What is Probate?
Probate is the name generally given to the process of administering someone’s estate after they die. When someone dies, a formal Grant Of Probate must be obtained from a Probate Registry (of which there are eleven in Engalnd and one in Wales), which is part of the court system, to enable the estate to be collected in and divided amongst the beneficiaries named in the Will.
Probate is used to describe both the Grant of Probate and the process involved in obtaining it. It includes making an Inheritance Tax return to HMRC and paying any tax due; collecting in the estate from banks, building societies and so on and selling any assets if necessary; finalising income tax affairs and pensions; preparing accounts for the estate and paying money due to beneficiaries; including making any gifts as outlined in the Will.
There are two types of grant: probate and letters of administration. Probate is granted where the deceased did leave a valid Will, and it is granted in favour of one or all of the executors named in that Will. Letters of administration are granted where the deceased did not leave a Will but most people still refer to this as probate because, although there are some differences in the process before the grant is issued, for all practical purposes, the two types of grant are the same.
Who Obtains Probate?
If there is a Will, this responsibility falls to the executors named in the Will to obtain probate. If there is not a Will, the next of kin are usually entitled to administer the estate and there are statutory rules about which family members can do ths.
The person who is going to obtain probate needs to access the deceased’s bank accounts, investments and other assets in order to pay the deceased's debts, inheritance tax and distribute their estate. It is worth noting that no-one who has an interest in the estate of someone who has died can receive their inheritance until a grant of probate has been obtained.
The Probate Process
The probate process is generally carried out by the executors if there is a Will, or by a court-appointed representative if there is no Will. The executors need to obtain a Grant of Probate by applying to a Probate Registry office and once the grant of probate is issued, the executors are able to carry out their duties in dealing with the deceased’s assets. There are three main stages in obtaining the grant:
1. Identifying and inventorying the deceased person’s estate
The executors will need to investigate the extent of the estate including gathering all information about the assets and liabilities of the person who died. The executors will need to contact the relevant banks, building societies, insurance companies and other relevant organisations to obtain proper valuations of the deceased’s home, bank accounts, other assets, including stocks and shares; and any liabilities, such as the mortgage.
2. Accounting and appraisal of the estate
The executors will need to complete the inheritance tax return form, currently either form IH205 or IHT207. They will also need to contact HMRC to establish the amount of inheritance tax that is due. Depending upon the circumstances, an accountant or tax adviser might be helpful here to double check the numbers. Once the tax return has been completed in full and filed, the application to the Probate Registry should now be made.
3. Filling Out The Probate Application Form
The probate application form AP1 now needs to be completed. This form includes details of the inheritance tax that has been sent to HMRC. Along with the AP1 from, the executor will need to provide the original Will and three copies of the Will together with a copy of the death certificate. There needs to be a visit to the the probate office for an ‘interview’ to make sure everything is in order. If it's easier for you, you can now complete the probate application online
After Probate Has Been Granted
After probate has been granted, there needs to be a formal distribution of the remaining estate as the Will directs. This involves collecting in the assets, and paying the debts of the person who has died, and then distributing the remaining estate to the appropriate beneficiaries in accordance with the terms of the Will (or the statutory order of distribution if there is no Will), and producing final estate accounts for the beneficiaries and a final tax return for the deceased. Any hold up here often arises when selling the property, as that is normally the major asset.
The probate process is relatively straightforward and is a lot less complex than people imagine. However, do not be afraid to use specialist legal and tax experts. A word of advice when using solicitors though:- Make sure you obtain a firm fixed price from them for the work you want them to do. Do NOT agree to an open ended pay-by-the-hour arrangement as they will then be incentivised to take longer than is necessary and longer than you would want. Do remember that most probate work is done without needing to employ solicitors, and most of the work involved with probate is administrative rather than technical. If you do use a solicitor, a non-qualified legal secretary will probably do the bulk of the work, and you may be charged £250 per hour or so for the privilege. As previously stated, the probate process is relatively straightforward and is a lot less complex than people imagine.