Probate explained – this article is designed to explain precisely what probate is, when you need it and how you apply for it.

After someone dies, their financial affairs will need to be finalised. This often involves obtaining a Grant of Probate or Letters of Administration.

Probate Explained: What is probate?

A Grant of Probate is the official legal document that gives someone the authority to deal with an estate after a death. The term ‘probate’ is often used to refer to the process of winding-up someone’s affairs.

Applying for a Grant of Probate

The person named as an executor in the deceased’s Will should apply to the Probate Registry for the Grant of Probate.

Before making the application, the executor will need to value the estate. This includes finding out how much is held in bank accounts and the value of property, shares, and valuable items. The amount of any debts should be deducted and the net value of the estate used to calculate the amount of Inheritance Tax due.

This can be a complicated calculation as some gifts made by the deceased in the last seven years of their life will need to be included and Inheritance Tax paid on a sliding scale.

The executor is responsible for paying the tax and this should be done within six months of the death or interest will be charged.

Application can then be made for a Grant of Probate and, once this has been received, the executor can start collecting in the assets.

Probate Explained: The executor’s role in probate

The role of executor is an onerous one and dealing with the administration of an estate can be time-consuming and take many months, even years, to complete.

Any property will need to be cleared and sold and letters will need to be written to all asset holders sending the Grant of Probate and asking them to close accounts, sell shares or encash policies. All of the deceased’s debts will need to be cleared, to include any outstanding tax.

The executor is also responsible for preparing detailed estate accounts, which can be complex in a larger estate.

They can be held personally liable for any errors made, even if they were genuine mistakes.

Once all of the assets have been collected in, the estate will need to be distributed to the beneficiaries in accordance with the terms of the Will. This will include making any cash gifts, transferring property or shares, if they are not to be sold, handing over specific bequests of valuable items and giving the residual estate to the named beneficiaries.

Probate Explained: How do I deal with probate if the deceased didn’t leave a Will?

If the deceased failed to make a Will, then their representative will need to go through a similar process to obtain a Grant of Letters of Administration from the Probate Registry. The representative is known as the administrator.

The person with the right to apply to become an administrator is decided by the Rules of Intestacy. These rules list the close family members of the deceased who are entitled to inherit, in order of priority. One of these beneficiaries can make the application to be an administrator.

Probate Explained: Does every estate need a Grant of Probate or Letters of Administration?

Some small estates will not need a Grant of Probate in order to be wound up, although this often depends on the rules of the various asset holders. Different banks have different thresholds above which they will ask to see a Grant, and they can start as low as £5,000.

If an estate is simply being passed in its entirety to a spouse, then it may also be possible to avoid the need for a Grant where most of the assets are jointly owned with that spouse.

Probate Explained: Professional help

As well as being time-consuming, winding-up an estate can be complex and expose you to personal liability for losses if any errors are made. For many people, it makes sense to instruct a professional to deal with the probate process on their behalf.

At Elm Legal Services we have expert Wills and Probate lawyers who have an in-depth understanding of probate, to include calculation of Inheritance Tax and preparation of estate accounts, two of the more complex aspects of estate administration.

If you would like to discuss how we could help you with an estate administration, please call us now on 0117 952 0698 or Make A Free Will Enquiry and we will be happy to explain the options available to you.

All estates of any deceased person need to go through all legal channels before the deceased’s assets can be distributed to all beneficiaries.

In England and Wales, this is referred to as the Grant of Representation and will be needed even if the deceased did not leave a Will. Any Will executor will need to apply for a Grant of Probate whilst anybody looking to administer the estate of those without a Will will need to apply for a Grant of Letters of Administration which will enable the executor to administer the estate under intestacy rules.

During lockdown, completing the administrative process of applying for probate has changed and executors or probate professionals will need to ensure they are adhering to the new system to avoid the form being returned and the process getting delayed.

At the end of March HM Courts and Tribunals Service introduced an eight week introductory period for a new standard grant of representation application forms. The introductory deadline lapsed on May 18 and all forms will now need to comply with the changes if they are to be processed.

The main change will see older iterations using ‘statements of truth’ obsolete and any forms sent after May 18 which uses this older system, will see their forms returned.

The new forms have been designed to digitize information from the start of the process, reducing the number of errors and creating a more efficient process as the new forms can be bulk scanned.

Three grant of representation forms have been redesigned. Any executor applying for probate will now use the updated PA1P form.

Those who are administering an estate without a Will and applying for a grant of letters of administration should apply for a PA1A form.

Anyone needs to apply for a caveat will need to use the updated PA8A form.

Make A Free, No Obligation Enquiry Now

To speak with one of our specialist Wills & Probate Lawyers, please call us now on 0117 952 0698 or Make A Free Will Enquiry and we will discuss your current circumstances with you and explain all available options available to you.

How to calculate the value of a property and its contents for probate

Probate is the legal process where you manage a deceased person’s possessions and allocate their money, assets and belongings once they have passed away – this is known as their ‘Estate’.

From the outset of probate it will be essential to calculate the total value of the Estate to find out if inheritance Tax is required to be paid.

