DIY Probate

What is probate?

Probate is a legal process that applies in England and Wales and it refers to the legal authority whereby the financial affairs of someone has died can be dealt with. Once probate has been obtained, the deceased person’s estate, defined as all their worldly goods, can make payments of money to various bodies such as utility companies, banks and building societies. After the granting of probate, any beneficiaries named in the will can then be given their inheritance whether that is cash, goods or property.

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When is probate not needed?

When an estate has a net worth of £5,000 or less, in most cases probate will not be needed. If the deceased has a surviving spouse and all property, goods and bank accounts were in joint names, then again probate will not be needed in most cases. In those two situations, you will be able to deal with the estate by presenting the death certificate to the appropriate bodies.

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What is an executor?

When someone dies and they have left a properly written and witnessed will, the will should include the name or names of at least one executor. The executor is the individual responsible for obtaining probate and administering the will. If you are named as an executor, you are not obliged to take the role on. Executors may be beneficiaries of the will.

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What if there is no will?

If there is no will or the will does not name an executor, then someone must be appointed as administrator, usually a close family member, who may also be a beneficiary of the will. They will then have the duty to act in much the same way as an executor in getting probate and administering the affairs of the deceased person’s estate, including dealing with HMRC. In the absence of a will, the proceeds of the estate will be distributed to the closest relatives. In the rare case of there being no surviving relatives, the estate goes to the Crown.

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Can I get probate myself?

An executor or administrator can undertake the process of obtaining probate and administering the deceased’s estate themselves. The process involves collecting information about the assets and liabilities of the estate and filling in forms for both the Probate Office and HMRC. When estates are large or complex many people choose to use a solicitor to obtain probate, but in the cases of many estate DIY probate is perfectly possible.

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How do I get probate?

The first step to getting probate is to obtain the probate application form which is available online at the gov.uk website. The form is fairly simple and once you’ve filled it in and returned it you’ll be invited to your local Probate Registry office for a face-to-face interview. At the interview, you will have to swear on oath that the information you have included in the application form is true and accurate to the best of your knowledge.

After the meeting, an executor will be given a Grant of Representation which entitles them to administer all the affairs of the deceased’s estate. In the case of an administrator, Letters of Administration are granted which come with same legal and administrative responsibilities and powers as the Grant of Representation.

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How much does probate cost?

The standard probate fee for an individual applying for a Grant of Representation is £215. You can also get extra certified copies of the Grant at the time of the original issue and these will cost 50p each. It is a good idea to order several copies of the Grant as a variety of bodies may need to see it at the same time. Photocopies of the Grant that you have made yourself will not be acceptable.

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How do I deal with inheritance tax?

Any estate with a net value of £325,000 or more will be liable to pay inheritance tax. The executor or administrator has the duty of declaring the net value of the estate to HMRC. Even if the estate is worth less than £325,000 HMRC will still insist that you give a valuation, unless the value is below £5,000. The valuation of the estate also forms part of the application process for probate.

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How do I value an estate?

To value an estate, you need to calculate the worth of all the estate’s assets and all of the liabilities and then subtract the second figure from the first to realise the net value.

The assets will include any property, vehicles and personal possessions such as artworks, jewellery and antiques as well as any cash held in banks or building societies. You are best advised to get property valued by an estate agent and you should also employ professional valuers for items like artworks and antiques. HMRC advises that a professional valuation should be given for anything with a value of more than £500.

After working out the value of the assets you need to calculate the total of liabilities the estate has. Theses may include mortgages, credit card balances, bank loans and bills payable to utility companies and tradesmen. You are also allowed to include funeral costs in the liabilities of the estate.

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Why is it important to value an estate correctly?

It is very important to ensure that an estate is valued correctly as HMRC will scrutinise the figures submitted by an executor and they can and do challenge valuations if they believe them to be too low. An HMRC challenge can lead to lengthy negotiations which will delay the paying out of inheritances to beneficiaries of the will.

Conversely, you do not want to put too high a value on the estate as this may lead to paying more inheritance tax than you need to.

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How much is inheritance tax and when must it be paid?

Inheritance tax is at a standard rate of 40% on the value of the estate above the £325,000 threshold. If a minimum of 10% of the value of the estate is bequeathed to charity the inheritance tax rate is reduced to 36%. It must be paid by the end of the sixth month after the month of death although it is possible to pay in instalments in some circumstances.

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When is no inheritance tax payable?

No inheritance tax is payable on estates with a net value of less than £5,000. An estate worth more than the £325,000 threshold will also be exempt from inheritance tax if the property, goods and cash that make up the value are jointly owned by a surviving spouse.

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When can I distribute inheritances to beneficiaries?

Before inheritances can be paid out to the beneficiaries named in the will the Grant of Representation has to be made to the executor or Letters of Administration have issued to the administrator. Then, HMRC must formally accept the valuation of the estate and any inheritance tax due must be agreed and paid. Only then can inheritances be distributed.

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