Probate

The word ‘estate’ tends to conjure up images of stately homes and the landed gentry, but this word is used to describe everything you own when you die. We all have an estate, and it usually consists of a combination of assets such as property, personal belongings (including cars, jewellery and household items), investments such as shares, ISAs, bank and building society accounts, premium bonds and National Savings, Life Insurance, pensions, annuities and so on.

When someone dies their assets need to be identified and financial institutions notified of the death. Next, the appropriate tax and debts should be paid, and the remainder distributed in accordance with the Will.  If there is no Will, the legal rules on distribution (called the ‘Intestacy Rules’) should be applied instead. These steps and actions are called administering the estate, and sometimes the phrase ‘probate’ is used as a catch-all term for this process.

As an Executor, you are responsible for administering the estate. If there is no Will then the administration can usually be undertaken by the next-of-kin of the deceased, and instead of being called an executor they are called the ‘administrator’. A Personal Representative is a catch-all phrase for both an executor and an administrator.

As personal representative you have a legal duty and responsibility to administer the estate correctly. If you fail to do so you may find yourself personally liable to make good any loss the beneficiaries suffer. That is why lay personal representatives often ask us for professional help to administer the estate to ensure it is done correctly.

The Grant of Probate is evidence that the executors have authority to administer the estate. When a bank is notified of the death it will very often hold onto the funds until they see Probate. Probate is the evidence the bank needs to be certain they are handing over the deceased’s money to the right person(s).

In the case of selling a property, you will need to produce the Probate to the purchasers. No-one will buy the deceased’s property from you unless they can be sure you have the legal right to sell it.

The process of obtaining ‘probate’ is different in nearly every case, and depends on the assets in the estate, the number of debts, whether there is inheritance tax to pay and so on. Therefore, the length of time it can take to obtain Probate can be different as well. Our solicitors will take details from you about the estate and should be able to give you a timescale at the outset.

When someone dies without a Will, the law dictates who inherits their estate. These laws are called the ‘Intestacy Rules’ and the person is said to have died ‘Intestate’. The Intestacy Rules usually provide for the next of kin to inherit the estate, but they are complex, so advice needs to be sought before making any distributions. They also set out who is entitled to administer the estate.

This will depend on the value of the assets in the estate and the exemptions and reliefs that may be available. We can usually give you a basic assessment of whether inheritance tax may be payable or not during our initial discussions.

One of the first steps in administering an estate is to identify the assets and value them so it can be established whether inheritance tax is payable. HMRC have very specific requirements for what assets are included, and how they must be valued. Our advisors will help you do this. We can instruct property valuers, obtain share valuations or more complex valuations of businesses and farmland etc. We will apply all the relevant exemptions and reliefs to ensure that any tax liability is minimised and advise you on how to pay inheritance tax from the deceased’s assets if that is necessary or to postpone payment where possible.

How much does it cost?

Where inheritance tax (IHT) is not payable because the estate is either exempt or the total value is under the IHT threshold, our fees would usually be between £3,000 and £7,000 plus VAT for work carried out up to and including obtaining the Grant.

Where IHT is payable and a full IHT return is required, our fees will usually be between £4,000 and £10,000 for obtaining the Grant.

What services do we provide?

Our services up to obtaining the Grant will normally include:-

• Following the necessary client identification procedures.
• Taking instructions and advising on the validity and contents of the Will and any Codicils. If there is no Will, we will advise who is legally entitled to administer and who is entitled to inherit the estate.
• Obtaining from you the information which we need to identify the deceased’s assets and liabilities and details of gifts which the deceased made in their lifetime.
• Obtaining valuations of the deceased’s assets and liabilities at the date of death to meet the requirements of HMRC.
• Preparing the IHT return and related schedules for the Executors or Administrators to approve and sign before submitting it to HMRC.
• Obtaining the information needed in order to claim any IHT reliefs that might be available and preparing the application for those reliefs.
• Calculating the IHT payable, whether some or all of it can be paid by instalments and what, if any, IHT reliefs and/or exemptions are available.
• Applying to relevant asset holders for the first payment of IHT to be paid to HMRC;
• Preparing the Legal Statement for the Executors or Administrators to approve and sign and submitting it to HM Courts and Tribunals Service.
• Obtaining the Grant.

Our fees may be higher if:

• The executors or beneficiaries do not cooperate with us, or each other.
• A dispute arises.
• The Will or any Codicil is invalid, defective or unclear.
• The deceased owned more than one property.
• The deceased owned a large number of certificated shareholdings or had more than five bank accounts, ISAs, life policies or other investments.
• The deceased owned foreign assets.
• The deceased was a beneficiary under a Trust.
• The deceased made lifetime gifts of more than £325,000 in the seven years before they died.
• The deceased made regular gifts out of income in their lifetime.
• The deceased or their spouse was not domiciled in England and Wales.
• The deceased owned agricultural property or business property.
• The beneficiaries want to vary the terms of the Will to change how the estate is distributed.
• The Will appoints Kreston Reeves as an executor.
• There is an imminent reporting deadline.

Our charges do not include:

• HM Courts and Tribunals Service fees for issuing the Grant.
• Professional fees of third parties providing valuations.

How long does it take?

Generally, if we are provided with all of the information which we need promptly, it usually takes between two and six months from our being instructed to being able to apply for a Grant.

How much does it cost?

Once we receive the Grant, we will have a better idea of how the matter is likely to progress and will provide a further estimate for administering the estate. This will be based on the time we believe we might expect to spend to wind up the estate. Our current hourly rates are:

The above hourly rates exclude VAT.

What may be included in the second phase?                                                    

• Registering the Grant with asset holders.
• Advising on and preparing statutory advertisements for creditors.
• Communicating with beneficiaries regarding their entitlements under the Will.
• Paying legacies.
• Selling or cashing in the estate assets and receiving the sale proceeds and/or transferring the estate assets to beneficiaries.
• Liaising with estate agents and conveyancers in connection with the sale of any property.
• Paying liabilities as instructed by you.
• Negotiating with HMRC regarding the value of the estate assets and the amount of IHT payable.
• Advising you on and arranging payment of IHT by instalments where appropriate.
• Reporting adjustments to the value of the estate and organising payments of additional tax or applying for a refund as appropriate.
• Preparing Estate Accounts for approval by the executors and beneficiaries.
• Distributing the residue of the estate among the beneficiaries.
• Registering the estate with HMRC’s Trust Registration Service if necessary.
• Liaising with our accountants or other accountants chosen by you in order for them to deal with the income tax returns to the date of death if required and during the administration period and to liaise with HMRC on your behalf.
• Obtaining IHT clearance and confirmation that the estate’s income and capital gains tax affairs are finalised.

How long does it take?

We generally find that it takes between six and twelve months to administer an estate after we receive the Grant, but this very much depends on the complexity of the estate and the time it takes to sell assets such as a property or agree the estate’s tax liabilities and obtain clearance of the tax affairs with HMRC.