The 5 Key Stages of the Probate Process
The probate process explained
Losing someone close to you is always a difficult time and having to deal with probate and administer their estate can be very complicated and doesn’t make the situation any easier. Whether you are an executor (appointed by a will) or an administrator (given powers to administer the estate by the Probate Registry where there is no will, known as an ‘intestacy’) there are five key stages to the probate process.
Stage One – Immediate Post-Death Issues
- Register the death – this must be done within 5 days at your local registry office. Doing this will get you the death certificate which you will need.
- Arrange the funeral – you need to find the will (if there is one) as this may contain the wishes of the deceased on burial or cremation.
- Look after the estate – if there is property, you need to make sure it’s maintained and insured. PRs are liable to creditors and the beneficiaries. There is specific insurance that covers property during an estate administration. You must also contact beneficiaries, utility companies and banks etc to notify them of the death. For utilities, this will stop charges accruing.
- Trust issues – if the deceased was a settlor or beneficiary of a trust, you need to notify the trustees of that trust of the death.
- Life insurance – if the deceased had any life policies the provider should be notified and a claim made.
- Read the will – consider the validity of the will and make sure you have the most recent will as sometimes people make many. Also, start establishing who is due to inherit and, possibly, who does not. If any close family members (children, for example) are excluded, it may be wise to take legal advice sooner rather than later as there may be a claim against the estate.
Stage Two – Value the estate
- Start valuing the estate – this often needs to include a visit to the deceased’s home and going through papers, accounts, etc and asking other close family about the deceased’s investments, property, etc to establish what the value of these assets were as at the date of death. You will need a death certificate and a copy of the will to prove your entitlement to information from banks and other institutions.
- Look for debts too – investigate and enquire about debts and liabilities of the deceased as well. These will need settling once probate has been obtained, the assets collected and there is money to pay them.
- Financial assets search – this can be undertaken to look for anything you might have missed.
- Protect against creditors – PRs can protect themselves from personal liability to creditors by placing creditor notices (also known as “Trustee Act Notices”) in the London Gazette and, in certain circumstances, a newspaper close to the deceased’s home address.
Stage Three – Complete the IHT return
- Identify the correct tax form – if there is no tax due on the estate, it’s likely that you’ll only have to complete the shorter IHT 205 form. For deaths after 1st January 2022, you may not have to complete an IHT 205 form at all. However, if tax is payable or if other issues arise, then the longer IHT 400 (and various additional schedules) will need to be completed.
- Lifetime gifts – you will need to include on the IHT 400 details of any lifetime gifts within 7 years of the death (and sometimes further back) in excess of the modest annual allowances have to be reported. This may well require enquiry of family or friends, or further investigation.
- Calculate the tax due – the PRs can calculate any inheritance tax due (or can ask HMRC to do it) and paying it is their responsibility. If there are liquid assets (cash in the bank) sufficient to pay the tax, banks will normally release funds to allow this. Any tax due should ideally be paid within 6 months from the date of death. Late payment will attract a charge for interest. For property and certain shareholdings, tax can be paid by instalments.
- Send the tax form – the longer IHT 400 is sent to HMRC. After 20 working days you can apply to the Probate Registry for a Grant of Representation, i.e. a grant of probate or letters of administration. The IHT 205 is sent straight to the Probate Registry (and there is also an online application system).
Stage Four – Apply for the Grant
- Make the application – as is clear from stage three (above) you can only apply once the tax form is filed and any tax due is paid (or arrangements to pay by instalments are made). You must send in the original will and any codicils which will be retained by the court.
- What type do you need? – if you are an executor named in the will, you will be given a Grant of Probate. If you are applying as a beneficiary under intestacy rules (an estate where there is no will) you will be given Letters of Administration.
- What if an executor can’t or won’t act? – there no obligation for an executor to take on the responsibility given to them in the will. They can ‘renounce’, i.e. give up their position or they could step back but reserve their position for the future should they want/need to act (for instance if the other executor(s) are unable to).
- Using the grant – now that you have the grant, you have the authority to collect in the deceased’s assets and property.
Stage Five – The Administration
- Collect assets – the PR’s need to collect in all assets in banks, investment policies, etc
- Pay debts – all debts must be settled prior to money or property being given to the beneficiaries.
- Pay specific bequests – if the will specifies that certain property of sums of money are given to specific individuals (or charities, for instance), these are made first.
- What happens in an intestacy? – in an intestacy, the law sets out a procedure for determining who receives the estate and in what proportions.
- Account for estate tax – in addition to the estate having a potential liability for inheritance tax, if the estate assets produce an income or if the sale of assets produces a capital gain (e.g. the value of the asset at sale is greater than the value at death) then either income tax or capital gains tax might be payable and estate tax returns will need to be prepared and sent to HMRC with the payment of the extra tax due.
- Keep estate records – PRs must keep careful records of what monies/assets they have collected in, debts paid and money due to/paid to beneficiaries.
- Distribute the residue – once specific bequests have been honoured, estate accounts prepared and any additional tax paid, the residue can then be paid to the residuary beneficiaries.
How long does probate take?
A simple estate with no property and no tax to pay, with no claims against the estate and no issues with identifying beneficiaries might take as little as 3-6 months. Larger, uncomplicated estates with no property to sell might take 6-12 months and larger complicated estates with property to sell, tax to pay and other unforeseen issues, might take 1-2 years.
While no two estates are the same, how long probate takes will vary widely depending on the size of the estate, where there is property in the estate that needs to be sold, whether tax is payable (that could be inheritance tax and/or income tax and capital gains tax on the administration), etc.
If a claim is made against the estate that is taken to court, the timeframe can be very much longer.
How much does probate cost?
Depending on the size of the estate, having a solicitor to help with most or all of the stages in the probate process is likely to cost anywhere in the region of £3,000 – £20,000 + VAT and disbursements. Large, complicated estates with foreign property, unidentified beneficiaries and claims brought against the estate by excluded relatives, and other complications are likely to cost considerably more.
Please note that a number of issues can arise in the stages set out above potentially causing problems that need solving. If you are a personal representative of an estate and need help with the administration, GN Law can help guide you through the probate process. Please contact one of our specialist Probate Solicitors on 020 8492 2290 or email firstname.lastname@example.org.