A Practical Guide to Probate

Transcription

1 A Practical Guide to Probate With Compliments With compliments Practical Probate Practical 1A Victoria Probate Park 1A Victoria Park Bristol Bristol BS16 BS16 2HJ 2HJ Tel: Tel:

2 Next steps after a funeral After coming to terms with the loss of a loved one, there are a host of practical matters that need to be attended to after the funeral. This guide sets out what you will need to do. If there is no Will If an individual fails to make a Will, he or she is said to have died intestate in the eyes of the law. Their assets are therefore distributed according to the rules of intestacy. These rules decide who will get what from the estate. Any entitlement depends on how much the estate is worth and if the deceased was married, in a registered civil partnership, have any children, or any other close relatives. Where there s no Will, assets can sometimes be awarded to people the deceased may Dealing with the Will, Estate and Grant of Representation to people who the deceased wanted to be looked after for example, an unmarried partner - not inheriting. If you think you are entitled to any inheritance, you should contact a solicitor for advice. Once the funeral has taken place, most aspects of the estate. Whilst this can seem daunting, this guide is designed to help you through the process using a practical approach. First, we look at the Will and what needs to be considered when working out how much the estate is worth. Then we look at Grant of Representation, which is your means of getting legal authority to manage and distribute the estate. A quick explanation of the legal terms A Personal Representative is the person who deals with the affairs of the deceased. When there is a Will, this person is called the Executor (Executor Nominate in Scotland). In the absence of a Will, a person dealing with the estate is called the Administrator (Executor Dative in Scotland). In all cases, there can be more than one person who takes this role. We use the term Personal Representative(s) throughout this Guide. 2

3 A PRACTICAL GUIDE TO PROBATE How do you work out who s entitled to any inheritance? The following is an overview of how an estate is distributed in the absence of a Will in England and Wales. Scotland and Northern Ireland may be different. If the deceased was married, or had entered in to a registered civil partnership with another person and there are no children, the spouse or partner receives the entire estate. If the deceased had children and was married, or had entered in to a registered civil partnership and the estate is worth over 250,000, the spouse or civil partner receives the personal possessions and the first 250,000 of the estate. The remaining amount is divided in half. The first half is divided equally between any children and awarded to them when they reach the age of 18. The remaining half goes to the spouse or civil partner. If the deceased had children, but was unmarried or had not entered in to a registered civil partnership, the estate is split equally between their children when they turn 18. This includes any adopted children, but it excludes step-children. If neither parent is still alive, the estate is shared equally between any siblings of the whole blood or, if they have not survived the deceased, their children in equal shares. It there aren t any siblings of the whole blood, then equally to half-siblings or, if they have not survived the deceased, their children in equal shares. In the event there aren t any siblings, the line of entitlement then follows grandparents, blood-related uncles, aunts or their children. If the deceased had no blood relatives, the Crown receives the entire estate. The above is just a guide. There may be general exceptions, which are not set out above. Because the laws are so complex, Practical Probate cannot give legal advice. It is recommended that you seek professional guidance and advice from a solicitor. 3

4 Who s responsible for distributing the deceased s assets? It s the role of the Probate Registry to appoint a Personal Representative(s). This person is usually the next of kin. Sometimes more than one person is appointed as a Personal Representative. This can be another relative, a friend or a solicitor. The Personal Representative(s) is then legally responsible for the distribution of the estate as set out by the Probate Registry. If the estate is large or complex, the Personal Representative may be better off employing a solicitor, bank or administration services and assistance. Can anyone become the Personal Representative? You need to apply and be appointed by the Probate Registry. In Scotland, the application needs to be made to the Sheriff s Court. If there is a Will The role of Personal Representative The deceased may have nominated one or more Personal Representatives in their Will. The Personal Representative is in charge of working out how much the estate is worth and distributing it according to the instructions set out in the Will. To Representative, the person nominated in the Will needs to apply to the Probate Registry. What if nobody has been named Personal Representative? If nobody is named in the Will, or the nominated person is unable or unwilling to act as the Personal Representative, an application has to be made to the Probate Registry to be appointed. More often than not, it is the surviving spouse, next of kin, or sometimes a solicitor who is expected to apply. Working out how much an Estate is worth The estate is made up of all assets and possessions at the time of death. This includes the proceeds of insurance policies paid to an estate (other than in trust ), plus any gifts the deceased may have made in the previous seven years. Reasonable funeral expenses, most debts and certain other costs can then be deducted when working out the total value of the estate. 4

