On some occasions it may be possible to deal with someone’s estate without needing to apply for probate.
When someone dies, the person named as executor in their Will is responsible for collecting in, valuing and distributing their assets.
Whether or not that person needs to apply for probate depends on the value of the estate and how any assets were held.
If an estate only has a modest amount of money, it may be classed as a small estate and probate might not be necessary.
There is no exact definition of a small estate, although as a rough guide estates worth less than £5,000 may qualify.
Each bank has its own different threshold under which it will close an account and release funds without requiring a Grant of Probate, ranging from around £5,000 to £50,000.
The same applies to share registrars, life assurance companies and pensions administrators. Where the estate is fairly small, then it is worth enquiring of the asset holders what documentation they will need.
Where the deceased owned a property in their sole name then probate will be needed to deal with the sale or transfer.
Similarly, if the property was owned as tenants in common with others, probate is required.
However, if a property was held by the deceased as a joint tenant, then it will automatically pass to the other owner(s).
Jointly held assets
Similarly, joint bank accounts and other jointly held assets will pass automatically on death to the survivor(s).
It is therefore always worth checking whether probate is necessary. If most of the deceased’s property passes automatically, then it may be possible to avoid the time and expense involved in applying for a Grant of Probate.
What documents will asset holders need?
If probate is not needed, asset holders will need to see a copy of the death certificate and may require the executor to complete a form called a ‘Small Estates Declaration’.
They may also ask to see a copy of the Will and identification, such as birth or marriage certificates.
To speak to one of our probate experts, ring us on 01243 216900 or email us at firstname.lastname@example.org.
When someone dies and their assets are sold at a profit, their executor will need to calculate whether Capital Gains Tax is payable.
When an executor or administrator is dealing with the administration of an estate, part of their job is to account to HM Revenue & Customs for any tax which may be due. This includes Inheritance Tax, Income Tax and Capital Gains Tax.
Capital gains or losses during the tax year leading up to death will be taken into account when making the tax calculation, as well as any capital gains made on assets from the date of death until their sale.
This means that if for example the deceased leaves a property that is subject to Capital Gains Tax, ie a second property and not their main residence, then if the value of that property increases between death and sale, tax will be payable on the increase if the amount exceeds the Capital Gains Tax allowance.
Expenses can be deducted from the gain, for example estate agents’ or solicitors’ fees, or in the case of shares or valuables, stock broking or auction house fees.
Capital Gains Tax allowance 2019
An executor is given a Capital Gains Tax allowance of £12,000 per annum for the three tax years following death.
Once this allowance has been used up, Capital Gains Tax is payable at the rate of 28% in respect of residential property and 20% for other assets.
Beneficiaries’ liability for Capital Gains Tax
Where a beneficiary inherits a valuable asset and then proceeds to sell it, they may become personally liable for Capital Gains Tax.
They can use their Capital Gains Tax allowance and may only be liable to pay the tax at a lower rate if they are a lower rate tax payer. This means they would pay 18% on gains from a property sale rather than 28%, and 10% on gains from other assets rather than 20%.
Where a beneficiary occupied the property as their principal private residence and is entitled to at least 75% of the net proceeds of sale, the executor may use principal private residence relief to avoid the need to pay Capital Gains Tax on any increase in value.
Valuing inherited property
The value of an asset to be passed on to a beneficiary is the full market value as at the date of death.
Where the asset in question is a property, it is preferable for the executor to obtain a proper ‘red book’ valuation from a member of the Royal Institute of Chartered Surveyors, rather than simply an estate agent’s quote.
For advice on Capital Gains Tax and the most effective way of passing on assets, speak to one of our team at legalmatters on 01243 216900 or email us at email@example.com.
When the owner of a business dies, administering the estate can be a complex affair.
A business forms part of a deceased’s estate and can be left under the terms of their will. However probate is far more difficult to administer when a business which is a going concern is left. In this event, the personal representative will almost certainly need specialist help to deal with the transfer of the business and any shares or alternatively with the winding-up.
Immediate decisions will need to be taken if the business is operational. The more planning the deceased has put into this, the easier it will be. There is a substantial risk to a business when its owner or part-owner dies that it will not be able to continue, or that its operation may be hampered in the short-term.
Preparing for this eventuality will mean that things can continue as smoothly as possible and the benefit of the business will be able to be passed on in the way the deceased would have wished.
Depending on the structure of the business, different actions may be needed.
