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

Probate fee changes in England and Wales

Posted on By Liz Skinner
will, probate

Are you applying for probate in England or Wales? You should be aware of changes to the cost of applications as of 26 January 2022.

What is probate?

In England and Wales, if someone has died, their next of kin, or those named in the will, need to obtain a legal document called a grant of representation, which gives them the legal right to deal with any property, money and possessions. This is known as probate.

The process and terminology differ across the UK – see ‘Elsewhere in the UK’ below.

You can find more information about probate in our article ‘What is probate?’

What are the changes?

The UK government announced in July 2021 that it planned to change the probate fee system. It consulted on the plans, explaining that it would introduce a single fee to cover the cost of delivery without making a profit. The proposed plans were officially enacted in December 2021.

As a result, for estates over the £5,000 threshold, the fee as of 26 January 2022 is £273. This cost is the same whether you apply yourself or you are paying a solicitor to act on your behalf.

As before, there is usually no need to apply for probate if the estate is worth less than £5,000.

Previously the fees were £215 for personal applications, and £155 if you applied via a solicitor.

What is the impact?

While the new fee is a lot more reasonable than earlier proposals, the removal of a lower ‘solicitor rate’ may discourage the use of a probate professional. This could result in more errors, possibly leading to delays or contentious probate claims being made later on.

To avoid these issues, it may be prudent to engage the services of a professional to administer the estate, which would ensure the correct estate searches and checks are carried out.

If you would like professional advice on dealing with probate, you can talk to a TEP, who are experts in inheritance and related issues: https://advisingfamilies.org/uk/find-a-tep/

Elsewhere in the UK

The legal document is called ‘confirmation’ in Scotland and ‘grant of probate’ in Northern Ireland and the process in each country differs slightly from that in England and Wales. You can find out more here:

The threshold in Northern Ireland is £10,000, with an application fee of £261 for estates over the threshold.

In Scotland, for ‘small’ estates with a gross value of (currently) £36,000 or less, executors are entitled to free assistance with obtaining confirmation from the local Sheriff Court. A fee is currently only charged for estates above £50,000, with £266 charged for estates between £50,000 and £250,000 and £532 charged for estates exceeding £250,000.

Probate v confirmation: a comparison of the English and Scottish procedures for executors

Posted on By Joanna Pegum
train leaving Scotland for England

If you are the executor for a friend or relative’s estate, there are some substantial differences to consider, depending whether the estate is in England or Scotland.

The differences reflect the different legal traditions in the two jurisdictions – common law in England, which originated in the Ecclesiastical courts of the Middle Ages, and civil law in Scotland.

Different terms are used

Different terms are also used. The document the court issues for the executors is called probate in England where there is a will; and confirmation in Scotland, whether or not there is a will.

In Scotland, the person who handles the estate is always called an executor. If they are appointed in a will, they are an executor nominate; where there is no will, an executor dative; but both kinds of executor need to seek a grant of confirmation.

Sometimes the Scottish and English terms are different even though they are describing essentially the same thing. The English say real and personal property, while the Scots say heritable and moveable; the English say life interest and remainder, while the Scots say liferent and fee; and the English say administration of estates, while the Scots say executry administration.

What are the real differences?

In England, probate tells the world that the executors named in it are entitled to deal with the assets of the estate because they are named in the will.

In Scotland, confirmation effectively transfers the estate assets to the executors so they can administer them, subject to the terms of the will. Scottish executors step into the shoes of the deceased person (in a legal sense), and they (and only they) can deal with the person’s assets and enforce their rights, for example calling in any debts the estate is owed.

When executors in Scotland apply for confirmation, which uses a form called C1, they must include a complete list of the deceased’s assets in the UK, together with their values. Along with the will, this becomes a public document when lodged in court.

This is not required in England, where the only information that is public is the total value of the estate, both gross and net.

