Step 3: Applying for probate

You are now able to apply for probate. This can be done online, or through paper forms, and you will usually receive your grant of probate within 20 days.

At the time of writing this blog the current fee is £215. However, the government is looking to increase probate fees and it is anticipated the new fees will come into force shortly. There’s not yet been a date announced.

The proposed new fees, which will be applied as of the date of the probate application (not the date of death) are:

Value of Estate Probate Fee
Estates worth up to £50,000 £0
Estates worth from £50,000 to £300,000 £250
Estates worth from £300,000 to £500,000 £750
Estates worth from £500,000 to £1 million £2,500
Estates worth from £1 million to £1.6 million £4,000
Estates worth from £1.6 million to £2 million £5,000
Estates above £2 million £6,000

We recommend that anyone considering an application for probate moves quickly if the estate is likely to be caught by the new fees.

Step 4: Accessing the estate’s assets

Once you’ve been granted probate, you can start collecting the estate’s assets (such as money from the sale of a property, or withdrawing funds). You can ask for financial assets to be transferred to an agreed ‘executorship account’, which is normally your own bank account or one that’s been set up specifically for this purpose.

Step 5: Paying off any debts and tax due

You’ll need to pay off any outstanding debts, such as utility bills, and you may also need to pay Inheritance Tax (you’ll know if you need to pay from Step 2).

There’s normally no Inheritance Tax to pay if the value of the estate is below the £325,000 threshold, or if the deceased person has left everything above the £325,000 threshold to a spouse or civil partner, a charity, or a community amateur sports club.

Step 6: Distributing the estate

Once all debts and taxes have been paid, you can distribute the estate as detailed in the will.

Step 7: Creating final estate accounts

You’ll need to keep records as you go that show how any property, money or possessions are being split, and once the estate has been distributed you’ll need to create final estate accounts. These must be approved and signed by you as executor and the main beneficiaries.

If there’s no will

If a person dies without leaving a will or the will that is left is invalid, they are said to have died “intestate”. If you’re the person’s next of kin, you can apply to administer their estate, a very similar process to applying for probate.

What happens to the deceased person’s estate depends on who that individual is survived by: 

Spouse/civil partner but NO children, grandchildren or other direct descendants

The entire estate will go to the surviving spouse or civil partner.

Spouse/civil partner AND children, grandchildren or other direct descendants

The surviving spouse or civil partner will receive the first £250,000 and half of the excess over £250,000. The children will receive the other half of the excess equally between them. Note that children here includes legally-adopted sons or daughters (but not stepchildren).

Children, grandchildren or other direct descendants but NO spouse/civil partner

The estate will be shared equally between the children or their descendants. If a son or daughter has already died, their children (the grandchildren of the deceased) inherit in their place.

Other rules determine who will inherit if there is no surviving spouse or children. You can use this tool provided by the Government to find out more. If you believe you should be a beneficiary there is also guidance provided by the Government on making a claim on the estate.

Where to start

Our final piece of advice is to get help. You don’t have to do this alone – the majority of families will choose to work with an experienced professional to ease the burden.

Probate accountant or probate solicitor?

Since 2014, accountants have been able to legally assist with uncontested probate (the vast majority of cases). Hiring a probate accountant is advantageous because:

  • Registered probate accountants can deal with all aspects of probate (a solicitor would need to consult an accountant anyway)
  • Accountants have good working relationships with HMRC and are in a better position to negotiate for you
  • The deceased person’s accountant will already have most of the figures they require and will need to find out about beneficiaries’ financial situations only
  • Your accountant will already have most of your information as a beneficiary and may only need details of the deceased person’s assets
  • Probate accountants are more cost-competitive (solicitors sometimes work to a % of the estate so it can become very costly)

The only time we would recommend engaging a solicitor in addition to our services would be in a contested probate situation, where there is a dispute over the will.

Contact us for further advice

We can support our clients, their families and contacts through bereavement and deal with the process of obtaining probate either as an entire process, or in those areas you need most support. Get in touch to talk to one of our experienced probate accountants.