When someone close to you passes away and you’re dealing with the estate, you can be forgiven for not knowing where to start.
How you deal with someone’s estate after they pass depends on whether they had a valid Will and whether you’re named as an executor. If the answer to both of those questions is yes – then you’re free to move forward with the process.
Two terms which you may hear when dealing with the next steps are ‘probate’ and ‘estate administration.’
Although both are related to dealing with the deceased’s estate, they are two different things – probate simply gives the executors the legal right to take control of the estate assets, while estate administration is the process of handling all of a person’s legal and tax affairs after they’ve passed.
You do not always need probate to be able to deal with the estate, however as it may often be required, let’s take a closer look at the process involved to help you understand what you’ll need to do.
What is probate?
If you are named in someone’s Will as an executor, you can apply for probate. Probate is the legal right to deal with someone’s property, money, and possessions – essentially their ‘estate’ – when they pass.
It’s important to ensure you have this legal right before making any financial plans or putting property on the market.
You must check the following prior to applying for probate:
- That probate is needed
- That you’re eligible to apply
- Whether there’s Inheritance Tax to pay
For many estates, you can undergo the process yourself – particularly the administration of the estate which is simply passing the assets to the beneficiaries.
Obtaining probate
Obtaining probate is a relatively straightforward process – you can apply yourself online or by post and you’ll usually get the grant of probate within 16 weeks of submitting your application. It can take longer however if you need to provide additional information.
Value the estate and work out Inheritance Tax
Form IHT400 is required to be completed as part of the process if there’s Inheritance Tax to pay, or the deceased’s estate does not qualify as an ‘excepted estate’. This could be considered the most technical part of obtaining probate, and so speaking to a financial adviser for professional expertise can help you in such circumstances.
Firstly, you need an estimate of the estate’s value to find out if there’s Inheritance Tax to pay. This includes the deceased’s money, property, and possessions.
There’s normally no Inheritance Tax to pay if either:
- The value of the estate is below the £325,000 threshold
- The deceased left everything above the £325,000 threshold to a spouse, civil partner, a charity, or a community amateur sports club
If the deceased was a widow or gave away their home to their children (including adopted, foster or stepchildren) or grandchildren, then they could have been eligible to an increased nil rate threshold.
The importance of making a Will
If someone passes without a Will, there are certain rules which dictate how the money, property or possessions should be allocated. Making a Will ensures the individual remains in control of their estate, ensuring a smooth transition of assets. Planning prior to death can also help individuals to potentially reduce the amount of Inheritance Tax for which the estate is liable.
A Will can also establish trusts to protect the interests of beneficiaries, while providing ongoing support to ensure that their inheritance is managed responsibly.
Applying for probate if there is a Will
You can apply for probate if you’re named as an executor in either the Will or an update to it – you should have been informed by the person who passed away if you’re an executor.
If the circumstance arises where more than one person is named as an executor, you must all agree who makes the application for probate. Up to four executors can be named on the application, however, if only one is named then that person will need to prove that they tried to contact all executors named in the Will before they applied.
You’ll need to send the original Will with your probate application and the probate registry will keep this. You cannot use a photocopy. If there’s more than one Will, you must send in the most recent one.
Once you have estimated the value of the estate to find out if there’s Inheritance Tax to pay, you can apply online to obtain probate.
If you’ve reported the full estate to HMRC, before applying you must:
- Start paying Inheritance Tax (If there is any)
- Wait for HMRC to send you a letter with a code before you apply
If there is not a Will
If someone passes away without a valid Will, this is known as dying intestate. In this situation, the law will determine who inherits what and who can administer the estate.
The most ‘entitled’ person can apply to become the administrator of the estate. This will be the closest living relative – normally the husband, wife, or civil partner (including if you were informally separated) followed by any children 18 or over (including legally adopted children but not step-children).
After you’ve applied
You can track the process of your probate application online. Once approved, the Will itself will be kept by the probate registry and you’ll receive a document that allows you to start dealing with the estate.
As the formal executor (personal representative) you’re legally responsible for the money, property and possessions of the person who passed away – essentially the estate assets – and you can send copies of the probate document to organisations that hold assets of the individual.
Thinking of applying for probate? Here’s a checklist to follow
If you’re a True Potential Wealth Management client and have any queries around applying for probate, you can speak to one of our financial advisors or call our Relationship Management team on 0191 500 9164. They’re available 7am – 8pm weekdays and 8am – 12pm on Saturdays.
If you’re not a client you can call one of our experts on 0191 625 0350 to learn more.
The Financial Conduct Authority do not regulate, Will Writing, Tax Advice and Estate Planning. The guidance and/or advice contained within this blog are subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK.
Tax is subject to an individual’s personal circumstances, and tax rules can change at any time. Please note, this blog is not a recommendation or personal financial advice, and it is not always necessary to apply for probate.