In Scotland, the Sheriff Court issues confirmation, which is a copy of Form C1 with the court order attached to it. The court issues certificates of confirmation so executors can send the confirmation to all asset holders simultaneously. Unlike the office copies of probate, issued in England, these are specific to each asset, and include a description and value as stated in Form C1.

Both probate and confirmation were well established long before estate duty (or inheritance tax) was introduced, and they double up as a tax return for the estate assets.

What happens if other assets are discovered later on?

In England, a person or organisation receiving an office copy of probate has no way of knowing how the gross value of the estate was made up, or what value was given for their asset. Because of this, English executors can deal relatively easily with additional assets that may come to light later, though of course they are required to report them to HMRC where inheritance tax  is payable.

In Scotland, however, executors will usually need to apply to the court for an eik (a Scots word for an addition) or supplementary confirmation, which details the additional assets. Executors need to report all applications for an eik to HMRC before the Sheriff Court will accept them, even if no tax is payable and the original Form C1 did not have to go to HMRC.

Occasionally executors can deal with additional assets of lower value without the need for an eik, but they generally have to inform HMRC, and may be required to produce written evidence that they have done so.

Will this hold things up?

If English executors omit or undervalue an asset in the probate application and the inheritance tax form, which is known as IHT400, they will still be able to deal with the assets by producing the original grant of probate or an office copy.

Scottish executors who omit details of an asset will not be able to deal with it until they have told HMRC and obtained an eik to confirmation.

The Scottish requirement to include a list of all the estate assets in Form C1 makes it simpler in cases where inheritance tax needs to be paid. In England, the IHT400 and supplementary forms request exact details of the estate assets, and English executors have to complete all the forms in full.

As Scottish executors have already set out all the assets and values in Form C1, HMRC accepts inheritance tax returns which simply show the total value for each category of asset, and can refer to Form C1 for the detail.

Your advisor will be able to help you through this process.

Ian Macdonald TEP is Head of Private Client at Wright Johnston & Mackenzie, Glasgow.

What is confirmation in Scotland?

Posted on By Louise Polcaro
confirmation,Scotland,inheritance

Confirmation is the Scottish equivalent of the probate procedure in England and Wales and Northern Ireland. It is granted by the Sheriff Court in the district in which the deceased was resident and provides the executors with authority to deal with the estate; whether it be closing bank accounts, selling property or transferring or selling shares.

While there are similarities with the probate procedure, there are also significant differences, principally in terms of the paperwork required.

For ‘small’ estates with a gross value of (currently) £36,000 or less, executors are entitled to free assistance with obtaining confirmation from the local Sheriff Court.

How do I apply for confirmation?

The process involves conducting a thorough examination of the deceased’s financial papers to draw together the information needed to complete the confirmation application form C1. This form accompanies the inheritance tax return and provides details about the deceased and the estate.

Where a person dies without a will, an application must first be made to the Sheriff Court to have an executor appointed and in most cases it will also be necessary to obtain an insurance document known as a Bond of Caution.  Legislation sets out who may be appointed as an executor in the absence of a will and it is important that the correct individuals are identified from the start.

The Form C1 includes a declaration by the executors confirming that the contents of the form are correct, to the best of their knowledge. As the declaration is similar to swearing an oath in court, it is crucial that full enquiries be made into the assets of the estate and into the deceased’s tax affairs.

Where inheritance tax is due, a copy of the signed confirmation application must first be submitted to HMRC along with the tax return, before being sent to the Court. The tax must be paid at the same time, either in full or as a first instalment where this is permitted. Once the application is submitted the Sheriff Clerk will check it and if satisfied, submit it to the Sheriff to issue the Grant of Confirmation.

How much will it cost?

Court fees are presently £276 for estates worth between £50,000.01 and £250,000 and £554 for all estates worth over £250,000. There is no court fee for estates with a gross value of £50,000 or less.

Separate charges ranging from £8 to £20 apply where individual ‘Certificates of Confirmation’ are requested, focusing on specific assets in the estate. These certificates are often used to speed up the ingathering process after Confirmation has been granted, as an alternative to circulating the original Confirmation document to each asset holder in turn.