If the business owner operated alone, the business simply becomes part of their estate and any debts will be paid out of the estate.
Ideally a partnership agreement will have been drawn up detailing how the death of a partner is to be dealt with. If this hasn’t been done, the effects can be catastrophic for both the business and any remaining partners.
Death will cause the dissolution of the partnership and the business would need to be wound up. This could take years and be complex to achieve. Any remaining partners would need to start a new business, alongside trying to finalise the old one.
Each partner would be liable for their share of any debts. If the business is in profit, the deceased partner’s share would become part of their estate.
Private or public limited company
If the deceased owned shares in a company, these would pass under the terms of the will or in accordance with the rules of intestacy to the beneficiaries.
If a shareholders’ agreement exists, this may give the other shareholders a right to buy the shares at market value, with a given time period for them to raise the necessary funds.
Where the deceased was the sole director of a company, the personal representative will need to register the shares in the name of the beneficiary and also appoint a new director, and possibly a company secretary as well.
When someone actively involved in running their own business dies, it can be complicated for the executor or administrator to deal with. It is always a good idea to call in specialist help to deal with matters as quickly and efficiently as possible so that the business can continue.
To speak to someone about winding up an estate that includes a business, call one of our specialist team at legalmatters, on 01243 216900 or email us at firstname.lastname@example.org.
If you’ve been left money or a share in someone’s estate, you may be wondering what liabilities you have. Do you need to pay tax on the money, and who is responsible for clearing any debts the deceased may have left?
After someone dies, their personal representative is responsible for winding up the estate. It is their job to collect in all the assets, sell any property and pay debts, including tax liabilities. Once this has been done, they will then distribute the funds in accordance with the Will or, if no Will was made, under the rules of intestacy.
Who is responsible for making payments from an estate?
If a Will was made, this will usually name a personal representative, known as an executor. If there was no Will, the Probate Registry will appoint an administrator.
This is the person who will be responsible for gathering in the money and settling any bills.
Debts are payable in a set order.
- Secured debts such as a mortgage
- Reasonable funeral costs
- Estate administration expenses
- Payments due to employees
- Unsecured debts
Estate administration expenses
These are usually the main expenses to be dealt with when winding up an estate and include the costs incurred by the personal representative, such as probate fees, estate agency and valuation fees, Income Tax and Inheritance Tax.
Making payments to beneficiaries
Once all of the debts have been paid, then the estate can be distributed to the beneficiaries. Personal possessions will be passed in accordance with the terms of any Will.
Cash payments are made in a strict order of priority.
Firstly, specified gifts of money are made to named beneficiaries.
After these have been paid, the residue is divided in accordance with the terms of the Will. A residual beneficiary can request a copy of the estate accounts, which will set out all income and expenses.
The amount of any taxes and other debts will therefore reduce the money paid to the residuary beneficiaries, as they are the last in the queue, after any specific cash legacies.
For help with administering an estate, call the probate experts at legalmatters on 01243 216900 or email us at email@example.com.
Winding up the estate of a deceased person can take many months, particularly if it is less than straightforward.
Following someone’s death, it takes an average six to nine months to finalise their affairs and distribute funds to the beneficiaries. The process can be complicated and frequently takes longer than this if difficulties arise.
A personal representative, either an executor or administrator (if there is no Will), has the job of listing in all the deceased’s assets and valuing them. Once this has been done, they need to work out how much tax is owed.
This needs to be paid to HMRC, who will issue a receipt, allowing the executor to apply to the Probate Registry for Grant of Probate.
The Registry will go through the paperwork and issue the Grant allowing the executor to deal with the estate’s assets. This involves selling or transferring everything that the deceased owned.
HMRC can take a long time to agree the information in respect of tax liability. The personal representative will then need to arrange for payment. If this is not possible, they may be able to request that HMRC provide a form allowing them to apply for a Grant on Credit.
The relevant receipt then needs to be forwarded to the Probate Registry along with the application and supporting paperwork, including the Will itself.
If the Probate Registry has any doubts about the validity of the Will, for example if it does not appear to have been witnessed properly, it will delay granting probate until it is satisfied.
This may involve providing documentation from the witnesses and whoever drew up the Will.
Once the Grant has been issued, the executor needs to gather in the assets by writing to banks, building societies, insurance companies etc, sending a certified copy of the Grant of Probate and asking for accounts and policies to be closed and a cheque for monies due to be sent to them.
