Probate – Client guide

Beginning on January 18, 2024, clients requesting probate in England and Wales will no longer have to include an IHT421 probate summary with their IHT400 account. A letter from HMRC confirming receipt and processing of the IHT400, along with the specific code and estate values required to submit a probate application to HMCTS Probate, is now sent by HMRC to the PRs or their agent as part of a new protocol. The process is still the same in Scotland and Northern Ireland, according to HMRC’s Trusts and Estates Newsletter (March 2024).

For laypeople handling a personal estate and grieving relatives, this document offers broad guidelines about the probate procedure. In light of your particular situation, your probate practitioner can offer tailored guidance.

Grieving the loss of a loved one can present a variety of difficulties, both psychological and practical. You might find yourself in an unfamiliar situation with unusual and confusing terminology if you are also a personal representative (PR), officially handling the estate (the assets and property of the deceased) as either an executor or an administrator (these terms are explained below).

This advice is meant to provide you peace of mind regarding your responsibilities as a PR or any actions you might need to take on behalf of a close relative of the deceased.

An overview of probate

Many things need to be taken care of right away, including notifying authorities of the death and planning the burial.

Eventually, you will need to begin handling the legal elements of managing the estate of the departed. Waiting a few weeks shouldn’t hurt anything unless there are urgent financial obligations and/or property that need to be handled for business purposes. However, take notice that the filing date for the IHT account is six months after the end of the month in which the deceased passed away, and interest begins to accrue on unpaid inheritance tax (IHT) from that point on.

Terminology

Administrators

The individuals appointed in the grant of letters of administration, who take on the duty of executors in the event that no will can be located or the executors are incapable or unwilling. PRs, or administrators and executors, are the two groups that make up an estate.

Chattels

The estate of a deceased person includes their personal belongings, such as jewellery, clothes, furniture, artwork, cars, etc. We refer to them as chattels.

Estate

An individual’s estate consists of their possessions and financial matters. Their home (as well as maybe other assets referred to as “real property”), cash, investments in bank and building society accounts, and personal belongings are frequently included in this. Aside from jointly owned assets, overseas assets, corporate assets, and agricultural assets may also be included.

Certain assets under a trust that the deceased person had an interest in and that are impacted by their passing might exist outside of their estate. A grant of representation is not usually necessary for life assurance and pension plans that pay out a lump sum or annuity upon death to the deceased individual; however, these plans may have had a grant of life insurance.

Executors

The people identified in the deceased person’s will (when there is one) and appointed in the grant of probate to deal with the deceased person’s estate. PRs, or public representatives, are either administrators or executors of an estate.

Fixed net sum

The amount that will legally transfer to the surviving spouse or civil partner of a deceased person who did not leave a valid Will and who is also survived by children or grandchildren (£322,000 with effect from July 26, 2023, formerly £270,000).

Inheritance tax (IHT)

The amount of tax due on a deceased person’s net estate after all reliefs and exemptions have been applied. A basic nil rate band is accessible to all estates, and a dwelling nil rate band is available in cases where the decedent left children (or designated persons) with an interest in residential property. In 2023–2024, a couple may be eligible for a maximum total nil rate band and residence nil rate band of £1 million. IHT is typically assessed at 40% above this amount.

Intestacy rules

The intestacy regulations govern the distribution of a deceased person’s inheritance in cases where they did not leave a valid will. These stipulate that the surviving spouse or civil partner of the deceased person receives the chattels and a defined net sum and that the remaining estate transfers on statutory trusts to designated relatives, including the surviving spouse and others, based on who has survived the deceased person.

Pecuniary legacies

Amounts of money bequeathed to designated charities or persons in a deceased person’s will.

Personal possessions legacy

Frequently, a will of a deceased person would specify that their personal belongings (sometimes referred to as chattels) be given to a specific person or to their executors for distribution in accordance with a letter of desires. The laws of intestacy stipulate that a deceased person’s personal belongings will transfer to their surviving spouse or civil partner even if they did not leave a valid Will.