The same fee will be charged again, in full, where it is necessary to amend the application after Confirmation has been granted, and care should therefore be taken to ensure that no assets are missed out or reported incorrectly.

It is crucial when obtaining confirmation that the specific procedures used in Scotland are followed. To ensure that the process runs as smoothly as possible, it is recommended that advice be sought from a suitably qualified advisor.

Jaclyn E P Russell TEP is a Partner and Head of Private Client at Stronachs in Aberdeen, Scotland

 

What is probate?

Posted on By Louise Polcaro
will, probate

In England and Wales, if someone has died, their next of kin, or those named in the will, need to obtain a legal document called a grant of representation, which gives them the legal right to deal with any property, money and possessions. This is known as probate.

The process and terminology differ across the UK – see ‘Elsewhere in the UK’ below.

If they left a will

If the deceased left a valid will, this will explain where their possessions, money and property should go. You will need to locate the original will, which might be stored in the person’s home, bank or with their solicitor or legal advisor.

If there is a will, contact the executors named, who will be responsible for obtaining the grant of probate. If you are an executor yourself, you’ll need to complete a probate application form and inheritance tax form which can be submitted online to the central probate registry.

You can either do this yourself, or instruct a qualified advisor to act on your behalf.

When the grant of probate is obtained, the assets may be sold, resulting in a lump sum to go to the beneficiaries, i.e. those named in the will. Before the estate is distributed, all debts and expenses should be paid. If inheritance tax is due, this will also need to be paid.

If no will was left

If there is no will, the deceased has died ‘intestate.’ The next of kin, or if there is none, the legal advisor or person appointed by the court, will need to apply for a ‘Grant of Letters of Administration’ before the estate can be distributed. If the grant is given, they are known as ‘administrators’ of the estate.

The deceased’s spouse or civil partner will usually inherit the estate in this case. However if there is none, a set of rules known as the rules of intestacy will determine who is to benefit from the estate.

Probate fees

In England and Wales, there is usually no need to apply for probate if the estate is worth less than £5,000. There is an application fee of £155 for estates over the £5,000 threshold, with a £60 fee added if you apply yourself rather than via a solicitor.

Elsewhere in the UK

The legal document is called ‘confirmation’ in Scotland and ‘grant of probate’ in Northern Ireland and the process in each country differs slightly from that in England and Wales. You can find out more here:

The threshold in Northern Ireland is £10,000, with an application fee of £261 for estates over the threshold. An extra £65 personal application fee is charged if you apply for the grant yourself, without using a solicitor.

In Scotland, for ‘small’ estates with a gross value of (currently) £36,000 or less, executors are entitled to free assistance with obtaining confirmation from the local Sheriff Court. A fee is currently only charged for estates above £50,000, with £266 charged for estates between £50,000 and £250,000 and £532 charged for estates exceeding £250,000.

Who should be executor of my will?

Posted on By admin
couple

An executor deals with the instructions in your will when you die and handles the finances and any tax liabilities that arise. It can become complicated if you have numerous assets and property, so it is sensible to appoint someone who is fairly astute, although they can always seek help from a professional if necessary.

Who can be an executor?

Anyone who is over 18 years old can be an executor of a will, and it is fine for them to be an executor and a beneficiary of your will. You can appoint up to four executors to act, however they must make decisions jointly so it might be simpler to appoint fewer. Ideally, though, you want more than one, in case that person is incapable of acting when the time comes. You could alternatively appoint professional executors such as your solicitor or accountant, but do bear in mind that they will charge for their time spent.

Who should I choose as executor of my will?

Most married couples tend to choose their spouse as their executor, which makes a lot of sense since you should trust your executor implicitly. However there could be a scenario in which both of you are in an accident together, so you would need a second executor to step in.

