What is Probate?
Probate is the legal administration process that takes place following someone’s death. It involves collecting in the deceased’s assets, paying outstanding liabilities, including any inheritance tax, and distributing the estate to the entitled beneficiaries.
When is Probate required?
You will be required to get probate if the deceased held a property in their sole name or as tenants in common with someone else, where there are assets over £5,000 (although some banks will release higher balances without probate), where the deceased benefitted from a Trust during their lifetime, where the deceased held stocks and shares or for some insurance policies. Probate is not required where all of the deceased assets were held in joint names with a spouse or civil partner, although some administration will be necessary to transfer these assets into the survivor’s name.
What is an Executor?
An Executor is appointed under the deceased’s Will. An Executor is the person responsible for collecting in the assets of the estate, paying liabilities and distributing to the entitled beneficiaries. There may be more than one Executor and they may be professional executors such as solicitors. Executors have the legal right to deal with the assets of the deceased including the selling of property and stocks and shares and are duty bound to follow the terms of the Will.
What happens if the deceased did not leave a Will?
Where there is no Will the deceased is said to have died intestate. In this case there will be no Executor but the next of kin may apply for Letters of Administration. The estate will be distributed according the Rules of Intestacy, which were introduced in 1925. Unfortunately these do not benefit unmarried partners, stepchildren, friends or charities and may not provide for your immediate family in the way you would have chosen. See our news page “Do I really need a Will” for more information on the intestacy rules.
When is Inheritance Tax payable?
If the value of the deceased’s estate is in excess of £325,000 at the date of death and it has not been left entirely to a spouse/civil partner or a charity there might be some Inheritance Tax (IHT) to pay. Spouses, civil partners and charities are all exempt beneficiaries for IHT. For estates which have been left to any other beneficiaries the amount of IHT payable might be reduced by the availability of a “transferrable nil rate band” from a spouse/civil partner who died before the deceased or by taking advantage of the “residence nil rate band” and/or reliefs for business and agricultural property. When calculating a possible IHT liability consideration must also be given to any gifts the deceased made during their lifetime. IHT is a complex area of tax law and each estate is different. If you are concerned about the impact of IHT on your estate or you have been appointed as an executor for someone who has died, and you believe there might be an IHT liability in the estate please contact us to see if we can assist you.
How much does it cost to obtain Probate or Letters of Administration?
MacLachlan Solicitors charges are based on the hourly rate of the solicitor dealing with the matter, which is between £210 plus VAT and £240 plus VAT. The length of time it takes to administer an estate varies and depends on the amount of work required – not the amount their estate is worth. In certain instances a fixed fee may be agreed at the outset.
The administration of an average estate where there is a property, a number of banks accounts and perhaps insurance policies or stocks and shares is around £4200 plus VAT. MacLachlan provide an estimate of the likely costs at the outset of the administration. We do not charge a percentage of the overall value of the deceased’s estate, as is common practice. There will also be some small disbursements, including the probate application fee of £155 that must be paid.
In a simple estate, with no property, a few bank accounts, and perhaps a small widow’s or private pension, we would be able to offer a fixed fee to obtain the Grant of Probate of £1500 plus VAT. This would not increase even if those accounts had large sums of money within them.
A more complex estate, for instance with a variety of shareholdings that need to be dealt with, properties and trusts (whether complicated trusts created in the Will, or if the deceased was a beneficiary of a trust during their lifetime) would cost more to administer and such an estate is likely to cost in the region of £6,500 plus VAT to administer.
If someone dies intestate there are additional requirements which may result in the estate being more complex to administer. If there is a reasonably small family to consider the cost of administration would usually only cost marginally more than an estate where there was a Will.
How long does it take?
When obtaining a Grant of Probate or Administration only, we aim to send the paperwork to the Probate Registry within 7 working days of receiving the completed paperwork and supporting information from the Personal Representatives. Timescales for progressing the cases at the Probate Registry have varied widely in the past 2 to 3 years but on average may take in the region of 10 to 16 weeks. On more complex estates or where Inheritance Tax is applicable, HMRC are taking approximately 2 months to deal with such applications.
For the administration of an uncontested estate, the average timescale would be in the region of 12 months. Some more complex estates can take between 24 and 36 months to be concluded as there are many agencies involved, working to their own varied timescales. For our part we aim to deal with all matters as efficiently as possible to assist the executors and representatives.
The above prices are an indication only and every matter needs to be considered on the facts, the specialist solicitors in our Private Client department would be happy to discuss the requirements of an estate to tailor a quote to suit the needs and complexity of that matter.
If you are a legal representative of an estate and need guidance please contact us on 01935 817736 for a free no obligation discussion about your requirements and to obtain a quote.