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IHT  •  Personal Taxation

Obtaining Probate Guide – How, What and other Questions Answered

By RJP LLP on 20 July 2023

Probate is one of the aspects of dealing with a deceased’s estate that is particularly confusing. We are asked a lot of questions by executors or next of kin who need to obtain grant of probate and are unsure how to go about it. The process is often complicated and time consuming, which causes issues if the beneficiaries of an estate need to access funds urgently.

This blog answers some of the most common queries we encounter regarding probate and accessing bank accounts. If you are in the unfortunate situation of needing to obtain grant of probate, we hope our Q&As address your concerns and help you understand how to proceed.

Contents Of Article

  1. Starting the probate process
  2. Understanding the role of an executor?
  3. What happens during probate?
  4. Using Professional Support

Starting The Probate Process

There are a number of considering and key questions when starting the probate process.

What is probate?

Probate is a legal process that must be undertaken by the executors of an estate, to ‘unfreeze’ any assets held within the estate so that they can be distributed to beneficiaries.

What is a grant of probate?

If you are the executor of a will, grant of probate will enable you to access the deceased’s assets and will authorise you to distribute these assets in accordance with the terms of the will. This includes all the deceased’s possessions such as property, money, and other assets.

What does bank require for probate?

Banks will require a certified copy of the grant to release the funds where an account is held in the sole name of the deceased, you will also need to produce a certified copy to sell the deceased’s property. If there are several different assets in the estate it will be useful to request a few certified copies of the grant when you are applying for probate.

What happens if the deceased had no will?

If there is no will, there will be no executors formally named and the next of kin will need to act as a ‘personal representative’ and will need to apply for letters of administration, which give them the same rights as grant of probate gives to an executor.

Understanding the role of an executor

Being an executor of someone’s will is a legal responsibility. If you are named as an executor, you are responsible for calculating the deceased’s estate, submitting the relevant inheritance tax (IHT) returns and paying any IHT due. Once the IHT position is agreed and any liability paid, you can complete the process to obtain grant of probate or letters of administration.

What does a will executor need to do?

You will need to sign a legal statement to say you will collect in the estate assets, keep full details of the estate, distribute the assets in accordance with the terms of the deceased’s will, and keep a record of how the estate has been distributed. When probate is granted and the estate assets are released to you as executor, it is your legal responsibility to pay off any estate debts and distribute the net funds to the named beneficiaries in accordance with the terms set out in the will and any codicils to the will.

What happens in 'contentious' probate situations?

Typically, this process is smooth, albeit it does take some time – the assets are ascertained, the IHT position is calculated and any liability paid, probate is obtained, assets are released, debts are paid, and net assets are distributed. However, there are inevitably times when the value of the estate released by the executor is disputed or beneficiaries contest the will. These situations are known as ‘contentious’ and require handing by a solicitor specialising in contentious probate.

What happens during probate?

When someone dies, their assets, other than those held in joint names, are frozen.

What probate forms are required?

The executors or administrators of their estate are required to report the value of assets to HMRC using form IHT400. For excepted estates (generally those of low value meeting certain criteria) it is not necessary to fill in an HMRC form; you must instead give details of the assets on an estate summary (NIPF7 form). It is also necessary to pay any inheritance tax (IHT) due; this is charged at 40% on chargeable estates.

How are chargeable assets calculated?

The chargeable estate is arrived at after the deduction of certain available reliefs such as the lifetime exemption of £325,000, a deceased spouse’s unused lifetime exemption, and the residence nil rate band for both where applicable.

What happens after IHT is calculated?

Once the IHT has been calculated and paid, HMRC issues a receipt, which then entitles the executor to apply for grant of probate from the Probate Registry. The exact process involved will vary slightly depending on the circumstances but grant of probate cannot be obtained until any IHT due has been paid.

Do I need to employ a specialist for probate?

It is possible for a layperson to complete probate with some guidance, but because of the complexity of the processes and the time required, it tends to be handed over to a professional. In addition, many people find it too much of a strain to undertake this work when added to the stress of dealing with bereavement.

Can I access bank accounts without probate?