Some people may appoint their children, either to act as replacements for their spouse or to act jointly with their spouse so that the family can make decisions together. If you feel that your children are currently not mature enough to act as executors you should not appoint them. It is risky to appoint your children on the basis that it is unlikely anything will happen to you until later when they will be old enough to act: an eligible executor (right now) should always be appointed. That said, in a scenario where the executors are young or inexperienced they can always consult a legal advisor about the probate procedure. Having some professional help may also ease the emotional burden for them.

If your estate is quite sizeable you may wish to appoint a professional executor such as a lawyer or accountant who will be accustomed to this kind of work. They will be able to handle the probate paperwork and tax matters. Again, it will the ease the burden from family members, but you may want to check their charging methods are reasonable before formally appointing them.

How do I appoint them?

The only thing that you need to do is state that you would like to appoint them as your executor and put their full name and current address in your will. If you appoint more than one, you should state that you would like them to act jointly. As mentioned before, you can also make them a beneficiary in your will but they must not be a witness to you signing your will as this may invalidate their gift.

Should I tell them?

In most situations it is advisable to tell your executors that you have appointed them and let them know where the original wills are stored. There is nothing wrong with giving them a photocopy of your will for their own reference. It is also sensible to keep a note of their new addresses should any of your executors move so that they can be located when needed.

What are my duties as executor?

Posted on By admin
man thinking, using laptop

If you have been informed that you are an executor, then sadly that probably means that a friend or relative has recently died.

That person has named you as the executor in their will, either alone, or with others, to carry out their wishes and to administer their estate. This is all the money and property that they have left behind. You will be required to pool all of their assets, pay any debts and taxes, and distribute the remainder, in accordance with their will.

What should I do next?

You may be required to register the death with the Register’s Office, if the family has not already done so. You will need a death certificate from the doctor or hospital to take to the Register’s Office. You are then in a position to arrange the funeral. Check the will first, in case it includes any funeral instructions, or details of any pre-paid plans. If not, you may wish to involve family members, who will probably have a good idea about their funeral wishes.

Once the funeral has been arranged, you might want to consult a legal advisor, and find out if the deceased had other legal documents or property you were unaware of, and to find what you need to do to obtain a grant of probate.

If the estate is sizeable or complex, you might instruct the advisor to take on the probate paperwork for you; but it’s your job as executor to sign it. The cost of the legal fees will be deducted from the estate, once the legal work has been completed. You may wish to get a couple of estimates before instructing an advisor, to compare prices.

How do I obtain a grant of probate?

If you decide to obtain the grant without the help of a legal advisor, you need to prepare the paperwork first. You will need to obtain the probate application form from the probate registry or online and then check the deceased’s financial records for:

  • Banks and building society accounts
  • Investment portfolios
  • Other sources of income, e.g. from an employer, pensions or benefits
  • Insurance policies, e.g. life, car or medical
  • HM Revenue & Customs (HMRC) details
  • Debts, including from credit cards, loans or hire agreements
  • Utilities eg gas, water and electricity, as well as council tax
  • Business contracts and agreements
  • Arrange temporary insurance on any assets such as house and car

You will need to write to each of these organisations with the date of death, enclosing a certified copy of the death certificate, and requesting a date of death balance.

Once they have replied, include all the figures in the probate application form. Send the completed form, together with the death certificates, and the fee, to the local Probate Registry to request the grant of probate.

What about inheritance tax?

The probate application form should calculate whether any inheritance tax is due, and this should be paid as quickly as possible from the available assets. If there is not enough cash available, the probate registry will accept payment following the grant of probate, when you are in a position to close the deceased’s accounts and sell any property.

What do I do with the grant of probate?

When you receive the grant of probate, send an official copy to each organisation requesting them to close the deceased’s accounts, and send the balance to you as executor (you will need to open a temporary account on behalf of the estate).

If there might be unknown creditors that the deceased owed money to, advertise the death in the local paper and the London Gazette to give any creditors or claimants 28 days to get in touch. You have then covered yourself legally, if one pops up at a later date.

