On death, a close family member (or sometimes a friend) will be granted the legal right to deal with the deceased’s assets.
To be granted this right, they will need to apply for a ‘grant of probate’.
Essentially, it is the legal right to administer someone’s estate – their funds, property and possessions.
The people who have the right to apply for a grant of probate are the personal representatives (PRs) of the estate.
PRs are either the executors named in the will, or the next of kin following the rules of intestacy if there is no will.
There are different types of grant depending on the circumstances and who is to deal with the estate.
The process
1. Is there a will? Firstly, your clients will need to check if there is a will. If there is, it will give an indication of who is to administer the estate. If there is no will, usually the estate will be passed to the next of kin following the HM Revenue & Customs intestacy rules, which are fully explained on the HMRC website. Only direct family will inherit in this circumstance and this can be very complicated if there were multiple marriages.
2. Probate: Next, they will need to apply for a grant of probate.
Probate is generally required in the following situations:
- When property is held in the sole name of the deceased or as tenants in common.
- When the deceased held assets typically worth £5,000* or more with financial institutions.
- When the financial institutions holding assets* in the sole name of the deceased require a grant of probate for the funds to be released.
- When the deceased benefited from a trust during their lifetime.
*Banks and other financial institutions may use a higher threshold than £5,000 before they require evidence of the grant of probate to release the funds, so it is worth checking with each organisation exactly what they require.
Once probate is acquired, the executors can start the process of closing accounts, transferring money and cashing in investments.
3. Inheritance tax: When applying for grant of probate, the executors need to ensure that any inheritance tax due is paid. An IHT form will need to be completed and submitted at the same time as the probate application, and can be completed online through the HMRC website, or via a paper application for (IHT205).
4. Debts: Once all of the estate’s assets have been collected (e.g. funds from a bank account, pension funds, life insurance and sale of any relevant property) the debts then need to be settled – credit cards, loans and unpaid utility bills.
