Wills, Probate and Inheritance Explained
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What does Probate mean?
Probate used to mean something different to what it does today.
Historically, it has been seen as the process involved in verifying a will. In effect, this meant giving the will legal status.
But that's not all ...
Over time, probate began to pick up aspects that made it a little more complex than just a verification tool. It has since become a bit of a catch-all term that covers everything involved in managing a person’s estate when they die.
This includes much of what is involved in the will, as well as property, inheritance and so on.
To make the distinction even clearer, probate has become the process by which executors deal with and manage money, possessions and property after someone has passed on.
Before we look at how to apply for probate and other issues around that, we need to clarify whether or not you need to apply for probate. It’s not always the case that a person needs to after someone has died.
What is probate and who needs to apply?
Probate, as stated earlier, is the legal right to deal with the money, property and possessions of someone who has died. These three areas are known collectively as ‘the estate’ of the deceased person.
The process of applying for probate is quite simple and usually starts with checking whether or not there is a will. Wills are actually less commonplace these days. A recent report by This is Money found that a large proportion of British people don't have a will, with many believing they don't have enough money to leave one.
If there is a will, it should state who is responsible for managing the estate (the ‘executor’). If there is no will, the next of kin can apply for probate as the ‘administrator’.
The duties of an executor and administrator
This can prove to be a very demanding role, and will most likely take up a lot of time. The commitment is considerable, which is why many people in this position entrust the process to their solicitor.
Below, all the possible duties and responsibilities of an executor/administrator are listed:
|Tax duties||Administrative duties||Legal Duties|
|Calculating inheritance tax that may be due||Identifying all of the assets and the liabilities of the estate||Arranging for the will’s validity to be confirmed|
|Completing the forms for inheritance tax, which is still necessary even if the estate is exempt||If assets are not found, they need to be located, as well as the location of any missing beneficiaries||Applying for a Grant of Representation|
|Gaining confirmation from HMRC that any inheritance tax payment has been received, or that no tax is required||Dealing with any property that needs selling or transferring||If there are claims against the estate, identify and manage these|
|Making any necessary changes to the inheritance tax amount. This may happen because the value of assets can change during the process||Preparing for transfer of any joint assets with a surviving spouse or partner||Addressing any modifications in the distribution amounts for beneficiaries, whether they have identified them or not|
|Managing and submitting the income tax return to HMRC, which is due for the deceased from April until the day of death||Distributing assets to beneficiaries||Setting up and managing trusts|
|Capital gains tax must be paid if it is due||Creating trusts, to protect inheritances of minors|
|If there are any documents needed to give to a surviving spouse around inheritance tax, this must be done promptly|
After the executor/administrator has been established, the steps are as follows:
- A grant of representation/probate is applied for. This allows the applicant to access bank accounts, for example
- Any inheritance tax has to be taken care of, if it is due
- The assets of the deceased are collected up, including, if applicable, money from the sale of property
- All debts are paid off
- The estate is then distributed to the beneficiaries
Applying for a grant of representation/probate
This is where you apply for the right to access the money and other aspects of the deceased’s estate. There are actually four steps to this process, and each is quite involving. The first step is completing the probate form itself.
The form is referred to as ‘a PA1’, and you can access it instantly online. However, it isn’t guaranteed that you can fill it in yourself. You will need to contact HMRC directly, with details of your circumstances, and ask them if you’re able to do so.
Inheritance tax and how to deal with it
To understand whether or not inheritance tax is due on an estate, you’ll have to work out how much an estate is worth first. This is not as laborious as it sounds, but it does require a methodical approach.
One thing to bear in mind when valuing the estate is that it can take up to 9 months. It can be longer if the estate is complicated or particularly large.
You value the estate by:
- Contacting all agencies and organisations in an attempt to identify all the assets and debts the deceased was responsible for.
- Estimating the true value of the estate. This is the crucial stage, and requires you to ensure that the value is 100% accurate. The estate may not have to pay this tax. If the money and property etc is to go to the deceased’s partner or spouse, then there will be no inheritance tax. If the estate is to go to a charity, no inheritance tax is required.
- Valuing the estate against the Inheritance Tax threshold of £325,000 (at time of writing). If it is below this amount no tax is payable.
- Reporting the accurate value to HMRC.