When you have accumulated all the money, you can pay the creditors and expenses such as bills, funeral expenses, taxes and probate costs, and any tax due. Next you can pay each beneficiary in accordance with the will instructions, and obtain a receipt from each one.

You will be required to draw up some estate accounts which show the money coming in and out of the estate and obtain a signature to the accounts from each residuary legatee (people receiving the residue of the estate after specific gifts have been paid out).

Finally you can close the bank account, once all payments have cleared. Keep the records safely for 12 years.

What about claiming money back from the estate?

You may need to organise a funeral and pay other costs before probate is granted and you, and anyone else who is named in the will, can inherit the estate. You can claim back some of these costs from the estate. They are:

  • Costs associated with the funeral
  • Probate Registry fees
  • Estate agent fees
  • Costs for appointing professionals such as valuers or solicitors
  • House clearance fees
  • General house or garden maintenance
  • Postage costs
  • Travel costs
  • Inheritance tax that becomes due before probate has been granted

You are not allowed to charge for your time. You may not be able to reclaim interest from the estate on your money that you use to pay for a funeral. Find out more by visiting the gov.uk site.

Getting help

If, at any point in the process, you need help or advice, you can talk to a qualified advisor, who will be able to talk you through what you need to do.

Inheritance tax explained

Posted on By admin
Mature woman discussing inheritance tax

Inheritance tax is a tax on your estate (your money, possessions and property) paid after your death. The money should be paid from your estate to the UK’s tax authority, HM Revenue and Customs (HMRC) within six months, or interest will be charged. However, everyone has a tax-free allowance, set at £325,000, and this is known as the nil-rate band. If the value of the estate is below this threshold, then no tax is due.

What are personal inheritance tax exemptions?

As well as the nil-rate band, there is an annual exemption of £3,000 that you can give away tax free, and you can distribute gifts of £250 to as many different people as you like. You can give donations to charities tax free, and wedding gifts of up to £5,000 to your children, £2,500 to grandchildren and £1,000 to anyone else.

While you can give more cash than this, in fact any amount, you will have to live for seven years for it to be tax free. If you live for less than this, there is a sliding scale for tax payable, depending on the number of years that you survive. See HMRC’s website for further information: www.gov.uk/inheritance-tax/gifts.

What are spouse inheritance tax exemptions?

If you are married or in a civil partnership, you can pass everything to your spouse or civil partner, tax free on death, if both are both UK domiciled (or transferor non-domiciled). When they die, they will be able to leave up to £650,000 tax free, which is double the nil-rate band threshold.

If it is a gift from a UK domiciled to a non-UK domiciled spouse/civil partner (the non-UK domiciled spouse/civil partner can elect to be treated as UK domiciled for IHT purposes) then it is £325,000.

Everyone gets an additional £175,000 tax free to use against the value of your home, but only if you leave it to your children or grandchildren. This allowance, which is frozen until April 2026) can be transferred to your spouse/civil partner if it hasn’t been used up, which means that a married/civil partner couple could leave their family a combined estate of up to £1 million tax free.

If you are not married, but live with your partner, he or she will not be able to benefit from these tax advantages.

What is payable?

Once you have deducted any inheritance tax exemptions that apply, including the £325,000 nil-rate band, the rest of your estate is taxed at 40%. This rate can be reduced to 36% if you leave at least 10% of your estate to charity.

What are my payment options?

You can take out a life insurance policy, which will pay out on your death and help your family pay the tax bill. The policy will be held in a trust, so it won’t be counted as part of your estate, and your family will not have to wait to obtain a formal grant of probate to access it.

Further information

There are more ways to reduce your inheritance tax bill, see ‘How can I prepare for inheritance tax?’

The above is, however, just a quick guide. If you are unsure, or would like advice on any aspect of inheritance tax, you should speak to a qualified advisor, who will be able to consider your situation and offer advice accordingly.