PROBATE AND ESTATE ADMINISTRATION
Most estates (unless of very low value) cannot usually be administered until a Grant of Probate or Letters of Administration has been obtained from the High Court.
Probate is the legal terms for having a Will ‘proved’ (i.e. verified by the Court) after death. The Grant of Probate is proof that the executors appointed by the Will are legally entitled to administer the estate.
LETTERS OF ADMINISTRATION
A person who dies without a valid Will is said to have died ‘intestate’. The law sets out who can administer the estate and how the assets are to be distributed. The administrators will usually need a Grant of Letters of Administration to confer legal authority on them to deal with the estate of the deceased.
ADMINISTERING THE ESTATE
Personal Representatives (i.e. Executors or Administrators) are responsible for ensuring the estate is administered correctly. The process will typically involve:
- Registering the death and arranging the funeral.
- Checking whether there is a valid Will or, if not, identify who is entitled to administer and share the estate under the intestacy rules.
- Estates which HM Revenue & Customs class as complex must be registered with the Trusts Registration Service.
- The death should be registered with financial organisations such as banks and other savings/investment providers, insurance companies, mortgage or loan providers, pension providers and utility companies.
- The value of all assets and debts should be confirmed to check whether the estate is solvent and if there will be sufficient funds to pay all legacies in full.
- Beneficiaries should be notified of their entitlement.
- Arrangements should be made to ensure that any property insurance does not lapse, and any conditions imposed by the insurer (e.g. if the property is unoccupied) are complied with.
- Further information may be required, such as details of gifts made by the deceased or of any trusts of which they were a beneficiary.
- This information will determine whether a Grant of Probate or Letters of Administration will be required to administer the estate and, if so, whether a full Inheritance Tax account or the shorter Return of Estate Information form will be required.
- It may be necessary to apply for unused Inheritance Tax allowances to be transferred from the person’s late spouse or civil partner, or for other exemptions/reliefs to be claimed to reduce or eliminate any potential Inheritance Tax liability.
- If Inheritance Tax is payable a proportion of the tax must be paid before the application for a Grant of Probate or Letters of Administration can be submitted.
- A statement of truth will need to be prepared and signed by the Personal Representatives. The application can then be submitted to the Probate Registry.
- The Personal Representatives should consider advertising in the London Gazette and a local newspaper to protect them from personal liability if any claims come to light after the estate has been distributed.
- When the Grant of Probate or Letters of Administration has been received the Personal Representatives may commence realising the assets. If the value of assets has changed since the date of death they should consider whether there are any Inheritance Tax or Capital Gains Tax implications and, if so, if there are steps which can be taken to reduce any additional tax liability.
- A corrective account may have to be filed if additional assets or debts have been discovered which affect the Inheritance Tax position.
- The Income Tax position to the date of death will need to be considered. There will often be a refund of tax to be claimed but, in some circumstances, the Personal Representatives may be required to submit a final Income Tax return.
- Once sufficient funds are available any outstanding Inheritance Tax and other estate debts and expenses can be paid.
- The Personal Representatives may then consider paying any legacies. Before doing so, however, they should check whether any beneficiary is bankrupt and consider the possibility of a claim being brought against the estate (e.g. by a family member not mentioned in the Will).
- If the administration of the estate is unlikely to be completed in the near future the Personal Representatives should consider making interim distributions to the residuary beneficiaries (i.e. those beneficiaries entitled to share the estate after payment of all other legacies, expenses, taxes etc.).
- Before finalising the estate, a clearance certificate may be required from HM Revenue & Customs to confirm that there are no further enquiries regarding Inheritance Tax. The Personal Representatives will need to notify HM Revenue & Customs of any Income Tax or Capital Gains Tax liability arising since the date of death and pay any tax due. Estate accounts should be prepared detailing all sums received and paid. Once approved by the Personal Representatives copies of the estate accounts should be given to the residuary beneficiaries. The final distributions can then be paid, and the residuary beneficiaries provided with tax certificates showing their share of the estate income.
- If there is an ongoing trust created by the Will (e.g. for grandchildren upon reaching a particular age) the trustees will need to consider appropriate investment of the available funds, tax implications and whether the trust must be registered with HMRC’s Trusts Registration Service.
Every estate is unique and the timescale for an estate administration will vary significantly depending on individual circumstances and factors such as:
- whether the financial affairs of the person who died are in order
- what that person owned and where it is
- whether they had business interests
- whether the beneficiaries can be easily identified and contacted
- whether Inheritance Tax and other taxes need to be calculated and paid
- and whether there are any claims either by or against the estate.
In very straightforward cases, the administration may take as little as three to four months. However, in many cases it will take longer (e.g. if there is a property to sell or assets overseas) and it is not unusual for it to take up to a year, perhaps longer, if things are not straightforward.