If a bank account is in joint names and one of the joint holders dies, once the provider becomes aware of the death, the account will revert to the name of the surviving joint holder who will be able to access the funds. Additional ID may be required by the bank to withdraw money, but it will be relatively straightforward and probate will not be required to access this part of an estate. Jointly held assets automatically revert to the joint owner irrespective of the terms of the will.

How is property held as tenants in common handled?

Solely owned assets, or property held as tenants in common rather than jointly will require grant of probate or letters of administration in order for the funds to be released to the executor and distributed in accordance with the terms of the will.

What happens with savings held individually in probate?

If savings are individually held, for example where spouses have separate bank accounts, probate will be needed to access the funds. It will not be possible for a spouse to gain access to their deceased spouse’s separately held savings until probate has been granted. In turn, probate cannot be granted until any IHT due is paid. This can create a vicious circle for executors and the beneficiaries of an estate, but there are several ways to address this.

What happens if an executor cannot pay the IHT?

It is the executor’s responsibility to pay the IHT due on the estate, and this is recoverable  from the estate assets. However an executor cannot access those assets before obtaining grant of probate. IHT can be paid directly to HMRC from the bank or building society accounts of a deceased person before probate is granted, and this often solves the problem of funding the IHT liability. There may however be situations where there are insufficient liquid funds available in the estate to meet the liability. In this case assets cannot be realised without grant of probate and if the estate includes a property that must be sold, the sale cannot take place before probate is obtained.

Can probate be obtained before IHT is paid?

Probate cannot be obtained until the IHT is paid, hence a vicious circle. However, to the extent that property is held within an estate, the IHT liability that directly relates to that property can be paid in 10 annual instalments of 1/10th until the property is sold. This can be used as a short term solution to pay 1/10th of the liability that relates to property, with the balance being paid once probate is obtained and the property is sold.  Note however that HMRC will charge interest on any IHT liability that is unpaid by the end of the 6th month following death. This includes tax paid on an instalment basis.

What is 'grant on credit' and when is it used for probate?

In extreme circumstances, where the estate has insufficient liquid assets to pay the IHT liability and the executor is unable to fund the liability until probate is obtained and assets can be sold, HMRC may consider allowing ‘grant on credit’. This involves the executor providing an undertaking that they will arrange payment of any outstanding IHT as soon as possible after grant of probate.  HMRC may then agree to probate being granted without payment being made in full. However interest will be payable on late paid IHT, this is 7.5% at the time of writing. This illustrates why being an executor is a significant responsibility – in addition to being obliged to file the relevant returns and complete the probate process, you are responsible for ensuring payment of the correct amount of IHT.

Using Professional Support

How can we help you to obtain probate?

RJP LLP is licensed by the Institute of Chartered Accountants in England and Wales to carry out the reserved legal activity of non-contentious probate in England and Wales. We can help you to obtain probate or, where a person dies intestate, the letters of administration.

Do you need legal advice for probate?

There are circumstances in which legal advice is required to obtain probate; such as where the validity of the will is in doubt; the intestacy provisions prove to be relevant and complex in the specific circumstances; a will was made but some dependants have been excluded and wish to make a claim; an estate is either insolvent or there are doubts about the solvency, to name but a few.

What are the benefits of having your accountant or tax advisor obtain probate?

Given the type of work involved, there can be a number of practical and financial benefits to using an appropriately qualified tax advisor or accountant. The first of these is simplicity; they may have a good understanding of the deceased’s assets and tax liabilities already and this enables the entire process to be dealt with quickly and without the necessity to involve multiple people. Secondly, much of the work involved is that which is familiar to an accountant or tax advisor; the production of figures such as accounts, assets, liabilities and tax calculations. In addition, by using an experienced tax advisor you can take the opportunity to undertake inheritance tax planning for the future.

 

Learn more about probate and inheritance tax planning

There are a number of tax planning strategies which can reduce the value of an estate for inheritance tax purposes and which are not considered to be aggressive by HMRC. For more information about these, read our previous blogs with tips on how to minimise inheritance tax.

 

If you would like advice about probate services or want to discuss inheritance tax planning, please contact Lesley Stalker by emailing las@rjp.co.uk.

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