Category: Probate articles

When you’re probating an estate, it’s necessary to work out which probate forms should be completed from an inheritance tax perspective. It’s essential on every grant of probate application to complete an inheritance tax form, irrespective of whether inheritance tax is payable.

Estates exempt from inheritance tax

To assist with the proper completion of the applications for a grant of probate or confirmation and the appropriate returns to HMRC (to calculate whether inheritance tax is due on an estate), the executors must first determine if the estate qualifies as an ‘exempt’ estate, or as an ‘exempt and excepted’ estate, or if neither category applies.

This will dictate how to complete certain parts of the applications for a grant of probate and which probate form is to be used to return the relevant inheritance tax information to HMRC.

For inheritance tax, the value of the estate for the grant of probate or confirmation is only one component of the gross estate and if the deceased made substantial gifts during their lifetime, or received income from a substantial trust, or where certain other circumstances apply, this can result in an inheritance tax liability even if the estate assets don’t exceed the inheritance tax threshold.

Where the deceased was domiciled in the UK at death, the estate is an ‘excepted’ estate or an ‘exempt and excepted’ estate where either:

1. Excepted estate – the gross estate for inheritance tax doesn’t exceed the excepted estates limit (currently £325,000 and linked to the level of the inheritance tax threshold).OR
2. Exempt and excepted estate – (a) the gross value of the estate is less than £1,000,000 and (b) because all or part of the estate passes to the deceased’s spouse who must also be domiciled in the UK, or to a charity or other body qualifying as exempt from inheritance tax, after deducting liabilities and those exemptions only, the estate is less than the excepted estates limit.

In addition, for both categories all of the following conditions apply:

1. If there are any ‘specified transfers’ (see below), their total chargeable value doesn’t exceed £150,000.
2. If the deceased had made a gift of land or buildings, it was made to an individual and not to trustees of a trust or to a company and it didn’t exceed £150,000 in chargeable value.
3. If the estate for inheritance tax purposes includes assets held in a trust that are treated as part of the deceased’s estate, there is only one such trust and the total value of those assets doesn’t exceed £150,000.
4. If the estate includes any foreign assets, the total gross value of these doesn’t exceed £100,000.
5. The deceased didn’t give away any property whilst retaining the benefit of it.
6. The deceased had elected that the income tax charge shouldn’t apply to: (a) assets they previously owned in which they retained a benefit or (b) the deceased’s contribution to the purchase price of the assets acquired by another person but in which the deceased retained a benefit.
7. The deceased didn’t benefit from an alternatively secured pension fund.
8. The deceased didn’t benefit under a registered pension scheme where (a) the benefit was unsecured and (b) they became entitled to the benefit as a relevant dependant of a person who died aged 75 or over.

To qualify as ‘specified transfers’, the assets given away can only be:

• Cash
• Quoted stocks and shares
• Household and personal goods
• Land and buildings

Any gift of land and buildings only qualifies as a specified transfer if it was an outright gift between individuals. If the gift of land and buildings was to a trust or a company, or the deceased kept back any kind of benefit from the property or was entitled to use it, it cannot qualify as a specified transfer.

If you’re not sure whether any transfers made by the deceased fall within these exceptions, you should contact the HMRC Helpline (tel: 0845 30 20 900) or seek professional advice.

Having determined if the estate qualifies as exempt or exempt and excepted, the executors are now in a position to complete the probate forms appropriately.

Get expert guidance on applying for probate, plus the probate forms you need, with Lawpack’s DIY Probate Kit.

Other information

• Completing Form IHT400 when inheritance tax is due

 

External links

• Probate Service
• HMRC
• Directgov
• Wikipedia

After someone dies, with or without leaving a Will, their money, property and belongings need to be dealt with and administered to beneficiaries.

If you are an executor of the Will (or an administrator, if the deceased died without a Will), then it is your duty to identify the assets and debts of the estate and distribute them.

Depending on the size of the estate and the kinds of assets in it, you may need to apply for a grant of representation (in England & Wales) or for confirmation (in Scotland).

