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.