When Probate is needed
Most people are familiar with the concept of Probate. However, fewer are aware of what precisely it is, or what is involved in it.
Probate is a crucial stage in activating a Will after the person who made it has died, but it is not always required. So, when exactly is it needed, and when is it not necessary?
What is Probate?
Probate describes the legal and financial process in England and Wales by which the assets of a person who has died are passed to the beneficiaries named in the Will or to anyone owed money by the estate. The Executor of the Will needs to apply for a Grant of Probate.
This is a document authorising the Executor to settle the estate. It enables you to close bank accounts held by the deceased, pay any debts or taxes outstanding and distribute the remaining assets as directed in the Will.
If there is no Will or the Will has been ruled invalid, the process is slightly different. A person wishing to be named as Administrator of the Estate (normally the next of kin) must apply for a Grant of Letters of Administration. This will give them similar rights to a Grant of Probate, but the distribution must be carried out according to the intestacy laws.
What requires a Grant of Probate?
A Grant of Probate is usually required for executing a valid Will, unless the estate is very small, though there are exceptions. In general, though, the following situations are likely to mean that Probate is needed:
- If the person held a bank account that was solely in their own name with more than £5,000 in it. Some banks have a higher threshold, but it is as well not to count on this.
- If the person owned property that was solely in their name, it will almost certainly require a Grant of Probate before you can sell it or pass it on to a beneficiary.
- If they held stocks and shares, they will probably need a Grant of Probate, unless they are of low value. The threshold for this may be as much as £10,000, but this cannot be guaranteed.
This is not an exhaustive list, and different financial institutions may have slightly different rules. You will need to find out which rules apply before you can apply for the release of funds or other assets held.
What does not require a Grant of Probate
There are certain circumstances in which a Grant of Probate may not be required to begin executing the Will. However, the situation may be complex, which means that it is always advisable to check.
Probate is not normally needed when:
- The estate is worth less than £15,000 in total and includes no land, property or shares.
- All assets were held jointly with someone else — for example, joint bank accounts, property owned jointly with someone else etc. — and all the deceased’s share passes to the other person.
- The estate is worth less than the debts, taxes and expenses due from it, and is therefore insolvent.
In addition, if the total value of the estate is below the Inheritance Tax threshold, the various banks and other financial institutions that hold the funds may be willing to release them if you present the Will, the death certificate and proof of your identity. However, you will also have to sign an indemnity, promising to repay if anything goes wrong.
It is important to remember, though, that you must approach each institution individually, and if one requires a Grant of Probate, then Probate must be established for the entire estate.
Is it possible to avoid Probate?
There are some steps available to arrange the Will so that Probate may not be needed. This can be done most easily as part of the estate planning by the person who makes the Will. However, it may be possible to make some alterations after the person’s death, by a Deed of Variation, which requires the consent of all beneficiaries affected by the change.
One possibility, is to move part of the estate into a Trust. This may not require Probate and may bring the total estate value below the threshold.
If funeral expenses are due, and if no prepaid funeral plan was put in place, the bank or building society may be willing to pay the funeral director without requiring Probate. This payment can only be made directly to the funeral director, but it may in some circumstances bring the value of the estate below the threshold for Probate.
How do I go about applying for Probate?
Probate is a complex procedure which involves a considerable amount of work and it can very easily go wrong. For this reason, most people choose to instruct a specialist Probate legal advisor to carry out some or all of the work on their behalf.
At Osborne Morris & Morgan, we can either help you get the Grant of Probate, or we can administer the whole process, including paying bills and transferring assets to the beneficiaries.
We offer a fixed fee initial appointment for £225+vat, which covers a discussion of what needs to be done and a follow-up letter. You can then decide whether you would like us to help you apply.
To book your initial appointment with our Probate specialists, please call us on 01525 378177 or you can get in touch with us online.