A grant of probate lets you gain access to the assets of an estate in order to carry out the wishes of the deceased. For more information on probate see Lawpack’s DIY Probate Kit.

• Find out more on who can administer an estate when someone dies.

 

When is a grant of probate required?

Normally, you need a grant of representation or confirmation if the value of the deceased’s estate (after paying the funeral account) is over £5,000.

These days, banks and building societies impose their own discretionary limit upon when they need a grant of probate or confirmation.

For example, if the deceased only left a nominal sum of cash, say £1,000, personal items having a high market value and a very expensive car, there is no need for you to apply for a grant of probate or confirmation because you, as the executor or administrator, need no formal proof of your authority to gather in and distribute these assets.

But, even if you don’t need a grant of probate, it may be better for you to obtain one in any event where the assets are high in value, to protect you and the executors and ensure that you are distributing the estate correctly.

On the other hand, if the deceased had a bank account and shares with a net value of over £15,000, or if the deceased’s home needs to be sold or transferred to a beneficiary, a grant will be necessary so you, as executor, can obtain formal authority to gather in and deal with these assets.

Payments automatically due on death

When someone dies, certain authorities can pay sums to the person entitled under a Will or intestacy (i.e. where there isn’t a Will) without needing to see a grant.

But the amount payable (normally) has to be less than £5,000.

These assets include:

• National Savings Also includes prizes won on Premium Bonds.
• Building society accounts Also includes deposits with friendly societies, trade union deposits of members, arrears of salary or pension due to government or local government employees and police and firemen’s pensions.
• Nominated property
  Pre-1981 National Savings investments and government stock which could be nominated for someone else to receive upon death.
• Jointly held assets When two people hold property jointly (e.g. a house or flat, or bank or building society accounts).

 

What do I need to do next if I need a grant?

You need to apply for a grant of representation or confirmation by completing various probate forms and registering them with the Probate Registry (in England & Wales) and the Sheriff Court (in Scotland).

• Find out more on what probate forms you need to start the application process.

You can get all the probate forms you need – plus expert guidance on how to complete them – in our DIY Probate Kit.

If you need a grant of representation in England & Wales, you need to make at least one visit to the Probate Registry or a local office. This is not the case in Scotland.

In dealing with an estate in England & Wales, apart from the Principal Registry in London, there are district Registries and local offices under their control throughout the country.

It’s sensible to choose a Registry or local office conveniently located for you and the executors.

Other information

• What is probate?
• How to register a death
• The types of grant of probate

Applies to England & Wales, and Northern Ireland. Read our equivalent article for Scotland.

When you’re named as the executor of a Will, you’re being asked to take responsibility for administering the estate of the person who made the Will, called the testator, after they have died.

After someone dies, executors are expected to begin their administrative duties immediately; long after other mourners’ lives have returned to normal, the executors will still be administering the estate.

The duties of an executor include taking an inventory of the deceased’s possessions and debts, collecting the assets, paying the bills and distributing the legacies (whether specific items, cash sums or residue) and following the testator’s wishes as closely as possible.

You may consider your duties as an executor to be a daunting task, but don’t panic. To help you, here is a summary of what you need to do when someone dies, taken from Lawpack’s DIY Probate Kit.

 