Dealing with debts
The majority of families who lose an adult loved one will be faced with a number of debts that the deceased left behind. These will all need clearing before any kind of distribution of assets can take place.
Commonly, these debts will include:
- Outstanding bills
- Any tax owed to HMRC
What needs to be understood here is that the executor or administrator will have a legal duty and responsibility to remove all debts before an estate is distributed. If this duty is not taken care of effectively, the estate and its management will be seriously delayed.
This is achieved by going through the deceased’s belongings but there is also another way to gain final confirmation of all the debts on the estate.
There’s an official government publication called The Gazette.
The Gazette allows you to place an ad that invites any creditors to come forward and take any money that is owed to them. This is usually best utilised for a complex estate, and one that has a considerable amount of history and money behind it.
Distribution of the estate
Once all debts have been identified and paid, the process now switches to distributing the estate amongst the recipients.
The will should outline how the estate is to be divided up. If there is no will, then you will have to divide up the estate according to the law’s guidelines on intestacy - which according to Citizens Advice - is on the rise.
If there is no will the law of the UK takes over and decides who receives what. This is actually quite a simple process. If the deceased left behind a spouse, and if the estate is worth less than £250,000 then the estate, in it’s entirety, is given to the spouse. A surviving partner (who was not married to the deceased) does not have automatic right to the estate when there is no will.
So essentially, the marriage is the most important part of an estate if there is no will present.
If the process does not identify a husband or wife, then the estate is next passed onto the children and grandchildren. Unless there are no children or grandchildren, it is divided up equally by those who survive the deceased.
This is what’s known as ‘intestacy’.
If children and grandchildren are not identified, the process then goes on to other family members until it finally reaches a position where surviving relatives of the dead person receive part or all of the estate.
Below is the ‘hierarchy’ of intestacy:
- Spouse or civil partner
- Brothers and sisters
- Uncles and aunts
At the same time, if the person dies ‘intestate’, as in not leaving a will, the following people are not entitled to any part of the estate:
- Cohabitants or unmarried partners
- Common law spouses
- Ex-spouses or civil partners
- Stepparents or stepchildren
- Close friends
This hierarchy is absolutely to be followed. The law allows no other ‘order’ and anyone who tries to subvert or upset this process will find they are breaking the law.
If there is absolutely no surviving family member, then the Crown receives the entirety of the estate.
The lack of a will
Sometimes there is no will.
This could be for a number of reasons. It could be because the deceased passed away unexpectedly, for example. Or it could be because the deceased recently remarried and the will was going through some significant changes. If there is no will then the executor or administrator should make every effort to find one.
The deceased could have made one, but had not informed anyone of this.
Sometimes the deceased has made a will, and has:
- Left it with their solicitor
- Stored it at their bank
- Given it to a will storage service
- Stored it at The Principal Registry
An executor can call the solicitor or the bank to confirm the existence of a will.
A will storage service is a business that has been developed principally to store wills, and there are a great number of such services available in the UK. If you have a strong indication that the deceased has a will and you cannot find it via a solicitor or a bank, it may be worth contacting will storage services in the local area.
The Principal Registry has a family division that deals with wills. The record keeper at the Principal Registry will ask for paper-based evidence before he or she is able to discuss the handing over of a will.
The Registry will need to see proof of actual death, which is usually only possible through the death certificate. If no executor is named there will be a delay. If you are not the executor, you can apply to a district judge for the will.
It must be understood that if there is no will, then the estate will undergo the intestate process.
So, how long does probate take?
It can be an incredibly lengthy process, one which is delayed by any number of factors. It has been known for probate to take several years before it finishes. Of course, if the estate is large and/or complicated, the probate process will last for a while. And if there is no will, assigning an administrator takes time, as does the process involved in looking for a will if this is necessary.
If there are numerous properties as well as shares in companies, for example, this will take some time to sort out through probate. If the deceased had a less complex estate, such as a single bank account and fairly centralised bill payments, it will take considerably less time.
Because the process relies upon the involvement of an administrator or executor, the availability of these people is important. If the people involved are not able to dedicate a number of hours to the process, it will again suffer delay.
If you’re looking for a figure, it is quite likely that probate will last from 6-9 months, and that’s with an uncomplicated estate to manage.
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