One of the most time-consuming parts of winding up most estates is the house sale. The property will need to be cleared before the completion date, and a sale alone will usually take two or three months and frequently much longer.
The personal representative is responsible for locating all the beneficiaries, which can take time if the Will was made many years previously and people have dispersed.
If a Will contains any ambiguity or family members feel that they were due money which in fact has not been left to them, disputes may arise which will delay distribution of the estate funds, in serious cases for years.
If you need help to administer an estate professionally and without undue delay, call one of our experts at legalmatters. Call us on 01243 216900 or email us at firstname.lastname@example.org.
A surprising number of difficulties and disputes arise when the beneficiaries to a Will can’t be identified easily.
Although it may be clear when a Will is drawn up who the writer intends to leave their assets to, as time goes by beneficiaries may change their names, often more than once, and/or move away.
Often, a long period of time elapses between the writing of a Will and the administration of the estate. If a Will doesn’t make absolutely clear who is to inherit, it can cause numerous problems for the executor or administrator when they have to find and identify everyone named.
Why you need to do more than just name your beneficiaries
If your Will simply names a beneficiary without any further identifying information, then over the years it can be hard to trace the person intended.
Women in particular may change their names several times throughout their lifetime on marriage, divorce and remarriage.
To help the person who will eventually administer the estate, it is a good idea to include other identifying information, such as address, date of birth and the beneficiary’s relationship to you.
A note containing new addresses can also be put with the Will to make contacting people easier. Beneficiaries will also need to provide the executor with relevant evidence of any change of name, such as a marriage certificate or deed poll.
Why attention to detail in a Will is essential
It is also important to make sure that everyone’s name is correctly spelled in a Will. While an incorrect spelling does not invalidate a gift, it can cause difficulties for the executor and even lead to disputes.
Again, by putting in other identifying information, it will be easier for the executor to be clear exactly what your intentions were.
A professional lawyer will be able to write a Will for you that is clear and unambiguous, with all of your beneficiaries accurately identified. This can avoid expensive and damaging disputes and make sure your intentions are carried out.
To speak to one of our experts about having your Will drafted, ring us on 01243 216900 or email us at email@example.com.
It’s a tough time when somebody you care for dies and we’re pleased when we’re able to lighten the load. At such a tough time when there’s such a lot to do, it’s a delight when clients takes the time to say thank you:
“I’d like to say a big thank you to yourself and your firm for all your help and support over the last few months!! It’s much appreciated. Thank you.” Darren & family
Thank you too, Darren. We’re glad that everything is now settled. Good advice in a supportive and caring manner is what we like to give.
When a person dies, if they owned property in their sole name this will need to be transferred to a beneficiary or sold as part of Probate. Here are some things to consider if the home needs to be sold.
Applying for a Grant of Probate
Probate is the legal process for dealing with the distribution of a person’s estate after they have died. To start the Probate process, a Grant of Representation is required. The sale of the property cannot be completed until the Grant of Probate has been issued.
Getting the property valued
It is essential to obtain a proper valuation of the property; backdated to the date of death. To ensure an accurate figure, it is a good idea to get more than one valuation.
Get the contents valued
As well as the value of the property you should also consider its contents. This will need to be valued as part of the deceased’s Estate. You should also locate and secure any valuable items in the house (e.g. jewellery, share certificates etc.).
Protecting the property
One of the first things you should do is make sure that the home is secure. Particularly if it is empty. Check that it is safely locked up, and switch off the appliances and water. You should also remove valuable items that might be at risk of theft.
Make sure the home is insured
Under some insurance policies, a home is not insured if it is left sitting empty for a certain period. Likewise, the death of the policyholder could terminate the policy. Contact the home insurance provider to inform them of the situation and find out what you should do next.
Locate the Deeds
If the property was owned for several decades, the Title might not have been registered at HM Land Registry. In such situations, you’ll need the Deeds to prove ownership.
Let the relevant organisations know
As well as the insurance provider, you should also contact anyone else involved in the property. For example, the local council and utility providers.
Instruct an estate agent and conveyancing solicitor
You can put the home on the market while you’re awaiting the Grant of Probate. But be aware that it can take 3-6 months for a Grant of Probate to be issued (even longer in more complex estates).
Prepare the home for viewings
It is always a good idea to give a home a thorough appraisal before letting viewers in. Where appropriate, consider what needs tidying, fixing etc. to showcase the property at its best.