OUR SERVICES AND TEAM
We understand how difficult it can be having to deal with what may seem like endless paperwork and bureaucracy when you have suffered a bereavement. Our experienced practitioners provide sympathetic advice and assistance with all aspects of estate administration to guide you through the process. We can offer a service tailored to your specific requirements and budget, whether that is dealing with all aspects of the administration or just to provide advice or assistance with a specific part of the administration or issue arising from it. For more information or an estimate of likely costs please contact us.
Nathan Bowles, our probate, trusts and tax partner qualified as a solicitor in 2000 and deals exclusively with estate administration, trusts, tax, Wills, Powers of Attorney and Court of Protection matters. Nathan is a member of the Society of Trusts and Estate Practitioners, the leading professional body for specialists in this area of law.
Nicola Hopper qualified as a solicitor in 1988 and deals exclusively with estate administration, trusts, wills and estate planning, tax and powers of attorney. Nicola is also a member of The Society of Trust and Estate Practitioners. She is a Fellow of the Agricultural Law Association.
Sarah Bogard qualified as a solicitor in 2002 and deals exclusively with estate administration, trusts, wills and estate planning, tax and powers of attorney
Michael Griffiths qualified as a solicitor in 1985 and currently spends around 30% of his time dealing with estate administration.
The exact cost will vary depending upon the individual circumstances of the matter such as the size and complexity of the estate and what work you require us to undertake.
Generally, we provide three levels of probate services:
- Grant Only
- Full Administration Service
- Tailored Service
Grant Only Service
Where the estate assets are all based in the UK we will charge between £750 – £2,000 plus VAT at 20% to provide this service and will deal with the preparation of the relevant Inheritance Tax return and the application for the Grant of Probate. There may also be additional costs required for disbursements*
This service is based on the assumption that you will carry out a number of enquiries and administrative tasks yourself, without the need for our involvement.
If you wish to use this service, it is assumed that you will:
- make full enquiries and disclosure of the assets and liabilities of the estate
- obtain valuations of all assets and liabilities, as at the date of death (unless agreed otherwise)
- make full enquiries and disclosure of the nature and value of any lifetime gifts
- provide details of any trusts of which the deceased was a beneficiary
- assume full responsibility for the accuracy of the information provided and for the content of the Inheritance Tax return that we will prepare on your behalf; and
- if applicable, provide us with the necessary documentation to enable us to apply for the “transferable nil rate band”
The Grant Only service does not include identifying and valuing assets and liabilities, or any work completed once the Grant of Probate has been obtained and sent to you and we would need to revise the fee estimate if we were asked to handle additional tasks, such as:
- identifying and valuing assets and liabilities
- arranging to encash the assets of the estate
- payment of liabilities
- payment of and obtaining clearance for Income Tax and Capital Gains Tax during the estate administration
- preparation of the Estate Accounts
- distributing the net estate
- providing additional information or negotiating with the HMRC
- providing tax advice or organising tax returns for either the beneficiaries or the Personal Representatives
These would be charged at the hourly rate of £250 plus VAT at 20%
Full Administration Service
This service enables you to instruct us to deal with all aspects of the estate administration.
The fees for this service are more difficult to predict until an initial consultation has taken place and we have a clear understanding of the nature of the assets and work involved. Typically fees range from £1,750 to £7,000 plus VAT at 20% and we would not expect them to exceed 1.875% of the gross value of the estate (the value before any liabilities are deducted)
If you wish to use this service, we will undertake the following tasks:
- identify the assets and liabilities of the estate
- obtain valuations of those assets and liabilities
- account to HMRC with full details of the assets and liabilities
- submit the application for the Grant of Probate
- receive the Grant of probate
- use the Grant of probate to encash the assets of the estate
- discharge the liabilities of the estate
- obtain tax clearances
- produce the Estate Accounts
- distribute the estate
There may also be additional costs required for disbursements*
This option provides flexibility and allows you to choose which tasks you would like us to undertake on your behalf, and which tasks you wish to complete yourself.
We will be able to provide you with a detailed estimate of costs once the package has been agreed.
Please note that any fees relating to conveyancing and Income Tax returns (up to the date of death) will be subject to a separate agreement between us unless these are considered minor issues in the overall context of the administration of the estate.
Disbursements are costs related to your matter that are payable to third parties and payable in addition to our charges. In estate administration, disbursements typically include:
Probate Registry fee (if estate value is over £5,000.00) £273.00
Copies of Grant of Representation (per copy) £1.50
Trustee Act Notices (approximately) £215.00
For more information or an estimate of the likely costs, please contact us.