• Register the death and obtain copies of the death certificate.
• Attend to the funeral.
• Find and review the deceased’s will or establish if they died intestate (i.e. without a will).
• Determine who the executors are and whether they are able and willing to act. If they can’t, or if the deceased didn’t leave a valid will, determine who will act as executors of the estate. Get the agreement of the executors in writing.
• Obtain the probate forms required by applying to the Personal Application Department of the most accessible and convenient Probate Registry. The probate forms – along with expert guidance on completing them – are available in Lawpack’s DIY Probate Kit.
• Secure the house and/or other property of the deceased, insuring the house, car and any other valuable items as necessary.
• Organise yourself for valuing assets, corresponding with others, keeping financial records and receiving the deceased’s mail. Open an executors’ bank account.
• Write to all financial and business organisations in which the deceased had an interest. Include a copy of the death certificate and request the necessary information for the probate application and the returns to HMRC.
• List the deceased’s assets and liabilities. Review them. Is it necessary to apply for a grant of probate? If the estate appears to be insolvent or there are other complexities, take legal advice.
• Raise funds to pay inheritance tax if the estate appears to be worth more than £325,000 (or where it exceeds the higher value available after application of a predeceasing spouse’s available inheritance tax allowance). Raise the money, for example, by borrowing or selling some of the deceased’s personal property. Inheritance tax must be paid before the grant of probate can be issued. Consider raising the funds from the deceased’s own account using the Inheritance Tax Direct Payment Scheme.
• Fill out the probate forms as information is collected and return them to the Probate Registry concerned. Complete Form IHT205 if the estate is either excepted or exempt and excepted. However, if the estate is neither an excepted estate nor an exempt and excepted estate, then it’s necessary for Form IHT400 to be completed and submitted to HMRC prior to applying for probate.
• All executors must visit the Probate Registry (or local office) – after the Probate Registry has contacted the executors – to sign or swear the necessary probate forms and pay probate fees.
• Pay any inheritance tax due at the time of application and arrange for instalment payments if any of the assets qualify.
• The Probate Registry concerned sends the grant of probate to you by post along with any additional probate copies (sealed copies) ordered.
• Send copies of the grant of probate to each organisation (bank, etc.) to show the executors’ entitlement to deal with the deceased’s assets. In return, the organisations will release the deceased’s assets to the executors and close or transfer the deceased’s accounts and files.
• Advertise for creditors, if necessary. If any large or unexpected claims result, you should seek professional advice.
• Respond to any queries raised by HMRC concerning the values of assets or liabilities of the estate. Agree final figures with them. Report any additional assets or liabilities that have come to light since probate was granted.
• When all the assets are collected, pay the debts, including any unpaid income tax and capital gains tax relating to the deceased’s income up to the time of death.
• Ask HMRC for an income tax return or repayment claim form and complete it with details of the income of the estate to the end of the tax year during which the deceased died. Pay any tax due. A tax return may also be needed for each subsequent tax year if the administration of the estate isn’t complete within one tax year.
• Ask the HMRC for Form IHT30 (Application for a Clearance Certificate); complete it and have it signed by all the executors and in due course receive the signed discharge certificate from HMRC.
• Check that there have been no claims against the estate under the Inheritance (Provision for Family and Dependants) Act 1975 during the six months following the grant of probate.
• When all the assets have been accounted for and debts paid, legacies can be distributed. Get a receipt from each beneficiary.
• Draw up estate accounts. Get approval of the accounts from all residuary beneficiaries (or those entitled under the intestacy laws) and send them copies. Make payment of the final balance of residue due to beneficiaries. Issue HMRC Form R185 (Estate Income) to the residuary beneficiaries showing their shares of the income of the estate and the tax deducted from it during the tax year.
• Close the executors’ account when all cheques have cleared.
• Probate is now complete. All accounts should be saved for 12 years, along with the other principal estate papers.
• Get more detailed information and advice on your duties as an executor – plus what probate forms to use – in our DIY Probate Kit.

Executors named in a Will have a wide range of tasks to complete when someone dies and for some this can be very daunting.

As part of their duties an executor has to value the assets and debts of the deceased’s estate, pay any taxes and distribute the contents of the estate to the beneficiaries.

In order to do this, the executor may have to apply for a Grant of Probate, so that they have the authority to manage the estate and get access to the deceased’s bank accounts and property.

In this article we discuss what happens if an executor refuses to apply for the Grant of Probate and what a beneficiary can do if an executor is performing the role badly.

What can be done if the named executor refuses to apply for the Grant of Probate?

In many cases beneficiaries like to have the deceased’s estate administered quite quickly after the person has died.

If the executor refuses to apply for the Grant of Probate, then a beneficiary (or next of kin) can write to the executor to give notice that they are applying to court for someone else to administer the estate.

If the executor is in possession of the original copy of the Will, a subpoena must be served on them telling them to hand it over within eight days. If the executor doesn’t provide the Will within this timeframe, the next of kin can then lodge a citation at court, which forces the executor to either accept or refuse the Grant of Probate.

