Interested in knowing more about probate, the costs associated with probate and how to get one? Keep reading as answer to some common questions around probate.
When someone dies, their estate will need to be taken care of. The process by which this is carried out is known as probate. Generally speaking, it involves clearing outstanding debts and paying any taxes due, with all remaining assets distributed according to their will.
Before a named executor or next of kin can claim, transfer, sell, or distribute any assets belonging to the deceased, they may be required to apply for a Grant of Probate. A Grant of Probate is a legal document that gives the executor, or next of kin, the necessary authority to deal with the deceased’s property.
The probate comes to an end once all taxes and debts have been settled, and the appropriate inheritance is passed on.
The document is only called a Grant of Probate if the deceased individual left a will.
If they died without one, it’s known as a Grant of Letters of Administration, although both documents work in broadly the same way.
The process of obtaining probate can seem complicated, but is in fact relatively straightforward. There are several stages to go through, each one requiring the necessary documentation, identifying the deceased’s assets minus their liabilities, paying inheritance, and applying for the Grant of Representation.
Once this has been issued by the Probate Registry, the executor will then need to liquidate the assets, settle any liabilities, and pay any remaining administrative charges, as well any outstanding Inheritance Tax, Income or Capital Gains Tax.
Estate accounts will then be drawn up detailing all payments in and out of the estate. This will also detail the remaining amount which can then be distributed to the beneficiaries. Providing there are no challenges to the estate or any other legal complications, the remaining assets can then be distributed to the beneficiaries as set out in the will or through the laws of intestacy.
While this can appear complex, with appropriate and expert legal support it is usually a simple process.
Why do you need probate?
Probate will usually be needed in England or Wales when the individual who died owned property, such as houses, buildings or land, or a bank or other financial institution requests a Grant of Probate.
This is what allows the executor to deal with any relevant assets that institution may hold on behalf of the deceased.
The term ‘probate’ essentially means to give permission for the executor to carry out the wishes of the deceased as set out in their will.
Is probate needed if there is a will?
There is a common misconception that probate isn’t required if there is a will. The need for probate isn’t dependent on the existence or otherwise of a will. The determining factor is the financial situation of the deceased person.
If you are named as the executor on a will, you will need to apply for a Grant of Probate to enable you to deal with the deceased’s assets in line with the wishes expressed in the will.
If there isn’t a will, you require a Grant of Letters. Although the terms used may be different, the process is similar. In some rare instances a will may exist but the will doesn’t name the executor.
Alternatively, the named executors might have predeceased the author of the will or may be judged not to have capacity in order to act as executors. In which case, a Grant of Letters will be required and legal advice will usually be needed in order to proceed.
If you have any doubts about which form of probate is appropriate, then legal advice should be sought. Mistakes can create delays and other complications which can be avoided with appropriate legal support.
At what value of assets is probate required?
Probate isn’t always essential for small estates in England and Wales. Certain assets are allowed to be transferred to someone else, and a maximum of £5,000 in cash can be paid out without the need for Probate.
It’s important to bear in mind, however, that banks and building societies will usually have their own internal policies regarding how much money they’re willing to release without Probate. In some cases, this may be as little as £5,000 or could be as high as £25,000. If a bank or building society asks for Probate, even for relatively small amounts of money, then the executor will be required to apply for it.
It’s important to remember that what’s defined as a small estate and therefore unlikely to require probate, is less about its overall value and more about the type of assets that the estate contains. If the estate includes land or property, then probate will usually be required unless that land or property is held in joint names.
In such cases, this will usually mean that the property passes to the surviving joint owner automatically. In most cases, this will usually be the spouse, civil partner or partner.
The probate application process also includes filling in an Inheritance Tax Form. Even if no Inheritance Tax is liable to be paid, a form still needs to be completed to show that no Inheritance Tax is due.
Even in the case of modest estates, a Grant of Probate may be necessary if requested by banks or other financial institutions. Not having Grant of Probate in place, or delaying the application for probate, can cause a range of potential issues and may increase the chances of the will being contested or other disputes arising.
Therefore, it’s important to proceed in a timely fashion, making sure that you supply all of the necessary information and documentation. In most cases the process will be straightforward if care is taken during the application process.
How much does probate cost?
The cost of probate will vary depending on who handles the process and the overall value of the estate. The cost of probate has two principal components. These are fixed costs and variable costs.
Fixed costs are the fee required to make an application. Variable costs are anything associated with other charges that may arise, including the professional probate services.
The fixed cost will be a minimum of £155 if you have a probate solicitor or specialist file an application. If you’re applying as an individual, and the deceased’s estate is worth more than £5000 after you’ve paid off any debts and funeral costs, the fee is £215. The variable fee is likely to be between one and five per cent of the value of the estate (plus VAT).
All but the smallest and lowest value estates will usually require the help of probate specialists. Their costs can vary, but in general a probate specialist or solicitor will generally charge around 1-5% of the value of the estate.
Probate services are calculated in a number of different ways. This may be a percentage shared based on the overall value of the estate, usually in the region of between two and five per cent. If the estate is complicated but relatively small, this can be advantageous for the executor. They may charge an hourly rate, which can soar in the event of unexpected complications. Alternatively, they may charge fixed rates for particular services.
An indication of the fees charged by Freeman Jones Solicitors for Probate Services can be found here.
The cost of probate fees will be met by the deceased’s estate. This means that the executor or administrator will not personally be liable for the cost of probate. Instead, it will impact the value of assets that are available to be divided to the beneficiaries.
If probate is contested, or if problems arise that require more legal advice and work, then costs can rise. These can be considerable in some rare circumstances; particularly where large estates are concerned.
Do all deaths go to probate?
It’s important to remember that not all deaths go to probate. If any of the deceased’s assets are held in joint names with someone who is still alive, the asset will automatically pass to the co-owner under the Right of Survivorship. If this applies to all of the deceased’s assets, then probate will not be required at all.
Small estates do not always require probate, but the definition of what constitutes a small estate can vary. As a rule, if the estate is worth less than £5,000 then probate will not usually be required. However, financial institutions have different criteria when it comes to probate. Some will require a Grant of Probate for relatively small amounts, others may have a threshold as high as £25,000.
In most instances, where a will exists, probate will be required to enable the executor to properly administer the deceased’s estate. Without the right authorisation, an executor will not be able to proceed, leading to delays and potential difficulties.
What if probate is contested?
In some instances, probate may be contested. When this happens it can prevent the executor from being given a Grant of Probate. Sometimes, a relative or beneficiary of the deceased may wish to enter a caveat. This can prevent or delay probate being granted. This can happen if two people are entitled to apply for probate. It may also happen if someone has concerns about the legitimacy of the will.
If a caveat is placed on the estate, then the person placing that caveat will need to outline their reasons within eight days. If these reasons are not received promptly, then the caveat will be removed. In some cases, the courts may be required to resolve the issue and will grant probate to whichever party they deem appropriate.
If probate is contested it can create delays to the entire administration process. If a probate is contested then legal assistance will be required. This can be costly and time consuming, so it’s important to get appropriate legal support as soon as possible to prevent smaller difficulties becoming larger ones.
Freeman Jones Solicitors provide expert and experienced probate and will advice, including dispute settlement and challenging wills.
To find out more about our range of services, call 01244 506 444 or email info@fjsolicitors.co.uk.