5 Who s responsible for working out the Estate s worth? The Personal Representative has the responsibility of working out the worth of is make a list of everything the deceased owned and owed. Our free, downloadable Asset Locator will help you identify what is in the estate, if this has been completed. We urge all visitors to our site to complete this important document and pass copies on to family and friends. It will be an invaluable help in managing a deceased s affairs as you ll need an estate estimate when it comes to applying for the Grant of Representation. Other things to remember which may affect the estate s worth are pensions and When does Inheritance Tax need to be paid? Inheritance Tax is generally due to be paid within six months after a person s death, after which interest is added. In most cases, Inheritance Tax must be paid before a Grant of Representation is issued. HMRC can also offer advice on how to pay. Transfers between spouses both domiciled in the UK are exempt from Inheritance Tax, no matter how much they re worth. So if everything in an estate is left to the surviving spouse, no tax needs to be paid. For assistance or more detailed information, visit their website: or call their Helpline on You are further advised to consider seeking professional advice. contact the Department for Work and Pensions. The Personal Representative the deceased for distribution as part of the estate. The Department for Work and Pensions will also provide details of or dependent. Inheritance Tax Inheritance Tax is charged on the estate 325,000 being free from Inheritance Tax (2011/2015 tax year). Anything above this amount will be taxed at 40% unless it s left to a spouse or civil partner, with the stipulation that both the deceased and surviving partner were domiciled in the UK. With effect from 9 October 2007, any unused allowance can be transferred to the surviving spouse or civil partner. from this change. It s the responsibility of the Personal Representative to report the value of the estate to HMRC if there is - or could be - Inheritance Tax due. The Personal Representative is also required to report certain gifts made by the deceased of more than 3,000 in the seven years before the date of death. 5

6 A personal experience of Inheritance Tax In today s busy world, keeping important something that many people neglect. This poses huge problems for those left to deal with an estate after death. Tracking bank accounts, assets, legal documents, life and assurance policies and so on can become a monumental time-consuming task. Fortunately for Lisa, her widowed mother had kept her paperwork in order. Lisa s After Lisa s legal mother advisor had told died, her when her legal her mother advisor died told her that that she she would would be required have to to go meticulously through all the go through bank statements all the bank for statements the past seven for years. the past From seven these years records, to identify Lisa needed all money to identify gifts all and the money transfer gifts of funds and fund in excess transfers of 3000,00 given to per members annum given of the to family members in excess of the of family. 300,000 All per the annum. These findings had to be reported to Revenue the HM and Revenue Customs and as Customs a percentage as of a these percentage monetary of the gifts monetary were now gifts, liable which for Inheritance were now liable Tax. for Inheritance Tax. Lisa s solicitor had made her aware that before any Grant of Representation could be issued, all due Inheritance Tax due on the estate had to be paid. I paid careful attention to this task, wanting to fully comply with all the HM Revenue and Customs rules and regulations and I also wanted to expedite this entire process. Upon going through my mother s documentation, I was astounded that she had not made more efforts to minimise any Inheritance Tax her estate would attract. This was more surprising as she had worked in the estates division of a large bank for many years and had a wealth of experience working with estates and Inheritance Tax. Over the past seven years, mum had given myself, brother and sister birthday and Christmas gifts totalling collectively. It was a great relief to learn that this amount was exempt from Income Inheritance Tax on the estate. Our relief was short-lived however, when we received calculated at 40%! It was a sad day for our family when we had no other option but to sell the family home we had all grown up in and loved to pay this off. We felt as if we had lost a big part of our childhood with the sale of the house. It was a very whilst we were all still going through our grieving process. In recent years, numerous estates have appreciated in value, many due to the increase in value since original date of purchase. This is certainly true of properties bought a few decades ago when prices were reasonably low. However, such increases in personal property wealth translate to an adverse increase of a higher Inheritance Tax after death. Most people live and accumulate wealth and assets so that they can bequeath these to their loved ones. Certainly nobody wants their life of hard work and wealth accumulation to go to the HM Revenue and Customs! Leaving your bereaved to face a huge and unexpected tax bill is not a legacy any one wants. It is therefore all the more important that this important aspect is given your careful attention and dealt with while one is still alive. By planning ahead, suffer once you die. There are a number of options one could your estate may pose to your loved ones. In Lisa s case, she went to her local Independent Financial Advisor (IFA) and took out a life insurance policy that will pay out a lump sum to her family upon her that would cover any Inheritance Tax her estate may attract. 6

