Two steps you can take to avoid leaving your loved ones waiting for probate

Posted on By Liz Skinner
older woman gives credit card details on the phone

April 2023

Are you or your family experiencing lengthy delays in receiving probate in England and Wales? Probate is the legal right to deal with someone’s estate. Read more about what probate is.

Many people are experiencing significant delays at the moment, particularly for paper (not online) applications. It is also a struggle to get through to the probate registry.

Being put on hold for 45 minutes to an hour is not unusual. The system is causing grieving families immense frustration. They do not need the added distress caused by these delays.

People can take steps now to avoid leaving their loved ones waiting for months for funds to come through. These include:

1) Nominating who should receive your insurance policies or death benefit payments

This makes it clear who should receive those funds. Probate is not needed, because the insurance company pays the nominated person directly. This would give a grieving family a helpful and immediate source of money to pay their mortgage or other urgent bills.

2) Have a joint bank account

When a person dies, banks will freeze their sole accounts. Although dividends or rent are paid into the account, family members cannot access those funds until probate is granted.

A joint bank account is one way around that, because it is not frozen when one of the account holders dies. This could help a family while they are waiting for probate. These are the kinds of conversations people should be having before it is too late.

Jo Summers TEP, Partner, Jurit

Estate tax returns on death: what do executors need to do?

Posted on By Louise Polcaro
A young biracial woman is reading a paper and looking at a laptop in a kitchen

Obtaining a Grant of Probate or Letters of Administration (the latter usually applies when a will has not been made) can involve a lot of information-gathering to find out the probate (date of death) values for completing the required HMRC forms. These forms must be completed regardless of whether there is an inheritance tax liability.

This information ideally ought to include whether there is any income tax liability due at the date of death. There may also be a refund due to the estate (depending on the date of death).  Sometimes, this can take longer to find out because it requires HMRC PAYE correspondence to confirm. An accountant can often provide a calculation, which can then be verified with HMRC later.

Tax after death

This is not, sadly, where liability necessarily ends. Many executors do not realise that tax does not end on death and the ‘estate’ as an entity in itself is possibly liable for income and capital gains tax.

During the estate’s administration period, which runs from the date of death until the conclusion of the administration (i.e., when all assets have been collected in, liabilities paid and the estate is ready to distribute), there may be income arising. This can come from bank accounts or stocks and shares (whether held individually with share registrars or within portfolios).

Unlike individuals during their lifetime, the estate does not have ‘personal allowances’ and therefore theoretically all income is potentially taxable. I say ‘potentially’ because there are some exceptions to this, where HMRC makes concessions (reviewed each tax year), which means that smaller estates may not need to pay any income tax, provided that certain conditions are met.

Otherwise, the estate will need to pay income tax and this may be by:

  1. Filing a full tax return for the estate (SA900), or
  2. The informal return process. The conditions for this should be checked, to ensure the estate qualifies for the informal basis.

Additionally, it may be necessary to provide beneficiaries with certificates to confirm the deduction of income tax (this can vary depending on beneficiaries’ circumstances and the question of costs proportionality being taken into account).

This is an often-overlooked duty. Many executors assume that getting the grant is the ‘main’ job and thereafter the main focus is on getting funds to beneficiaries as soon as possible. However, care needs to be taken to ensure that the income tax (and capital gains tax) position is checked, returns filed, and HMRC’s clearance sought, to properly safeguard the executor and beneficiaries.

Pippa Bavington TEP is an Associate Solicitor Private Client with Giles Wilson Solicitors in Leigh on Sea, Essex