The loss of a close relative can be traumatic, and things can be very much worse if there are financial questions.
Probate is the process of answering those questions and conjures up images of Dickensian courtrooms, long and protracted legal arguments and delays, where long lost relatives fight over assets and everybody loses apart from the lawyers.
At Continuum we know that it does not have to be that way – and in fact the whole process has been made much easier by some recent government initiatives.
What is probate?
When someone dies and leaves property, money and possessions, someone will have to take care of seeing who will get what. There will be beneficiaries, and HMRC who will want their share of the estate if inheritance tax (IHT) applies.
To do this, if the deceased left a will and appointed an executor they will need a ‘grant of probate’. If there is no will, someone will need to apply for ‘grant of letters of administration’.
This process is generally referred to as ‘probate’ in England, Wales and Northern Ireland, ‘confirmation’ in Scotland.
Once probate is granted, the executor will need to gather assets, such as money in bank accounts, pay any remaining bills, and distribute what’s left according to the will. You can bring in a professional – usually a solicitor – to handle things for you, but in many cases, you can take care of it all yourself, just by following a few fairly simple steps.
Registering the death
The first step is to register the death, which you may need to do this in person at the local registry office. The deceased’s doctor will send an email of the medical certificate of death to the registrar, who will then issue a death certificate. You will probably need several copies.
You may be able to use the Death Notification Service and the government’s Tell Us Once site to deal with tax and benefits and inform all banks, building societies through the service, but you could be well advised to speak to them directly.
The next step is to find the Will – if there is one. If the Will doesn’t name an executor, or the person who has been named can’t take on the position for any reason, it gets more complicated. Any beneficiaries of the estate – usually a close relative such as a spouse, child or parent – can apply to the probate registry to be what is known as an ‘administrator’ of the estate instead.
If no valid Will has been left, the deceased has died ‘intestate’. In this instance, laws known as intestacy rules govern how their estate should be distributed.
The probate process
The person authorised to deal with the deceased’s property, money and possessions needs to apply for a document known as a ‘grant’.
You can fill in the probate application form ‘PA1P’ yourself, online, and complete an inheritance tax (IHT) form for HMRC to see if the estate is liable. Depending on the value of the estate use form IHT205, or IHT400 or IHT435. You can find the forms at Gov.uk, where fortunately some explanatory notes are provided.
If there is any tax to pay, you’ll need to settle this before the grant of probate is issued to you. You have six months from the end of the month in which the person died to do so. You can defer tax and pay in instalments on some types of assets, including land, some shares and the value of any business owned (not the assets).
Once the tax is paid, the grant can be issued, and you can then close and empty any accounts, pay off any debts, and share out the remaining assets.
The whole process takes some time – between three to four months – but in almost all cases, it is quite straightforward. Only if you do find complications, such as doubts about the validity of the will, or dependants who might want to make a claim on the estate are you likely to need the help of a probate specialist.
Do you need any help?
Inheritance tax of course figures large in matters of probate. At Continuum, we can help reduce the impact of inheritance tax, but in most cases, we will need to start that help well in advance. We can work with you or your relatives to reduce the impact of IHT by using estate planning.
This requires expertise not just in tax, but in understanding the overall financial position. With a full picture, we can help put measures in place which will keep wealth safe from the taxman – and make the business of probate a little easier.
It is time for a fresh look at all your finances, and getting expert advice, and getting it as soon as possible will help. Simply contact us at Continuum for the advice you need.
The information contained in this article is based on the opinion of Continuum and based on our understanding of current HMRC rules.
The Financial Conduct Authority does not regulate taxation and trust advice, legal services and will writing.