This guide touches briefly on various aspects of the probate process and aims to answer some of the most common queries. If you need further information then please contact a member of our probate team.
Navigate to the desired sections in this article:
- Who can apply for probate?
- Will you need to obtain a grant?
- What should you do first?
- Before you can apply for probate
- How is the grant obtained?
- Is there a time limit in which you must obtain a grant?
- How long does it take to obtain a grant?
- How long does the administration of an estate take?
- Inheritance tax and interest
- Summary of important dates
What is probate?
Estate administration, also known as ‘Probate’, is the administration of the estate of someone who has died. This involves:
- identifying, locating and protecting the assets and liabilities including bank accounts, investments, property, cash and personal possessions
- valuing the assets and liabilities and reporting the values to HMRC
- paying any inheritance tax due
- applying for a Grant from the Probate Registry
- collecting in the assets and paying all liabilities
- distributing the estate to the beneficiaries
- finalising the deceased’s tax affairs with HMRC (e.g. IHT, income tax, capital gains tax)
Only certain people can apply for probate. Who can apply depends on whether or not there is a will.
If the deceased leaves a will or codicil naming executors, those executors apply for a Grant of Probate. Until a Grant of Probate is obtained you may not be able to access the deceased’s bank accounts or sell any property belonging to them. You may also not be able to pay any legacies left in the will to the beneficiaries.
If the deceased did not leave a will, or if there is a will which does not name executors (or if the named executors do not wish to act as executors), a 'Grant of Letters of Administration' is applied for instead of a ‘Grant of Probate’. Usually a beneficiary, who is someone who benefits from the will, applies. The person to whom the grant is issued is known as the Administrator.
The term probate is often used to refer to obtaining a Grant of Probate and a Grant of Letters of Administration and in this guide the term 'grant' will refer to both unless otherwise specified. The term 'personal representatives' (PRs) covers both executors and administrators, and the maximum who can be appointed in an estate is four.
If you are dealing with the estate of someone who died without leaving a will then you may find our Client’s guide to intestacy helpful. The estate does not always pass automatically to the surviving spouse or civil partner. The distribution of the estate will depend on which family members have survived. Please do contact us in this scenario as it can involve a complex distribution between family members and needs to be done correctly.
Generally a grant is needed to give the PRs authority to deal with the assets of an estate. It may not be required in some circumstances, for example where assets are jointly owned as joint tenants and on the death of one of the co-owners the asset passes automatically to the survivors.
You should locate the original will, as this needs to be sent off to the Probate Registry with the probate application. The person who died should have told all the executors where to find the original will and any updates to it, for example:
- at their house; or
- at their solicitor’s office.
Before applying for probate, it is necessary to work out the value of the estate and whether there is inheritance tax to pay.
We can advise you on the inheritance tax allowances and exemptions.
If there is no inheritance tax to pay and the person died on or before 31 December 2021
If no inheritance tax is due on the estate a short form of inheritance tax account (IHT205), known as a Return of Estate Information is usually completed and sent to the Probate Registry at the same time as the application for the Grant is made.
If there is no inheritance tax to pay and the person died on or after 1 January 2022
You will need to report the gross and net values for inheritance tax and probate in the probate application. However there is no need to complete a separate return.
If there is inheritance tax to pay
If inheritance tax is due on the estate or if certain other factors apply, a longer return, called an IHT400 has to be completed. It is necessary to give full details of all the assets and liabilities of the estate at the date of death, plus details of relevant life time gifts and various other matters to give a full picture of the financial position of the deceased at the date of death. This involves obtaining date of death values of all the assets of the estate by engaging surveyors, writing to various banks, building societies, investment managers, utility companies and many others to get the necessary information and is something that we can do on your behalf.
If inheritance tax is payable on the estate, the tax due has to be paid on the submission of the inheritance tax account to HMRC. In certain circumstances it is possible to pay by instalments.
Once the inheritance tax account has been sent to HMRC and any tax due has been paid, the probate application can be sent to the Probate Registry 20 working days later.
The Personal Representatives obtain the Grant by making an application to the Probate Registry once the inheritance tax position has been dealt with. This involves the PRs declaring to administer the estate in accordance with the law, and sending off the original Will and any other relevant documents to the Probate Registry. In many cases the application can be made online but certain applications still need to be made on paper. Once the application has been made the Probate Registry will issue the Grant provided it has no queries to raise.
There is no deadline by which a grant must be obtained, but:
- interest is payable on outstanding inheritance tax from the first day of the seventh month after the date of death (see below); and
- if an account is not submitted to HMRC within twelve months of the date of death HMRC may impose penalties.