A citation allows the court to direct that the Grant of Probate be given to the next of kin, if the executor fails to refuse or accept the Grant of Probate. The next of kin can then administer the estate.

But if the executor has already intermeddled in the deceased’s estate, then a citation cannot be served. This is because an executor who has been involved in the estate cannot renounce their role or refuse to take the Grant.

If the executor refuses to apply for the Grant, the next of kin can apply for a court order which directs the executor to take probate within a specified timeframe or, alternatively, that they, as next of kin (or another specified person), can be issued with the Grant.

The next of kin can apply for the Grant once they have obtained a court order.

What can a beneficiary do if the executor is not performing their duties correctly?

If a beneficiary is unsure of an executor’s actions, they can initially write to the executor asking them for an account of the administration of the estate.

If the beneficiary is still dissatisfied with the executor’s explanation, they can apply to the court to remove and substitute the executor.

However, this is not an easy thing to do, as the beneficiaries must prove to the court that the executor has seriously misbehaved. The courts, generally, will only remove an executor if they have done the following:

1. Disqualification

The executor has become disqualified since they were appointed by the deceased, i.e. they have been convicted of a crime and sent to jail.

2. Incapability

They are incapable of performing their executor duties. For example, if they have a physical or mental disability (albeit permanent or temporary), which is preventing them from performing their duties.

3. Unsuitability

They are unsuitable for the position due to either a conflict of interest or serious misconduct. The misconduct would have to be so serious that it affects badly the estate (e.g. stealing from the estate, not keeping proper accounting records, not obeying a court order, or mismanaging the estate).

Misconduct can be difficult to prove. If the beneficiaries feel that the executor has been rude to them or does not provide them with sufficient information, then this is not enough for a court to remove an executor.

How to remove or substitute an executor by court order

Beneficiaries can apply for a court order to remove an executor by making a Part 8 Claim, under the Civil Procedure Rules 57.13.

The following documentation must be provided to support the application:

1. A certified sealed copy of the Grant of Probate (or Letters of Administration).
2. A Witness Statement outlining why the executor should be removed, along with details of the deceased’s assets and liabilities, names of the beneficiaries and the proposed name of the substitute executor.
3. The proposed executor’s signed consent to act.
4. A Witness Statement of the proposed executor’s fitness to do the role.

If proceedings regarding an inheritance dispute have already started, then the application to remove an executor must be made by an application notice and not by a Part 8 claim.

 

Related articles

• Executors: what to do when someone dies
• My friend has died and I’m executor. Do I have to do it?
• How to renounce your role as executor

When someone dies, the executors have a duty to identify the assets of the estate and assess their value at the date of death (i.e. the market value had they been sold that day). For full information and guidance on probate, see our DIY Probate Kit.

To help you with the probate process, here is a list of the most commonly owned assets in a deceased’s estate and how you need to go about valuing them:

Valuing the deceased’s property

• Obtain as accurate an estimate of the value of the property, by estimating the value yourself or asking an estate agent for an informal valuation.If the deceased owned their own home jointly with another person, only the deceased’s share of the home is treated as part of their estate.
• Notify the mortgage lender, if there is a mortgage on the deceased’s house or flat.
• Find out how much of the mortgage was outstanding at the date of death.
• Is a life assurance or mortgage protection policy linked to the mortgage? Ask if the cover is sufficient to repay the mortgage and if there will be any surplus remaining after repayment.

The deceased’s bank account

• Write to the deceased’s bank (and building society) with a registrar’s copy of the death certificate.
• Inform the bank of the death and instruct them to stop all unpaid cheques, direct debits and standing orders.
• Ask for a list of all deeds, share certificates and other documents held on the deceased’s behalf and the balances on the accounts (including joint accounts) at the date of death, with a separate figure for interest which had been earned on the money to that date, but not credited to the account.
• Ask what interest has been credited to the deceased’s account during the tax year in which they died and whether it was paid net of tax or gross. This information will be needed for the tax return to the date of death.
• Open a bank account in your own name to enable you to pay in cheques for the proceeds of sales of assets of the estate, and to write cheques to discharge liabilities.

