What is Probate?
Most of us live in the hope that our estate (money, house, possessions, etc) will simply be handed over to our loved ones when we pass away without any hassle, but it’s not always that simple and there are a few legal procedures that will need to be completed once you pass away.
One of these is probate.
In this guide, we cover the exact meaning of probate, explain when you need it and how the whole process works, as well as answer other frequently asked questions. Read on for all you need to know.
What does probate mean?
In the UK, probate is the legal and financial process by which a deceased person’s estate is managed (shared out) after they die. The probate process must be completed in order for the executor to be granted permission to distribute the deceased’s assets, hence why it is often referred to as ‘grant of probate’.
The right to probate is requested typically by one of the heirs to the estate (usually the Next of Kin if there is no will), by a solicitor or the executor of the will if there is one. The executor is responsible for making sure the estate is shared out legally and according to the wishes stated in the will belonging to the deceased.
The process of probate is essentially to ‘prove’ the will in a court of law, meaning that it is accepted as a true, valid document that represents the final wishes of the deceased.
What if there is no will?
If the deceased person did not make a will before they died, their estate will have to be distributed according to the Rules of Intestacy, as per UK law.
It is for this reason that most people write a will; to ensure their assets are given to the people they wish them to.
When is probate required?
In England and Wales, there are two main situations where a grant of probate must be carried out:
- If a person has died and left behind property (i.e. a house, other building or land)
- If a bank or other financial institution has requested a grant of probate (or grant of letters of administration)
How does probate work?
The probate process involves 5 main steps:
Stage 1 – Applying for probate
First of all, someone must apply for probate if the deceased did not arrange a fixed-fee probate service before their death. This can be one of the heirs to the estate, a third-party who is trusted by the family or heirs, or a solicitor working on behalf of the heirs. They are usually listed as the ‘executor(s)’ within the will and are tasked with the responsibility of handling and distributing the estate left behind by the deceased.
Due to the complicated nature of some of the duties involved – such as handling inheritance tax and valuing the estate – it is often recommended that a trained solicitor takes control of the majority of the financial and legal issues.
How much does probate cost?
The price will differ depending on which firm is chosen to carry out probate and other estate administration duties in the event of a loved one’s death, as well as the entire value of the estate. You can contact a specialist solicitor, probate specialist or bank to do this for you, or, in some cases, it may be that the deceased secured a fixed rate prior to their death with an online probate service.
Generally, the cost of probate will be between 2% and 5% of the total estate value with most solicitors and firms (not including their hourly fees and VAT), which will be cheaper than what most banks offer.
However, if the deceased selected an online probate specialist before their death and secured a fixed-fee probate service, the cost could be as low as 0.75% of the value of the estate (as with Wills.Services), which is much cheaper than using firms such as Slater + Gordon and Co-op Legal Services.
To apply for probate via the GOV.UK website, the application fee alone is £215 for estates worth over £5,000. If the estate is worth less than £5,000, however, there is no application fee to pay. This is not taking into account any further fees for a solicitor to carry out the process for you.
Bear in mind that extra copies of the probate cost £1.50 each, if you want to send them to more than one organisation at a time.
If a solicitor has been chosen to be the executor of the will then there will be their fees in addition to the minimal probate fee (see more information on the cost of probate below). These could run into thousands of pounds if the estate and will are complex, and it is important that the responsibility for paying these fees is determined and agreed beforehand – is one of the heirs choosing to employ the solicitor and pay for it, or is it expected that the money comes from the estate?
If more than one person believes they should apply for probate, then it is important to communicate fully before doing so. In some cases, of course, there is animosity or a lack of trust between parties, in which case it is important to obtain legal counsel as soon as possible and get the solicitor to act as an executor.
The best way to avoid any disputes or animosity is to state who your preferred executor(s) are clearly within your will.
You might like: The benefits of writing a will
Stage 2 – Valuing the estate
The executor should administer and value the total of the estate. This means identifying all assets, no matter how seemingly insignificant they may seem, and determining their monetary value accurately.
It is important that the executor shows some common sense and careful thinking at this stage – many mistakes have been made where the value of items has been significantly misinterpreted. Take, for example, a collection of comics – to someone not interested in the items, they could look like a box of valueless nostalgia, but to a collector, they could run to thousands if not hundreds of thousands of pounds worth of value.
Other financial assets such as shares, or life insurance policies should be found (or confirmed to not exist) by the executor.
While it is normal for the will to dictate any assets of value, sometimes these things are overlooked or obtained after the will was written and to not thoroughly investigate can cause problems later.
It’s also important that the value of the estate is calculated accurately, because if it totals an amount that is above the nil rate band (which is £325,000 in 2020), then inheritance tax will need to be paid by the deceased's loved ones, which is 40% on anything above that threshold.