How long it takes to obtain a grant depends on how quickly all the information for the inheritance tax account can be assembled. If we receive instructions soon after the death has occurred, generally we aim to submit the application for the grant within approximately three to six months of the death. If the estate is complicated this can take longer.
The administration of the estate is what occurs after the grant has been obtained. It involves collecting in all the assets of the estate and distributing them amongst the beneficiaries of the estate. Once the grant has been obtained the PRs have the authority to close accounts and sell assets. They are responsible for ensuring that all debts and inheritance tax are paid and that the estate is distributed correctly.
How long all this takes is dependent on a large number of factors. There may be a property to sell or protracted dealings with HMRC over valuations or the deceased's own tax affairs to the date of death. There may be foreign assets necessitating lengthy procedures abroad. Any dispute about assets, the terms of the will or the distribution of the estate will almost certainly prolong the administration.
Although it is difficult to estimate, for a straightforward estate it would be reasonable to expect everything to be completed between six and twelve months from the date of death.
Inheritance tax is charged at 40% on the date of death value of the estate above the nil rate, or tax free, band. At present the nil rate band is £325,000. The main exception to this rule is that gifts to spouses, civil partners and charities are exempt from inheritance tax. Everyone has a nil rate band available for use on their death, although it can be reduced by any gifts made during the lifetime of the deceased. In the case of spouses or civil partners, if the nil rate band is not used in whole or in part on the first death, the unused portion can be transferred and added to the nil rate band available on the second death. This is known as the transferable nil rate band. This is something that PRs must apply for on the second death and they will need to supply certain pieces of information. We can assist you with this application if we are helping you with the administration of the estate.
In certain circumstances the Personal Representatives may also be able to apply for the residence nil rate band. This is an extra nil rate band available broadly where a deceased leaves a property such as a house or flat to a child or grandchild. The level of this exemption is currently £175,000. As with the nil rate band, it is also possible to transfer the unused element of this from a predeceased spouse or civil partner. If all nil rate bands are available, this means that a total of £1m can be left tax-free in certain situations. However, it is important to note that the residence nil rate band comes with certain eligibility criteria, so it is not available in all circumstances.
If inheritance tax is due on the estate the total inheritance tax bill is calculated when the inheritance tax account (the form IHT400) is completed. The proportion of the total tax bill which is applicable to land, property and business assets can be deferred and paid by instalments (the instalment option). The proportion applicable to the rest of the estate (for example on bank accounts or shareholdings) has to be paid on submission of the inheritance tax account.
The instalment option for payment of inheritance tax provides for tax to be paid over 10 years by instalments. The first instalment is payable on the last day of the sixth month after the date of death. The instalment option ceases if the asset to which the tax relates is sold. All outstanding tax on that asset then becomes payable.
HMRC charges interest from the first day of the seventh month after the date of death on all outstanding inheritance tax, whether or not any assessments for the tax have been issued. Interest therefore does apply to tax paid by instalments.
Inheritance tax can be complicated and it is advisable for you to s
eek expert advice. Problems can be caused by the tax (or at least part of it) being payable in order to obtain the grant of probate. In some cases Personal Representatives find it impossible to find the money to pay the tax in advance, as without the grant of probate they cannot sell the assets of the estate and so cannot raise the funds for the tax. If you find yourself in this position let us know and we will be able to advise you further.
The deadlines referred to in this guide are summarised below, together with some additional important dates which may be relevant in some cases:
- first instalment of instalment option tax payable on the last day of the sixth month after the date of death
- interest payable on outstanding inheritance tax from the first day of the seventh month after the date of death
- penalties may be imposed for accounts submitted more than twelve months after the date of death
- Inheritance Act (Provision for Family and Dependents) Act 1975 claims should be made within six months of the grant being issued. These are claims which in certain circumstances members of the deceased's family or his dependents can make if the will or intestacy does not provide adequate financial provision. If you want further information about such claims then please contact our Contentious Probate and Trusts Team on +44(0)20 8394 6549
- Deeds of Variation must be made within two years of the date of death to be effective for inheritance tax and capital gains tax purposes. The terms of a will or intestacy can be varied with the consent of those concerned so that for inheritance tax and capital gains tax purposes the terms of the variation are deemed to be terms of the original will or intestacy
- a claim to transfer an unused nil rate band must be made within 24 months of the end of the month in which the deceased died
- an estate must be registered on the Trust Registration Service if its administration goes on for more than two years after the date of death