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A How to Guide to Probate and Estate Administration

Posted on 23 Jan 2017 by Alexis Outram - Personal Tax

This guide sets out what must happen, from a legal and financial perspective, when somebody dies. This can be a very upsetting and difficult period.

What is probate?

Probate is a term used generically to refer to the process of dealing with the estate of a deceased person. The people who are legally entitled to deal with the estate of the person who has died are known as ‘personal representatives’.

If there is a will naming executors, and they are willing and able to act, they become the personal representatives. They will need to obtain a grant of probate from the Probate Registry, which will enable them to fulfil their duties.

If there are no executors willing or able to act, or if there is no will, the personal representatives will be called ‘administrators’, and they will need to obtain a ‘grant of letter of administration’ which gives them authority to act. To keep things simple we will use the term probate to cover all situations.

The probate process ensures that relevant taxes are calculated and paid, money owing to creditors and owed by debtors is collected and, if a will has been made, the deceased’s remaining assets are distributed to the beneficiaries in accordance with his or her wishes.

Is probate always required?

In certain circumstances you do not have to go through the probate process, for example if:

  • The deceased doesn’t own any property, land or shares and the estate is valued at less than £5,000.
  • The contents of the deceased’s estate is held jointly with another and therefore passes automatically to the other joint party. Examples of where this may apply are joint bank accounts and some properties.

What’s involved in the probate process?

There are several stages to the probate process, which are set out below:

Find the will

Firstly you should check whether the deceased has left a will.

If you are liaising with accountants, solicitors, banks or will storage companies they’ll need to see a copy of the death certificate and also proof that you are the executor named in the will, before they release any documents.

If the deceased didn’t leave a will, which is referred to as ‘dying intestate’, it is usual for the next of kin to oversee the probate process. As noted above, for the purposes of probate they are referred to as ‘administrators’.

Applying for the grant of representation

The deceased’s personal representatives (executors or administrators) are responsible for handling the probate process.

The personal representatives can choose if they are happy to undertake the administration of the probate process, or whether they would like to engage the services of a suitably qualified professional, such as Streets Chartered Accountants.

The first part of the process is to apply for a grant of representation. There are four stages to the application process:

  1. Complete an inheritance tax form - you or a professional valuer need to calculate how much the deceased’s estate is worth, including property, shares, goods and chattels etc. This valuation will decide which form you complete and how much tax there may be to pay on the estate. If inheritance tax is payable the form will be sent to HMRC and the tax payable must be paid before you apply for the grant. HMRC will send a form to confirm that this has happened which will be sent to the Probate Registry.
  2. Complete the probate application form (form PA1) – this can be downloaded from http://hmctsformfinder.justice.gov.uk
  3. Send your application to your local Probate Registry – this should include the above PA1 and relevant inheritance tax forms, an original copy of the will and any codicils, as well as copies of the death certificate and current probate application fees.
  4. Swear an oath – once they have received the necessary paperwork the probate office will send you an oath. You will need to visit your local probate office or the office of a commissioner for oaths. Once you have sworn the oath, you should receive the grant of representation within ten working days.

Administering the estate

Once the grant of representation has been received you will need to send a copy to the deceased’s asset holders, such as banks, building societies etc. 

At this point you can start liquidating the deceased’s assets, which will provide funds to clear debts, pay additional inheritance tax, income tax or capital gains tax arising from the estate.

As the personal representative you are personally liable if you distribute the estate to the beneficiaries, but a creditor of the deceased subsequently makes a claim for an unpaid debt. To protect yourself from this happening you can give notice to potential creditors under Section 27 of the Trustees Act 1925. This involves placing an advert in the deceased’s local paper and in the London Gazette. Potential claimants have a set time frame for responding, which can be no less than two months and one day from publication of the notice.

Preparing estate accounts

Once all claims on the estate have been investigated and all debts and taxes have been paid, you can proceed to distributing the estate. As the personal representative for the estate you must distribute the estate assets to the beneficiaries as identified in the will, or by statement of the law, if there isn’t a will.

All beneficiaries should sign a discharge to confirm receipt of their assets or funds. Residuary beneficiaries will normally sign the estate accounts that you will need to prepare to confirm that they are happy to accept the amount left to them once all other payments have been made and confirm that they have no further call on the estate.

Streets’ Probate Service

Streets, as a leading accountancy and tax practice, is amongst the members of the ICAEW to be licensed to provide probate services*.  

The Streets Probate team is headed up by Partner Linda Lord who, as a member of the Society of Trust and Estate Practitioners (STEP), is experienced in both estates and trusts, as well as dealing with the tax and broader financial affairs affecting clients and their families. Linda is supported by members of the firm’s tax practice who are well-versed in inheritance tax, wills, trusts and estate planning.

For further information on Streets’ Probate Service and/or advice on dealing with an estate please email PROBATE@STREETSWEB.CO.UK or call 01522 551200.

 

*Licensed by the Institute of Chartered Accountants in England and Wales to carry out the reserved legal service of non-contentious probate in England and Wales.

Details of our probate accreditation can be viewed at www.icaew.com/probate under reference number C001224050.

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