Personal representatives (PRs)

Those handling the estate of the deceased, whether under a grant of letters of administration or a grant of probate, are referred to by this phrase, which encompasses both executors and administrators.
The following explains the ramifications of whether or not the deceased left a will. Administrators and executors will have many of the same responsibilities.

Probate registry or HMCTS Probate

Division of the His Majesty’s Courts and Tribunals Service that handles applications and provides letters of administration or grants of probate.

Residuary estate

This is the amount that remains after all inheritances from the deceased person’s assets have been dispersed, IHT, other taxes, debts, and administration costs have been settled. Typically, the decedent’s Will specifies how the residual estate is to be distributed to heirs or charities in predetermined proportions.

The norms of intestacy will govern the distribution of the deceased person’s personal belongings, fixed net worth, and residual assets in the event that they did not make a will.

Specific legacies

Certain personal belongings or other items (not cash) bequeathed to designated recipients or charitable organisations by the deceased person’s will.

If a Will Is Present

The appointment of an executor in a will takes effect on the date of death. The executor has the power to make decisions and handle many parts of the estate right away, even though their appointment is not official until the Probate Registry issues a grant of probate allowing the executors to gather assets and pay obligations. An executor is a vital, permanent position. The original executors will be responsible for resolving any future claims from the estate.

In the event that you are named as an executor in the will but are unsure about accepting the position, you should speak with your probate practitioner, who may assist in addressing any concerns you may have and helping to clarify the role. Notify the Probate Registry and the deceased person’s (other) family members if you still choose not to accept the role. Note that if you have taken any action that suggests you have accepted the role of executor, you might not be able to “renounce” probate, which means you will need to stand down from your role. For this reason, you should speak with your probate practitioner right away.

If a Will is not Present

Things get a little trickier if there is no Will. Before the Probate Registry grants letters of administration designating the administrators and giving them permission to gather assets and settle debts, no one can really make any choices.

No one is formally in control until the estate has been fairly evaluated and all taxes have been paid, at which point the grant application cannot be made. As a result, it may be more difficult, time-consuming, and occasionally more costly than in cases where a will was left by the deceased.

The intestacy regulations essentially govern administrators. These regulations specify who will inherit the estate and who is/are eligible to receive the grant. The requirements can be clarified by your probate practitioner, but generally speaking, the surviving spouse or civil partner of the deceased individual, as well as their children, are eligible to seek to be administrators.

Duties and obligations of personal representatives

The PRs must:

  • Ensure the deceased’s property and belongings are kept safe and secure during the administration procedure.
  • Ascertain precisely what the departed individual possessed, owed, or was owed.
  • Provide the Probate Registry and HMRC with the details of the dead person’s estate, including any IHT owed.
  • Gather the decedent’s belongings and settle any outstanding bills, such as your own out-of-pocket costs, any taxes related to the decedent’s lifetime tax status, and any taxes associated with the administration period.
  • Advertise for creditors and determine whether any claims could be filed against the estate.
  • Complete the estate’s IHT situation and resolve any outstanding IHT obligations.
  • Disperse the remaining estate according to the terms of the Will or the rules of intestacy. The “beneficiaries” are those who inherit according to intestacy or will rules. If the Will contains more debts, or more debts than the amount needed to cover gifts, this procedure needs to be followed precisely, in a certain order, and with the assistance of a solicitor for specialised guidance.

There are situations where a will’s legitimacy is questioned. You should speak with a professional adviser right away if you believe that the deceased person’s Will has a flaw (either in its wording or the circumstances surrounding its creation) or if you believe that another party may contest its legitimacy. Before beginning the administration procedure, you should seek professional assistance in addition to beginning to list the deceased person’s assets and liabilities.

Getting professionals involved

You must first determine whether to instruct a probate practitioner to operate as your PR if one has not been appointed alongside you. This decision affects how you will proceed administratively while handling an estate.