Stage 3 – Paying inheritance tax
If there is any inheritance tax to pay then this must be done right away (or, in the very least, contact HMRC if there is a problem in paying the bill).
A life insurance policy placed in a trust can be used to cover the expected inheritance tax bill and there may be a policy in place for this purpose.
It could be that the inheritance tax bill is large enough that the only way to pay it is for the sale of any estate property to be undertaken. It is the job of the executor of the will to see that this happens, and they should discuss it all with the heirs in case other alternatives are desired and can be reached.
Note: If you are an executor and feel that you’re out of your depth when attempting to deal with these issues, it’s always best to contact a solicitor or legal professional before things go wrong.
Stage 4 – Settling other debts
Any other debts and bills should also be paid for from the value of the estate. Like inheritance tax, this may require the liquidation of some of the assets from the estate, but communication with creditors may result in a much easier process.
If the estate does not have enough assets to cover the outstanding debts, then some creditors will be left short, but there is no requirement on any of the heirs, the executor of the will, or any other person to cover these debts and they will be cleared once the process of probate is complete.
As explained previously, many choose a solicitor as the executor of their will because they are far more experienced and better equipped to deal with these financial issues.
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Stage 5 – Dividing the estate
Once stages one to four have been completed, the final stage of probate is to distribute the assets to the beneficiaries as directed in the deceased's will.
Remember, if there is no will, the estate will be shared out as per the UK's intestacy rules.
Once completed, the process of probate is finished.
How long does grant of probate take?
Despite the grant of probate usually being received within three to four weeks following the oath swearing, the entire process of probate can take between six and twelve months in the UK. There is no set timescale and it can vary quite considerably between each case.
If the circumstances surrounding the will and estate are straightforward, probate will usually be granted without much hassle, but some situations can become complicated and may take longer, depending on the complexity of the estate, any issues with the will and so forth.
What are intestacy rules? When is probate not required?
If you die without a will, your estate will be handled by the rules of intestacy. In this case, there is no need for probate although someone should become an administrator of the estate in a similar way to see that the assets are properly managed.
The rules of intestacy will not take the deceased's personal wishes and requests into account when distributing the estate, which is one of the main reasons why it is so important to have a legally-valid will in place. Intestacy rules usually mean that the surviving civil or married partner will receive most – if not all – of the estate left by the deceased, but of course, this might not represent their true final wishes.
How to avoid probate completely
You are able to avoid probate in the UK by placing your assets in a trust, which you can get help with at Wills.Services – a professional will writing service.
A trust is a safe way of ensuring that your assets are also used in exactly the manner in which you intended – for example, you could set up a trust consisting of £20,000 that must only be used for a deposit on a house and can only be released to the beneficiary when they are buying their first home (on a certain date).
Trusts can provide you with the peace of mind in knowing that its contents – whatever they may be – will be used in a way that represents your wishes in the event of your death.
Learn more: What is a deed of trust?
Do I need probate for a small estate?
If there is a will then probate is required before the estate can be managed by anyone – the value of the estate is not a factor. It is free to apply for probate on estates valued at under £5,000, so there is no difficulty in doing so.
Remember, an estate that has a low monetary value may carry a significant sentimental value, so it is always important to apply for probate and take care of the assets properly.
What is the probate time limit?
There is no limit set on applying for probate itself, but any inheritance tax must be paid within six months of the death and this may have an effect on the timescale for applying for probate.
Can I appoint the executor of my will before I die? Is probate required in this case?
Yes, you can clearly specify who you would like the executor of the will to be in your will – often, this is a spouse, other family member or your solicitor, depending on the complexity of your situation. Probate will still have to be applied for as usual but there is unlikely to be any conflicts regarding who should step up to become the executor. if it is already stated in the will.
It is important to discuss your wishes with your proposed executor prior to writing their name into your will in this way – if you are in any doubt then discuss this with your solicitor when you write the will to make sure everything runs smoothly for your family when you pass away.
Bear in mind that the executor faces a number of time-consuming and often complicated tasks – such as handling inheritance tax, valuing the estate and distributing it – so it’s always worth having a solicitor as one of your executors to take care of all issues without making any errors, rather than a loved one.
Write a will online today - Protect your loved ones and your assets
To start the process of writing a will, head over to Wills.Services.
You’re simply required to enter the relevant details in an online tool, following which their team of qualified professionals will progress the will. Once it has been processed and checked over to make sure that it's legally-valid, you will receive the completed will by both email and post.
At CUKQ, our guides are here to help you with every aspect of your personal finance, up to and including the division of your assets to your heirs. Please browse our library of informative articles for more information on wills in the UK, life insurance, inheritance tax and everything else you need to know about personal finance and insurance.