Valuing stocks and shares

• Compile a complete list of shareholdings. The share certificates may be at the deceased’s home or with their bank, solicitor or stockbroker.
• Ask a stockbroker for a probate or confirmation valuation.
• Alternatively, make your own valuation by referring to the Stock Exchange Daily Official List (SEDOL) for the day the deceased died. The List is available at public libraries or can be bought from the Publications Section of the Stock Exchange in London.

The deceased’s business interests

• Get any interest in a business valued by the business’ accountant, backed up by a copy of the latest three years’ accounts and a copy of any partnership agreement.

Valuing the car

• Get an accurate valuation from a local garage.
• Alternatively, sell the car on the open market and use the sale price as the value at the date of death.

Jewellery

• An overall valuation is usually acceptable for jewellery. But if an individual piece is worth more than £500, get it valued separately.

Works of art

• Find out the value of a particular painting or sculpture by seeing if it is separately listed on the deceased’s home contents insurance policy.
• An art dealer can give a valuation of any works of art. Make it clear that you are asking for the price it would fetch at auction at the date of death, not the value for which it should be insured.

Other possessions

• Make a fair estimate of the total value of the deceased’s possessions (such as furniture and personal effects), based on what they might fetch if sold second-hand or, if appropriate, at auction at the date of death.
• Give separate details, and preferably formal valuations, of individual items worth over £500, as well as values of items such as vehicles, boats and aircraft, antiques, works of art or collections.
• In the case of a husband and wife, household possessions are generally treated as being held jointly between them, so their total value should be divided by two to give the value of the deceased’s share.

National Savings

• Complete Form NSA 904 and send it to the address given on the form for that type of account.
• For National Savings certificates, write to National Savings asking for a letter confirming the value of the certificates held by the deceased at the date of death. In England and Wales, the Probate Registry will need to see this letter.

Premium Bonds

• Notify the Premium Bonds Office of the holder’s death. A form for completion is available at www.nsandi.com, or contact National Savings & Investments on 0500 007 007.

Outstanding salary or pension payments

• If the deceased was employed at the time of death, send a letter to their employer notifying them of the death and asking whether any salary or other payments are outstanding.
• If the deceased belonged to a union or trade association, there may be a death benefit payable to the deceased’s family.
• If the deceased was receiving a pension, notify the scheme administrator or pension provider of the death and outstanding pension payments claimed.

Life insurance and pension policy

• Write to the life insurance company or pension provider, enclosing a copy of a registrar’s copy of the death certificate.
• Ask what sum is payable on the death and whether it was written in trust for any named person.

Taxes and bills

• Inform the deceased’s tax inspector of the death.

Social security payments

• If the deceased was receiving a state retirement pension, notify the local Department for Work and Pensions office of the death.
• Send the pension book with your letter inquiring whether there are any pension payments uncollected by the deceased.
• Stop any other state benefits, if appropriate, and claim any outstanding payments due up to the date of death.

Foreign property

• Report to the Probate Registry or HMRC the value in sterling of property owned by the deceased outside the UK or debts owed to the deceased by any resident outside the UK.

For further information and expert guidance on valuing the assets and debts of an estate for probate, read Lawpack’s DIY Probate Kit.

Other information

• Valuing the debts of an estate
• Do I need a grant of probate?
• Is inheritance tax due on the estate?

If you have been appointed as executor in a Will and you don’t want to do it, then you are not obliged to do so.

You can abandon your right to act by signing a form of ‘renunciation’ at the outset. This allows you to relinquish your title to the Grant of Probate.

But you can only renounce probate if you haven’t intermeddled in the deceased’s estate. So if you are unsure whether you want to take on the role, you must not interfere in the affairs of the estate until you have decided to proceed.

If you have interfered with the estate, then you cannot renounce your role as executor and you risk liability arising from any improper administration of the estate.

When does the renunciation take effect?

The renunciation must be absolute.

It takes effect once the renunciation document has been signed, but you can withdraw it before it has been lodged with the Probate Registry.

Once it has been lodged with the Registry, you can only retract it with the leave of a District Judge or Registrar.

How do I obtain a ‘deed of renunciation’?

