A quick guide to probate and dealing with someone’s estate after they die
When someone dies it is essential to deal with their estate, which is made up of their home, savings and investments, belongings and anything else they may have owned.
This is not as easy as simply passing around what they owned as they wished, even if they left a will.
Instead an official process must be followed, known as probate (or confirmation in Scotland). This gives the legal right to distribute the estate and involves varying degrees of complication.
Our quick guide below outlines the process in England and Wales for dealing with the estate of someone who died leaving a will.
Where there’s a will…there is also likely to be some complicated paperwork to fill out on someone’s death
What is probate?
Probate is generally used as the term to describe dealing with someone’s estate. It involves finding out about all their assets and debts, valuing their estate and passing it on.
This is done by that person’s executors, who will be named in their will. They could be a trusted friend or member of family, or a nominated professional, such as a solicitor.
When writing a will it is important to remember that you do not need a professional to do probate, it is perfectly possible for the layman or woman to do it.
The crucial elements that decides how complex this task will be is whether you need a grant of representation and have to complete inheritance tax forms.
What is a grant of representation?
A grant of representation is the official seal that you are allowed to access the deceased assets and distribute them. Banks and other financial institutions will ask you for this before they will release funds.
A grant may not be needed if the estate:
- is a low-value estate – generally worth less than £5,000 (some organisations may use a higher or lower figure in deciding whether or not a grant is needed) – and doesn’t include land, property or shares
- passes to the surviving spouse/civil partner because it was held in joint names
Jointly held assets, such as bank and savings accounts, will typically automatically transfer to the other named holder without the organisation requiring a grant of representation.
Who does this?
When someone dies leaving a will they will name an executor or executors in it, which should have been agreed with those people when they wrote the will.
The executors are responsible for administering the will and dealing with probate. Even if they have been named in a will as an executor, some people pass this task onto a solicitor, deciding to pay a professional to do the job for them.
It is possible to do probate yourself, however. One money-saving tip is to do the bulk of it and then simply pay a solicitor to check over the forms for you.
What do you need to do to value an estate?
To value someone’s estate you need to identify all their assets. This means any bank and building society accounts, investments, properties, their belongings, car and anything else they may have owned. You also need to identify and pensions and life insurance policies.
For savings and investments and other financial assets you need to write to the provider and ask for a valuation on the date of death.
Properties need to be valued, preferably by an estate agent or valuer, and you will also need to tot up what everything else is worth.
You also need to know about any debts, such as mortgages, credit cards, loans and personal debts and you can deduct the cost of their funeral expenses, so get this figure too.
Inheritance tax forms then need to be completed even if no tax is going to be owed.
Do I have to fill in inheritance tax forms?
Unfortunately, form-filling is difficult to avoid. Most estates do not incur inheritance tax and are excepted estates, but even they require forms.
HMRC explains what counts as excepted estate:
For deaths after 1 September 2006, the estate will generally be an excepted estates if one of the following applies:
- it’s a low value estate – valued at under the Inheritance Tax threshold (£325,000 in 2016 to 2017 tax year) but see more about thresholds in the section below
- it’s an exempt estate – the deceased person left everything (or everything over and above the Inheritance Tax threshold) to a spouse or civil partner living in the UK or to a ‘qualifying’ charity (and the estate is valued at under £1 million)
- the deceased person was a ‘foreign domiciliary’ – they lived permanently abroad and died abroad and the value of their UK assets is under £150,000
For deaths on or after 6 April 2010 an estate will also be an excepted estate if both of the following apply:
- the value of the estate is less than twice the Inheritance Tax threshold (£650,000 in 2016 to 2017 tax year)
- 100% of the unused Inheritance Tax threshold from a late spouse or civil partner can be transferred to the deceased.
Excepted estates only require the Return of Estate Information form to be completed. This is shorter and less complicated than the full IHT forms.
If an estate owes inheritance tax or is not an excepted estate the full inheritance tax forms must be completed – even when it has been passed between spouses or civil partners and there is no tax to pay.
This is a more complicated form with extra schedules to be filled in that involves detailing all the deceased’s assets and debts.
When you can’t use a short form
- the estate is worth more than £1 million
- the person’s partner used some of their Inheritance Tax threshold, so you can’t transfer 100% of it
Unfortunately, inheritance tax forms aren’t the only ones that need to be filled in. You must also fill in a probate form to apply for the grant of representation. The form is called PA1 and involves details about the deceased and their family and rehashes some of the figures from the inheritance tax forms (so you need to do those first.
You can find form PA1 and the guides on how to complete it and what to do next here on the HM Courts page.
Once this is complete you need to gather together some extra documents and send everything to the Probate Registry of your choice.
These are in major cities and towns around the country.
You will need to include form PA1, the inheritance tax summary form, the original will and any codicils, plus three plain copies of this, an official copy of any foreign wills (if relevant, and an original death certificate.
You will also need to send a check for the probate fees.
This is currently a flat £215 but those fees are set to be controversially hiked and graded on the size of the estate: these range from an estate under £50,0000 paying nothing, through one between £300,000 and £500,000 paying £1,000 and the highest fees being £20,000 for estates over £2million. Changes arrive in May 2017.
What happens next?
Once the forms are complete, they must be sent to the Probate Registry. If you had to complete the full inheritance tax form, IHT 400 and the accompanying summary IHT421, this must be sent to HMRC and if there is any inheritance tax due it must be paid.
The executor must then ‘attend in person at a Probate venue, or at the office of any commissioner for oaths (usually a solicitor’s office) to swear an oath,’ says HMRC.
A grant of representation will then we sent in the post, which needs to be shown to banks and other institutions to release assets. Any debts owed by the deceased must then be settled and the estate can be distributed. The grant also allows properties to be sold and the money distributed.
This entire process can some time.