7 Grant of Representation In order for a Personal Representative to have the power to make and receive payments from a deceased s estate, they may need a Grant of Representation, also known as a Grant of Probate. This is a legal document issued by the Probate Registry (or Sheriff s Court in Scotland) that allows one or more people to take responsibility for the deceased s estate. When a Grant is needed A Grant of Representation is almost always needed when the person who dies leaves one or more of the following: Stocks or shares Certain insurance policies Property or land held in their own name or as tenants in common In most cases above, the bank or relevant institution will need to see the Grant before transferring control of the assets. However if the estate is small, some organisations, such as insurance companies and building societies, may release money to you at their discretion. When a Grant may not be needed A Grant of Representation may not be needed where the deceased: Left Left less less than than 5,000 10,000. Owned everything jointly with someone else and everything automatically passes on to the surviving joint owner. To establish whether the assets can be obtained without a Grant, the executor or administrator will need to write to each institution informing them of the death and enclosing a photocopy of the death one. Grant of Representation, contact your local by calling the Principal Probate Registry on : Alternatively, a guide online at: 7

8 How to get a Grant of Representation You will need to apply for a Grant of Representation at your local Probate Registry (or Sheriff s Court in Scotland) If you re using a professional, they will help you with this. Otherwise, you can call the HM Revenue & Customs Probate and Inheritance Tax helpline on who will give you the telephone number and address of your local Probate Registry. You will need to go to the Probate Registry in person to collect the document. You ll also need to take the following things with you: The Will, or any written wishes, if they exist Full details of the value of the deceased s estate. This includes property, cash, bank balances, wages, pensions, insurance policies and any other assets that you are aware of. Types of Grant of Representation In England, Wales and Northern Ireland, there are three types of Grant of Representation: Letters of Administration authorise Personal Representatives to deal with the estate when there is no Will (person died intestate) Grant of Probate, which is often called Probate. This is the term used when there is a Will and it authorises Personal Representatives to collect monies on behalf of the estate Letters of Administration with Will Annexed authorises Personal Representatives to deal with the estate when there is a Will, but it does not appoint an Executor, or the Executor is unwilling or unable to act. In extreme cases, this could be due to an Executor s own death, or a company appointed as the Executors closing down. Please note that a fee is charged for this service. How long will I have to wait to get the Grant of Representation? It may take you a few weeks to gather all the information and documents you will need before you can actually apply for a Grant of Representation. It also depends on whether there is any Inheritance Tax due, or if the case is complex. Ask for help and advice at the Probate Registry or Sheriff s Court while you re there. In Scotland, there s just one document Estate and this applies irrespective of whether there is, or is not a Will. 8

9 USEFUL CONTACTS Department for Work and Pensions Website: Formerly the DSS, this department now handles all state and work pensions as well of information is their website. There you ll together with information on how to apply for them. Alternatively, look in the phone Jobcentre Plus Your local Jobcentre Plus now handles Their website explains just what these are. You ll also be able to download the necessary application forms. There s no central Jobcentre Plus so to contact your Pension Service Tel: Website: Part of the Department for Work and Pensions, the Pension Service can help with any pension claims you may be making. Counselling and Advice Cruse Bereavement Care Cruse House 126 Sheen Road Richmond Surrey TW9 1UR Bereavement helpline: helpline@crusebereavementcare.org.uk people to understand and cope with their grief and loss. It is the largest bereavement counselling charity in the world and has nearly 200 branches throughout the UK. Support Groups Care for the Family Their A Different Journey initiative offers hope and support to those who have lost a partner at a young age. Tel: Website: National Association of Widows The National Association of widows is run by the widowed for the widowed. They offer support, friendship and understanding to men and women who have lost their partners through bereavement. Tel: Website: Society of Trust and Estate Practitioners (STEP) Worldwide 26 Grosvenor Gardens London SW1W 0GT Tel: Website: STEP can help with Estate and trust issues by putting you in touch with experts. Institute of Professional Will Writers Website: Contact them for details of professional Will writers in your area, or for advice. Law Society Tel: Website: solicitor in your area. Scottish Law Society Website: solicitor in your area. 9