It can be drafted by a solicitor or a probate professional.

Can I appoint another person in my place?

The renunciation document doesn’t confer the right to a Grant of Probate on another person.

If the next of kin has agreed to step in and apply for the Grant of Probate, then they can lodge the renunciation document at the same time.

What happens to the probate process once I have renounced my position?

If other executors have been named in the Will, the remaining executor (or executors) can apply for probate, provided that the Will doesn’t expressly require a certain number of executors.

If you are the only executor appointed in the Will and no alternate executor has been mentioned, then an application must be made to the court to appoint an administrator.

What is there isn’t a Will?

When someone dies without a Will, they are said to die ‘intestate’ and an administrator is appointed to administer their estate. The rules of intestacy determine who will act as administrator.

If there is just one person entitled (e.g. spouse, or sole surviving child), they may renounce their role as administrator. When they do so, the right to act falls to the next in line.

If there is more than one person entitled (e.g. three children), then they don’t need to renounce their role, as the child who wishes to act simply does so, and the others don’t need to formally state that they are not involved.

Does the process of renunciation have to be so official?

If you have been appointed as an executor in a Will (but not as an administrator without a Will), you can unofficially leave the role of the day-to-day running of the probate process to the other executor(s) under the option ‘power reserved’.

This leaves you with the option of being able to step in at a later date, if the other executor(s) become ill or cannot continue with the process.

An executor with power reserved doesn’t sign the forms or attend the Probate Registry.

This option may be appropriate if you are one of three executors who are, for example, children of the deceased and only one of you deals with the deceased’s estate as one sibling lives closer to the parent who has died. The other two can then have power reserved.

How do I obtain ‘power reserved’?

If you are dealing with the probate process yourself, then the Probate Registry will deal with this for you, based on the information you provide on the Probate Application (PA1) form.

If a solicitor or other probate professional is involved, they will draft the appropriate document, known as a “notice to a non-proving executor”.

Related articles

• What are an executor’s duties?
• Executors: what to do when someone dies
• Executors: what to do if there is a Will

Most estates do need to go through probate: It’s not a question of whether the deceased left a Will, but whether or not the assets dealt with by the Will are the sort of assets that require a Grant of Probate before they can be dealt with under the terms of the Will.

The purpose of a Will is to carry out the deceased’s wishes as to what will happen to their estate after death.

The Grant of Probate is a document that allows ownership of the assets to be transferred from the deceased to the executors, so that they can give effect to the terms of the will.

Whether a Grant of Probate is required will depend on the assets of the deceased:

Did the deceased own assets in their name at the date of their death? 

If so, depending on the value and type of assets, you will need a Grant of Probate.

A bank account is a good example. If the deceased held, for example, £50,000 in a bank or building society account, the bank/building society will need to be provided with a Grant of Probate before it will release money to the executors to deal with under the terms of the Will.

But if the deceased left a few bank and/or building society accounts, say with only a few thousand pounds in each, along with some personal possessions but nothing else, it is unlikely that the banks/building societies will need to see a Grant of Probate for modest amounts.

Each bank and building society has its own limit but, generally, most institutions will let the amount of around £15,000 be given to executors without seeing a Grant of Probate.

Did the deceased own stocks and shares?

If so, the registrar will need to be provided with a Grant of Probate before they will transfer the shares out of the deceased’s name into the names of the executors or beneficiaries.

But the registrar may not need to see a Grant of Probate if the deceased held just a few shares of a modest total value.

Did the deceased own their home in their own name? 

If so, you will need a Grant of Probate before it can be sold or transferred to a beneficiary.

If the deceased’s home was owned as joint tenants with a surviving spouse (or other party), it will pass to them by survivorship.

What happens where there isn’t a Will?

The basic rules of probate are the same, but the people who administer the estate are known as ‘administrators’ (instead of ‘executors’).

Administrators will apply for a Grant of Letters of Administration (instead of a Grant of Probate) and the distribution of the estate will take place according to the rules of intestacy.

Other information

• Do I need a grant of probate?
• Probate: Where do I start?
• Executors: what to do if there is a Will