To help you through the Probate process, speak to one of our expert team speak at legalmatters. Call us on 01243 216900 or email us at firstname.lastname@example.org. We can take over the responsibility for you and make sure everything is carried out in line with the law, and the wishes of the deceased.
Losing someone you love is never easy. And, for families faced with administering an estate, it can be even harder. At such times, the support of a professional can help to reduce the burden.
Many people seek professional help when grieving. Not least because, the pressure of administering the financial affairs of a deceased loved one can be overwhelming.
Even the most organised of us might not cope well. Particularly as, for many people, looking after themselves and their family takes up most of their time.
When someone dies, it’s not uncommon for family disputes to arise. This can happen regardless of the size and complexity of an estate (the money and possessions left by the deceased). But, having a neutral party you can turn to for impartial, professional advice can help to relieve any tension and stop it from escalating.
What is involved when administering an estate?
Probate is the legal process for dealing with the distribution of a person’s estate after they have died. There are many duties and obligations under Probate, including:
- Getting a Grant of Probate (where there is a Will)
- Interpreting the Will correctly
- Making sure you are working from the right Will
- Ensuring the Will is carried out correctly
- Identifying all of the assets of the estate
- Correctly valuing the assets
- Identifying and settling the liabilities of the estate
- Establishing how much the estate is worth
- Ensuring that the estate is appropriately managed
- Opening an executor’s bank account to hold estate funds during the administration period
- Looking after unoccupied properties (e.g. making sure they are insured)
- Preparing tax returns for Inheritance Tax, Capital Gains Tax, Income Tax and Stamp Duty Land Tax
- Placing Trustee Act notices to advertise for creditors to come forward.
Sometimes this process can get contentious and lead to unwelcome and stressful family disputes.
Do you need professional help?
You can administer an estate without a lawyer, however expert advice can be hugely valuable. Dealing with an estate can be a complex and emotionally challenging process, but you need to stay focused. Not least because, without legal expertise, errors and delays are not uncommon.
Crucially, if you make a mistake or fail to administer the estate in an efficient and timely manner, you could be held personally liable. Professional advice will make sure you are supported and protected.
To find out more about how we can help, take a look at the Estate Administration section on our website, or speak to one of our expert team. Call us at legalmatters on 01243 216900 or email us at email@example.com.
When someone dies, the person administering the estate needs to let the beneficiaries know what they are entitled to.
All too often, beneficiaries are challenging to track down. And that can have a significant impact on the probate process.
Finding an identified beneficiary
If you know the name of a beneficiary (for example, if they are mentioned in the Will), then the process of locating them isn’t usually too difficult.
Things you can do to find them include:
- Placing a note in the newspaper
- Asking family members and friends to help
- Using a Tracing Agency.
As an executor, you must make reasonable efforts to try and find them, so it is worth speaking to your solicitor if you are struggling to do so.
Finding an unknown beneficiary
According to the latest figures, there are currently almost 9,000 unclaimed estates in the UK. And the total amount of this unclaimed inheritance could be worth billions.
In many cases, these estates remain unclaimed because the deceased did not leave a Will, and it is unclear if there are any living relatives entitled to this inheritance.
Under the UK’s inheritance laws (Rules of Intestacy), when someone dies without a Will, people who are blood relatives of the deceased could be entitled to a share of the estate. Even distant relations could be in for a windfall. However, if no heirs are found the estate will be passed on to the Government (the Crown).
It can be difficult to establish who the beneficiaries are, but your probate solicitor will be able to help. Often this involves you pulling together a family tree and using a Tracing Agent to do the rest.
It’s not enough to find any living relative, they have to be the right person to benefit under the Intestacy rules.
Where a beneficiary can’t be found, you may have to administer the estate regardless. But, you must ensure you are protected in case someone comes forward at a later date and makes a successful claim on the estate.
To protect yourself from liability you could:
- Obtain insurance specific to this situation
- Apply for a Court Order to determine how the Estate should be distributed
- Make a payment to the Court under S.63 Trustee Act 1925 (leaving a nominal sum in an estate).
Ultimately, you are financially liable for searching for missing beneficiaries, so specialist legal advice is strongly recommended.
To find out how we can help, take a look at the Estate Administration section on our website, or speak to one of our expert team. Call us at legalmatters on 01243 216900 or email us at firstname.lastname@example.org.