The size and complexity of the deceased person’s estate, the existence of a will, the existence of jointly held, overseas, business, or agricultural assets passing as a result of their death, and the extent to which the probate practitioner is to be involved are all factors that will determine the likely fees that their firm will charge after discussing the specifics of your case. A probate practitioner is required to advertise their standard fees. The amount of professional expenses will probably be greatly impacted if there are any claims against the estate that have been or will be made.

You can instruct a probate practitioner to handle all aspects of the estate administration for the deceased person, including handling any trusts established in the Will or on an intestacy and handling any income tax or capital gains tax obligations that come up during the administration phase.

For the sole purpose of preparing the IHT return and the documentation needed for the probate application, some PRs decide to hire experts. On the other hand, some PRs would rather finish the entire procedure by themselves. It is important to take into account the time commitment and the emotional toll that comes with handling the estate administration of a deceased person.

When the deceased person’s assets and liabilities are looked into, what may have seemed simple at first may turn into a more complicated probate procedure. You can get help with most, if not all, of your duties in managing the estate from a reputable probate practitioner.

Professional assistance should be obtained right away if there is any foreign aspect to the deceased person’s estate, whether there are assets abroad, trust interests, business, or agricultural assets, or if there is a suspicion that a claim may be made against the estate.

The estate itself may be used to cover reasonable legal or other professional costs that the PRs incurred while managing the estate. When professionals act as PRs themselves, the situation is a little different, but there will typically be a suitable charge clause in the deceased person’s Will, or else this can be negotiated with the residual beneficiaries.

An overview of the deceased person's estate's legal administration

Finding out what is contained in the estate

To determine everything the deceased person owned or owed and the approximate value of each asset or debt (and occasionally the whereabouts of certain assets, like cars, jewellery, furniture, artwork, and other chattels), a thorough search of all the deceased person’s papers and property will need to be conducted.

Gathering information about bank and building society accounts, chattels (see above), life insurance, tax records (especially the deceased person’s last tax return and P60 (end of year tax certificate), information about the property, including council tax and services, mortgage, tenancy or title information, employer or pension information, shares and/or stockbroker address and money owed or owing are just a few of the things that will be involved in this.

There can be online accounts that need to be taken into consideration if the deceased possessed a computer or any other digital/storage device, including a cell phone. Look for a memorandum of digital assets or a list of passwords. If applicable, this can be filed with the lawyer who created the will. If not, it’s crucial to know that there are online accounts.

A list of all the assets (including digital assets) and liabilities, with approximate values, should be made if you are giving a probate practitioner instructions to handle the estate administration. You should also give them copies of pertinent bank, building society and investment account statements, along with other records. This way, they can write to the relevant institutions to obtain accurate valuations as of the date of the death and take care of gathering or transferring the assets

Lifelong gifts and interests in trust

It is the PRs’ responsibility to determine whether the deceased made any donations or transfers into a trust during the final 14 years of their life. It is imperative to ascertain whether the deceased individual was a beneficiary of a trust or qualified to receive benefits from another person’s estate that had not yet been disbursed at the time of their passing. HMRC requires this information, which could have an impact on the estate’s IHT liability.

Foreign interests and residence [Domicile]

The type of IHT return required and the amount of IHT payable may change if the deceased person was born abroad, lived abroad for a significant portion of their life, had parents who were born abroad, or even just owned assets outside of the UK. All of these circumstances may need to be included in the IHT return. You can get advice from your probate practitioner regarding the deceased person’s residence for IHT purposes and the disposition of their overseas assets.

Assets owned jointly

It’s possible that the deceased held some assets jointly with another individual. Even though some assets may pass automatically through “survivorship” rather than needing to be administered once the grant has been issued, this may make handling the asset easier after they pass away; however, the value of their interest will still be important for IHT purposes and must be included in the IHT return. Ascertain as much as you can about the history of jointly owned assets, such as the date of the deceased person’s interest emergence, the contributions made by each party, and the deceased person’s share at the time of death.

Assets related to business and agriculture

The interests of the departed must be appraised as of the date of death and may necessitate the intervention of an expert if they included a business, agricultural holdings, or woodland. How these assets are to be handled and whether or not there are any potential IHT exemptions or reliefs can be explained by your probate practitioner.