10 Useful Contacts Continued Funerals National Association of Funeral Directors Tel: Website: Contact the NAFD for a list of associated funeral directors in your area. They ll also advise you on how best to arrange a funeral. Natural Death Centre 6 Blackstock Mews Blackstock Road London N4 2BT Tel: Website: Offers advice to dying and bereaved people on environmentally-friendly funerals. Legal, administration and expert advice HM Revenue & Customs Tel: Website: Offers help and advice concerning the practicalities and legalities of Probate and Inheritance Tax. They ll also be able to give you the number of your local Probate Registry and advise you on the laws surrounding a Grant of Representation. The Bereavement Register Tel: We re here to help you please just ask! Practical Probate Practical 1A Victoria Probate Park 1A Bristol Victoria Park Bristol BS16 2HJ BS16 2HJ info@practical-probate.co.uk info@practical-probate.co.uk Tel: Operated by the Direct Marketing Association to help prevent companies sending mail to people who have died. Baby Mailing Preference Service Tel: Website: Operated by the Direct Marketing Association to help prevent mail about baby products being sent to parents of children who have died. 10

11 BASIC GLOSSARY OF TERMS Administrator (Executor Dative in Scotland): Person handling the administration of an estate where there is no Will, or where no Executors have been appointed. Codicil: A schedule or amendment to an existing Will. Deed of Variation: Deed changing the terms of the deceased s Will. Discretionary trust: A trust where the payment of capital or income is at the discretion of the trustees (see Trust). Estate: The assets of the deceased. Executor (Executor Nominate in Scotland): A person appointed by a Will to handle the administration of an estate. Grant of Probate: Authority given to Executors to administer an estate in accordance with the proven Will. Grant of Representation: A collective term for Probate, Letters of Administration and HMRC: Her Majesty s Revenue and Customs Inheritance Tax: A tax paid to HMRC on the part of an estate above the value of the Nil Rate Bond. Intestacy: Where there is no valid Will, the estate is passed in accordance with the rules of intestacy. Letters of Administration: Authority to administer an estate where there is no Will. Next of kin: The deceased s closest living relative. Nil Rate Bond: The amount up to which an estate is not liable for Inheritance Tax ( 325,000 for the 2011/2015 tax year). Pecuniary legacies: Gifts of cash. Personal Representative: General term for Executors and Administrators of an estate. Registrar - The Registrar of Deaths: Where the death needs to be registered. Residue: cash gifts distributed. Non-cash gifts, for example, jewellery, artworks and heirlooms. Testator: A person making a Will. A female is known as a Testatrix. Trust: Trustee: A legal owner of a trust responsible for administering the trust in line with the Please note there are a vast number of glossary terms. Ask us for an explanation. 11

12 ABOUT PRACTICAL PROBATE - A QUICK OVERVIEW We understand that you need to deal with a Will, or Grant of Probate quickly across all of the UK and specialises in probate service. We can arrange to visit you at home, if required. We can give you a probate quote simply by making a free phone call to us. We will give you all the assistance needed to make an informed decision. We re all about dealing with probate practically during a time of loss when you may need our friendly and professional support. We are here to help you deal with the Grants of Probate as easily as possible. Complete and submit all necessary probate registry forms Recover any assets Ensure all assets are bestowed to the Settle any outstanding debts from the estate Account for the estate, including demonstrating the distribution of the Probate practically unlike other probate services. Our Probate Costs Explained Before commencing any work, Practical Probate will assess the work involved. fee probate service rather than an hourly rate, or a percentage of an estate s value that is charged by most banks and high street solicitors. Payment for the probate service is made only once the estate has fee probate quotation. Keep visiting our website to download more future guides, booklets and useful information. in receipt of funds from the estate. What Practical Probate will do once the Grant of Probate/Letters of Administration have been obtained: Research and list all assets, property, savings and other investments of the deceased Get the estate professionally valued, if required Ensure the Will is probated correctly Gather information on outstanding debts and bills Calculate what income and inheritance taxes are due and make any necessary tax returns and payments COPYRIGHT NOTICE Whilst Practical Probate offer its publications free of charge for personal use and to share with others, it retains all copyright of its material and contents. No publication, in part or entirety, can be claimed as one s own work; nor can it be sold for personal, or commercial gain. 12