Accountancy Resources
The days and weeks following the loss of someone close can be a turbulent period, and beyond informing people of a death, arranging funerals, and other duties, there are many other important decisions that need to be made, including seeking permission to handle the person’s estate.
This process can be particularly hard for an individual, especially if they have no experience and have not been through this scenario before. In this article we will provide an overview of wills, probate, and estates, looking at the importance of forward planning and why a solicitor is often the best person to oversee the handling of an estate.
When someone dies, there are many tasks that need to be carried out, but before you can get started with dealing with a person’s property, money, and their estate, you will need to apply for the right to do so; this process is often referred to as probate.
The probate process usually involves first establishing the value of the deceased’s estate, paying any inheritance tax if it is due, applying for a grant of probate to be given access to assets, placing an advertisement inviting creditors to be able to settle any outstanding debts, gathering in the estate, completing tax forms, paying any debts that are due, dealing with any disputes and finally distributing the estate and assets to the correct beneficiaries.
In order to be able to move forward with handling a person’s estate, a grant of probate must be sought from the probate registry which will enable the person dealing with the estate to be able to have access to their assets. Often institutions like banks and building societies will require this before they will hand over any assets.
In some cases, less than you might expect, the deceased will have left a will behind and in this scenario, they may have specified who they would like to handle their estate. This person is known as an ‘executor’, (or ‘executors’ if more than one person is named) and they are responsible for conducting the will writer’s affairs.
In order for the deceased’s wishes to be carried out, their will must first be located, and there are occasions where this can prove to be quite difficult. Sometimes a will might be found among the deceased’s personal possessions, for example in a safe or with other important documents. However, sometimes it can be rather more difficult to track down.
It may be that the deceased has left a copy of their will with their bank, their solicitor, a will storage service, or the Principal Registry who will need to be contacted. If it is a solicitor who holds a copy of the will then they may choose not to automatically hand it over to anyone other than the person named within the will as an executor. If no executor has been named then permission may need to be sought from a District Judge before that person can withdraw the will.
On some occasions, a person might not leave behind a will. There can be many different reasons for this; their death might be unexpected and they didn’t get a chance to prepare one, they may have been unsure as to how they wanted to divide their estate and failed to make a timely decision or they may have simply never got around to making one as other things got in the way.
However, it is important to note that the problems that can arise from the absence of a will can be particularly troublesome, especially for close family and loved ones. There can be anger and confusion surrounding the deceased’s final wishes which could lead to arguments over important issues like the division of financial assets, child custody, and inheritance, amongst other things.
If there has been no will left behind by the deceased then a relative can apply to deal with the estate, requesting what is known as a ‘letters of administration’. If this is approved then that person is then known as an ‘administrator’ of the estate and it gives them authority to handle the person’s assets. However, banks may still allow a small amount of money to be released prior to this to pay for funeral arrangements.
The way that the person’s assets are distributed when there is no will in place is determined by the rules of Intestacy. Under the rules of intestacy, only married or civil partners and close relatives can inherit. If the persons’ assets are worth less than £250,000 then the married partner or civil partner inherits everything, however, if their assets are worth more than this amount then the married partner or civil partner inherits only the first £250,000 and half the estate, while the rest is distributed equally between the deceased’s children. If there are no children then the entire estate is distributed to the partner or civil partner. If the person was unmarried then a close relative might become a beneficiary, or alternatively, if there are no close relatives then the estate will pass to the Crown and the Treasury Solicitor.
Using an experienced solicitor to write your will means that you can be confident that your wishes will be followed and that it will be valid when you die. Often people who don’t have this process overseen by a solicitor will wind up with a will that is unclear, and they might also forget to have it properly witnessed or even signed.
Before a Grant of Representation is applied for, it is important to establish the assets and liabilities of the deceased. This means contacting financial institutes such as banks and building societies, insurance companies, and other organisations to get a complete view of the person’s financial estate. This could also mean investigating stocks, shares, and other investments. This can be a time-consuming process and it is important to have plenty of copies of certificates that have been certified by a solicitor.
A tax return must then be completed which details the size and value of the deceased’s estate and any liabilities. Once these forms have been completed and returned to HMRC, probate can be applied for. It is worth noting that if a person’s estate is valued at over £325,000 then tax deductions may be made under inheritance tax. Inheritance tax usually depends on the value of the deceased’s property and assets, any assets which were gifted to another person, any trusts the deceased was a beneficiary from, and who the beneficiaries of the will are.
When you are valuing someone’s estate the key is to identify a realistic selling price that could be attained for the sale of their assets, such as land, household goods, and any other personal belongings that are valued over £500, for example, fine items of jewellery and cars.
Once probate has been granted through a grant of representation or letters of administration then financial institutes will be able to release funds to the executor or an administrator.
Unfortunately, in some cases, the deceased may leave behind unpaid debts when they die. It is important to seek legal advice when this happens as it can be a complicated process, especially if the estate is not big enough to meet the amount of debt that is owed.
Grants of representation help to facilitate the handling of an estate, allowing access to assets and key documents. They are required if the deceased leaves behind a significant amount of money (more than £10,000), owned stocks or shares, had specific insurance policies, or owned property or land.
In some scenarios, a person may die with very little and in this instance, the administrator or executor would not require Grants of Representation, for example, if the deceased has only small amounts of money (less than £10,000) or all of their possessions were jointly owned with someone else.
In most cases a grant of representation is needed before a will can be executed, however, the specific type of grant that is needed will depend on whether the person looking to handle the estate is named as an executor in the will or has been named or appointed as an administrator.
Grants of Probate are needed if the person seeking to handle the estate is a named executor in the will, and Letters of Administration are needed when no will has been made, or no executors named in the will and the person seeking to handle the estate is an administrator.
You can apply for this through a solicitor or by yourself by contacting the Probate and Inheritance Tax helpline.
Bereavement is hard enough without the stress and time involved in tracking down wills, obtaining probate, and other time-consuming aspects of handling an estate. Solicitors will have plenty of experience in valuing an estate, filling in the appropriate forms, and distributing estates properly which can help a case to be wrapped up more quickly. However, the time involved can vary depending on the individual case, sometimes being resolved within around 6-8 weeks for example, but in some cases take much longer.
Here are some reasons that might affect the timescale of the process:
An example of a case that can be wrapped up quickly could be if the deceased has a will in place and decides to leave their assets to charity. However, these cases are rare and probate can generally be a complicated and time-consuming process.
Although it is possible to administer an estate yourself, you should be aware that it can be a complicated affair and in order to be successful you will need to have a strong understanding of the law, as any mistakes that you make could leave you liable.
Using a solicitor can be very important in making sure that no mistakes are made when handling an estate, ensuring that the beneficiaries of a will, or an estate without a will, get what they are entitled to. It also takes away some of the pressure of arranging the deceased’s estate, in what can be a very painful time – giving you space to grieve.
Payroll Heaven are respected probate lawyers with the skills and experience required for the complicated process of managing an estate. For more information or to arrange an initial consultation, please contact us on 0843 289 2227.
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