Life insurance policies and pensions

You would need to know specifics about these interests if the deceased received life insurance or made contributions to a pension plan during their lifetime. A declaration of desires or nomination may have been completed by the deceased, in which case a lump sum payment can be made to the designated beneficiary without going through the estate administration process (i.e., without having to wait for the grant to be given).

These sums will frequently, but not always, be outside the deceased person’s estate for IHT reasons. This implies that since the deceased person’s death did not result in their being liable to IHT. However, the PRs are frequently required by the IHT account to include some, if only minimal, details of such rules. You should speak with your probate practitioner if you are unsure how these interests should be handled.

Reporting to HMRC

The PRs will often be required to file an IHT return (generally Form IHT400 and supporting schedules) and account for any IHT owed on the estate to HMRC once the deceased person’s assets, liabilities, and any other interests have been determined and at least estimated values are available.

There are a number of exemptions and reliefs that may be applicable to lower the amount of IHT that is actually payable if the net value of the estate—what is left over after any debts owed by the deceased person—is greater than the IHT nil rate threshold, which is set at £325,000 for deaths in 2023–2024 and will remain fixed until 2027–2028.

In certain situations, it is also possible to pay IHT in instalments on the deceased person’s home or other real property. In order to assist you with the IHT return and computations, your probate practitioner will need to know whether the deceased individual was ever a widow or widower. If so, they may be able to utilise the nil rate band of a prior spouse or civil partner, even if they had remarried.

You and any other PRs will need to approve (and typically sign) the IHT account, regardless of who prepared it, to attest that the assertions and information are true and accurate to the best of your knowledge. You should thus carefully review the IHT account and its schedules and ask your probate practitioner any questions you may have. Penalties may be imposed for returns that are incomplete, erroneous, or even noticeably past due.

In order for HMRC to stamp the Form IHT421 (Probate summary), which they will then forward to the Probate Registry, who can process and issue the grant of letters of administration or probate, the IHT calculated as due at this stage (even if based on estimated values) must be paid to HMRC. However, without a grant of probate or letters of administration, many assets cannot be handled (that is, handed to the PRs or sold as needed). This could result in a vicious cycle where PRs don’t have enough money to pay the IHT since they don’t have a grant.

When an estate meets the criteria to be an exempted estate, there may be no need for an IHT return. Nevertheless, the grant application that is submitted to HMCTS Probate will still need to include certain details regarding the net and gross estate values.

You should attempt to obtain a grant as soon as feasible for any assets that may be accessible without one, such as accounts with modest values belonging to the deceased person.

You might be able to ask for the cash in the deceased person’s bank, building society or National Savings & Investment accounts to be remitted straight to HMRC under the direct payment programme in order to settle IHT before the gift.

It’s possible that the deceased had a life insurance policy or that their pension would pay out in full without a grant being required. This money may be utilised to pay the IHT, depending on the beneficiaries and recipients listed in the Will or on an intestacy basis. As an alternative, a bank or relative can agree to lend you the money to pay the IHT on the condition that they would receive their money back from the estate after the assets are gathered and the grant is granted.

A corrective account may be needed to notify HMRC about any assets for which estimated values were provided once revised values are discovered, following the grant’s issuance and the assets’ collection in. The PRs will have to make this payment if they cause more IHT to be due. HMRC may also object to certain items in the IHT return, which could lead to discussions regarding asset assessments (real estate, for example). Once more, having an expert involved at this point is beneficial when negotiating with any HMRC specialised teams, such as the Valuation Office Agency’s

district valuer.

Making a grant application

The probate application will often be prepared for you by your probate practitioner; this can be done online or with a paper application form PA1P or PA1A. In order to verify that you are the executors named in the Will, that the Will is the last Will of the deceased person, and that the estate is valued, you, as PR, must verify the information and sign the application form that contains a legal statement of truth. Alternatively, you may sign as administrators to verify that the deceased person left no Will, that you are the person or people entitled under the rules on intestacy to administer the estate, and that the estate is valued.