More often than not, one of the largest assets that a person will own is their home and all their belongings inside. So, how do you work out how much everything is worth in readiness for probate?

Valuing a property and assets throughout the Probate process

One of the most crucial parts of the Probate process is valuing the deceased’s home and possessions. Throughout the administration of the Estate, you will need to keep a log of how much money is being transferred into and going out of the Estate in order that you can pay in total remaining debts owed and work out how much inheritance remains to give to the beneficiaries who are entitled to it.

When making these calculations it makes it clearer in terms of inheritance tax (IHT) and whether the Estate is liable for it or not. If the estate is accountable for tax, you will be able to calculate how much. You will then need to pass all the information to HM Revenue & Customs.

Valuing a house and its contents can be a difficult task but there are processes in which you can follow to make it easier. Following processes will help you in the long run as it lessens the risk of a dispute with HM Revenue & Customs.

How to calculate the value of property during probate

It is important to remember when calculating the value of a property or land that there are various factors impacting the price of it. These factors include development land opportunities, remedial maintenance needed to the property and sales of properties alike in the surrounding area.

If the Estate is liable for IHT, it would be prudent to seek a valuation from a Chartered Surveyor as they are skilled and experienced in providing valuations specifically for IHT so are much more likely to be approved and acknowledged by the HMRC.

How to Get a Property Valuation in Probate

To ensure the accuracy of a property valuation, the District Valuer Service (DVS) of HMRC would need to check and examine the valuation presented to them. If the DVS think the valuation is wrong, they will contest it and ask for additional evidence to back up the valuation given. If Executor(s) of an Estate negligently obtain a property valuation they could be at risk of being fined. Equally, if Executor(s) found the valuation sent to HMRC was too low, they will have to contact the HMRC in writing to advise them of the correct value.

If the deceased person’s property was jointly owned with someone else, known as ‘Joint Tenants’, then the property value will need to be split down the middle to find out what the deceased owned. However, if the property was owned jointly with someone else as what is known as ‘tenants in common’, then the value will need to be worked out along the lines of what proportion of the property the deceased owned e.g. 60/40 split between owners.

Working out the value of the house belongings

The first stage when valuing the contents of a house is to make a list of items which you think might be worth something e.g. cars, jewellery and furniture. Next, do some research on the internet to find out how much the items are worth or sold for, taking into consideration their age and condition. For specialist antique items it is advisable to seek a professional valuation who have the expertise and specialise in valuing these items.

Working out the Value of the Estate for Inheritance Tax

IHT will only need to be paid if the value of the Estate surpasses the nil-rate band. At the moment, the nil-rate band is £325,000. If the Estate is worth less than £250,000, HMRC will probably be happy with an estimated value. However, if the estate is worth more than £325,000, it will be obligatory to pay IHT, although there are some exceptions whereby you could end up paying less IHT by increasing the threshold due to certain factors.

It is crucial to understand that when valuing the Estate for IHT that you calculate the ‘gross’ value of the taxable Estate. The taxable estate includes all assets which are owned by the deceased, plus any gifts too in the 7 years before they passed away.

Apart from the deceased’s home and contents, other assets will need to be looked into such as bank accounts, pensions, investments, shares and life insurance.

To speak with one of our specialist Wills & Probate Lawyers, please call us now on 0117 952 0698 or Make A Free Will Enquiry and we will discuss your current circumstances with you and explain all available options available to you.

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When the owner of a business dies, probate can be lengthy and complicated as their business assets have to be valued and transferred.

Whether business assets are sold or transferred depends on the way in which the business was owned and operated as well as the wishes of the deceased.

The estate’s executor or administrator will need to obtain a Grant of Probate or Letters of Administration enabling them to deal with the business.

Sole trading and probate

If the deceased was a sole trader, then their finances and assets are simply treated as part of the estate.

Business partnerships and probate

Where the deceased was in a partnership, there would normally be a partnership agreement giving details of each partner’s contributions and liabilities. It should also set out what is to happen in the event of the death of a partner.

The deceased’s estate will be liable for any debts or a share of partnership profits. Separating the estate from the partnership may well be complex and an executor or administrator should take independent legal advice on behalf of the estate.

Companies and probate

Where the deceased owned shares in a company, the company’s Articles of Association will govern how shares can be sold and/or transferred, for example if first refusal must be given to company directors.

The executor or administrator will need to contact the company secretary and arrange for valuation of the deceased’s shareholding.

Complications

It may be that the business will need to be sold or shut down. If there are redundancies, there may be liability to make payments.

If it is advantageous to keep the business running while a buyer is sought, then someone needs to be appointed to do that. If there are other owners or partners, then liaising with them will be essential.

As well as dealing with probate, the executor or administrator may also find themselves having to deal with questions of employment law, company law, property law and insolvency.

For this reason, it is highly recommended that when the deceased owned a business, professional legal help is sought.

If errors are made during the administration of an estate, executors or administrators may be held personally liable.

Make A Free, No Obligation Enquiry Now

To speak with one of our specialist Wills & Probate Lawyers, please call us now on 0117 952 0698 or Make A Free Will Enquiry and we will discuss your current circumstances with you and explain all available options available to you.