What is Probate?
Probate refers to getting Legal permission to carry out the final wishes within someone's will, though the term also applies to the whole process of settling someone's estate.
If you are appointed the appointed executor of someone’s will then you’re responsible for carrying out probate. which means clearing their debts and distributing their assets in accordance with their will.
Applying for Probate
Following the death of a loved one, you will need to get a Grant of Probate or if the deceased didn’t leave a Will, a Grant of Letters of Administration. This is a legal document giving you the right to deal with a deceased person’s estate. You may apply for a grant yourself or by using a solicitor.
How does the Probate process work?
The first part of the process is to locate the deceased’s will. Many people keep their wills at home or with a solicitor or Bank. The will states who the executors are as well other important information such as the deceased’s final wishes.
If the deceased had no will, then the rules of intestacy would apply; meaning that by rules set out in section 46 of the Administration of Estates Act 1925, the government will decide how to distribute the estate.
When you make a will, You should inform your Executor(s) of its location.
The executor(s) will need to apply for a Grant of probate from either from the local Probate Registry Office.
Without the Grant of Probate, administration of the estate cannot be processed. Applying for probate involves completing a probate application form PA1 and Inheritance Tax forms either IHT205 or IHT400 However a Grant of probate is not always required if the value of the estate is worth less than £5,000 or held jointly with another person.
Where there is no will and the deceased estate is intestate, the person applying would be called an administrator and would apply for letters of administration rather than a grant of probate.
Before the Grant of Probate can be issued, the executors are required to calculate the value of the entire estate, this is essential for working out if Inheritance Tax is owed. Inheritance Tax needs to be accurate and paid to the HMRC.
The current standard rate of Inheritance Tax for one person is 40% but this only applies to the value of the estate that is over the Nil-rate band threshold which is currently at £325,000.
Once the executors have the estates value, they would need to send the all relevant probate forms to the local probate registry. After receiving the documentation, the Probate Registry Office will send a letter stating whether the grant has been approved for probate or not. They will also issue the executors an “oath” this is usually done at the local Probate Registry Office. They also send details of how to organise an interview at their office to have the oath sworn.
After the grant has been issued, executors should then distribute copies of the grant amongst the companies and/or organisations that hold the deceased’s financial assets. Once all assets are collected and secured, the executor will have a legal obligation to pay any outstanding debts owed by the deceased such as utility bills, mortgage and solicitors fees. It is of vital importance that this must be completed before the residue of the estate can be distributed. Failure to do so could result in the executor being held liable for any remaining debts.
In the final phase of probate administration, the executor has to arrange the estate accounts listing all payments coming in and going out of the estate resulting in a final figure being produced. This is referred to as the residue of the estate. The residue is paid to the beneficiaries according to their shares stated on the deceased’s will.