You acknowledge that you believe the information on the application form to be correct, with the understanding that anyone discovered to have been wilfully dishonest or untruthful may face criminal charges for fraud. Once more, you should consult your probate practitioner with any issues you may have regarding the application form’s contents and report any inaccuracies.

The Probate Registry will provide either a grant of letters of administration (to administrators) or a grant of probate (to executors) as soon as these details are approved and as long as there hasn’t been any delay in paying the estate’s outstanding IHT.

Gathering assets and paying off debts

After the grant is awarded, you can request that the account be closed and the proceeds paid to your PR’s account or the client account of your probate practitioner by sending a certified copy of the grant to the different banks and building societies.

If beneficiaries would rather have an asset (such as investment account) moved into their own name instead of being sold or paid in, it is advisable to address this matter with them beforehand. Beneficiaries are entitled to receive the deceased person’s residuary estate.

But you have an obligation to pay off the estate’s debts, which includes paying back any loans taken out to pay off the IHT and covering your own or your family members’ burial costs. Some of the estate’s assets will need to be cashed in as a result.

Interim distributions

You can consider allocating gifts as specific legacies in the Will early in the proceedings, along with any specific legacies of money, once the IHT status has been verified and if there are enough assets to cover the liabilities.

Waiting until the estate administration is ready to be finished is not always necessary. It makes sense to ask each beneficiary for a receipt, which ought to be maintained with the probate documents. It is advisable to contemplate carrying out bankruptcy searches prior to distributing funds to recipients. In the given situation, your probate practitioner can clarify whether or not this is acceptable.

Varying legacies and entitlements on intestacy

A beneficiary may occasionally choose to transfer their legacy to a different individual. This can be accomplished through a disclaimer, a modification of the Will, or intestacy clauses, depending on the circumstances. To benefit from the “reading back” provisions for both IHT and capital gains tax, a change must be made within two years following the death of the decedent. Your probate specialist can offer guidance on the possibilities and possible ramifications of changing the estate in this manner. If the variance results in more IHT being due, HMRC must be informed.

Claims against the estate

It is best to be ready and take into account any claims that might be made against the estate right away. Exist any prospective lawsuits filed against the estate? Does the decedent leave behind any financial dependents that the will or intestacy does not sufficiently provide for? You should think about if somebody could file a claim against the estate due to their relationship with the deceased, even though it might be a delicate topic. It is also necessary to take into account any debts that are not readily apparent from the documentation.

By distributing the estate after the deadline has passed and advertising in specific publications and the local press in compliance with section 27 of the Trustee Act 1925, PRs can shield themselves from liability for claims made by creditors after the estate has been distributed. The custom is to distribute the inheritance at least six months after the date of the grant in order to guard against claims for financial provision from the estate under the Inheritance (Provision for Family and Dependants) Act 1975. The alternatives for insurance and suitable indemnities can be discussed with your probate practitioner.

Final distributions

Final distributions and estate administration can be concluded if HMRC has verified the IHT status, all tax and other payments have been paid, all assets have been sold or distributed, and it is evident that no claims have been made against the estate or have been resolved. This will involve creating any trusts based on intestacy or established by the decedent’s will. This frequently occurs a year or longer after the person’s passing.

Every estate is unique, with various levels of complexity and time constraints. The procedures of any active trusts might be advised upon by your probate specialist. They will be able to provide you with updates regarding the estate administration so you always know where you stand. Additionally, they will be able to notify you if anything changes that could impact how long it takes to settle the estate.

In the event that the Probate Registry requests it, you, as PR, must be able to provide an accounting for the estate administration (typically at the request of a beneficiary). As a result, it’s critical to maintain thorough records of all intermediate and final distributions as well as liabilities that have been settled, and assets that have been gathered in, sold, or delivered directly to beneficiaries. Simple or formal estate accounting may be necessary; your probate practitioner can advise you on this and make the necessary arrangements for their preparation.

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