Latest posts by Tina PJ (see all)
- Probate Administration – What to do When Someone Dies - April 6, 2017
- How to Write a Will – Advice for Parents - September 22, 2016
- Parenting a Child with a Chronic Health Condition - March 3, 2016
Tina Price-Johnson is a Specialist Paralegal in Wills, Probate and Estate Administration, and she has some advice on Probate Admininstration and what to do when someone dies, in this follow up to her article on How to Write a Will.
The death of a loved one is always painful, and if you have to deal with their estate after they pass away, it can also be incredibly stressful. Depending upon the relationship you had with them and whether or not they left a Will, administering their estate can be quite complicated. This information is valid at time of writing (April 2017) and deals with the situation in UK.
If you are appointed Executor in a Will and you accept the responsibility, you and your co-Executors if any are legally liable for collecting in any money due to the estate (from banks, buildings societies, stock and share etc.) and for any debts of the estate to be paid off (including inheritance tax) for the first six months after death. After that, the responsibility passes to the beneficiaries for the next 2 years.
This means it is very important that you get the probate administration correct.
The forms you need to complete for submission to the Inland Revenue are the same whether or not there is a Will. The UK government website has very helpful links in this regard and can be found at: https://www.gov.uk/wills-probate-inheritance/overview
The forms you will need vary according to whether the estate is going to have to pay inheritance tax or not. This is where it gets really complicated!
At the moment there is no inheritance tax payable on an estate if the entire estate is left to a spouse or civil partner. The form that will be required in this case is an IHT205; the form will let you know within it what supporting documentation you will need to provide.
If the estate is not left entirely to a spouse or civil partner, then the following tax allowances apply:
Nil Rate Band allowance:
Everyone has a tax-free estate allowance. If the person who died is a surviving spouse or civil partner who inherited the entire estate from their deceased partner, then they get what is known as a double spouse Nil Rate Band allowance. For example, the current tax-free allowance is £325,000, so the double spouse Nil Rate Band allowance is £650,000.
Everything above that amount is subject to an inheritance tax rate of currently 40%, and should be paid within six months of the date of death to avoid interest being applied.
As of April 2017 there is another allowance available to estates, called the Residential Nil Rate Band. This is only available on the residential property in the estate, and only if it is being left to children or grandchildren. This is a staged allowance, as follows:
As of April 2017 to 2018 – £100,000
As of April 2018 to 19 – £125,000
As of April 2019 to 20 – £150,000
As of April 2020 to 21 – £175,000
Again, if the person who dies is the surviving spouse or civil partner, these allowances are doubled.
If anything has been left to a charity, it is automatically exempt from tax, and is counted as a debt of the estate. All debts are deducted from the gross value of the estate to come to a net figure, and it is this figure to which the Nil Rate Band allowance and Residential Nil Rate Band allowance is applied. Once these deductions are made it is this total which is subjected to the inheritance tax of 40%.
Submitting to Inland Revenue
Once the relevant forms are filled out then they should be submitted to the Inland Revenue, who will reply with a sealed certificate confirming that either the inheritance tax has been paid, will be paid from nominated bank accounts (these can be nominated on form IHT423, so you can nominate the decedent’s bank to pay the inheritance tax due, and can use multiple forms to nominate a number of accounts), will be paid by staged payments (on which interest will be charged) or that no inheritance tax is due.
When this certificate is received, you can apply for the Grant of Representation in either the Grant of Letters of Administration or Grant of Probate formats. The form to apply for a Grant of Representation varies according to whether a Will was left or not.
When a Will Exists
If there is a Will, it is the people who are appointed to act as Executor in that Will who will all have to apply together for a “Grant of Probate”, as the form of representation in is known in these cases. In order to do so, they will have to all swear or affirm an Oath for Executors, and this has to be done in front of a solicitor or notary public.
It is possible for a person to recuse themselves from acting as an Executor by writing a letter to be attached to the Oath for Executors stating they want to act. This is called a recusal letter. However, if there is anyone under the age of 18 who will be receiving bequests from the estate then two people MUST be appointed to act as Executor. If only one is appointed or wishes to act, then there is a partial intestacy and another person must be appointed to act alongside. This appointment is the same process as is detailed below.
When there is no Will
You will need to complete an Oath to apply for a “Grant of Letters of Administration”. The correct people to make such an application will be the entire ‘class’ (or group) of relatives, in descending order:
- All surviving children who may be over the age of 18.
- All grandchildren who may be over the age of 18.
- All surviving parents.
- All siblings of the full blood.
- All surviving grandparents.
- All surviving aunts/uncles of the full blood.
- All nieces/nephews.
If any of those people who are entitled to act don’t want to, they will need to write a letter recusing themselves to be attached to the Oath.
As to who is entitled to inherit from an estate where there is no Will (an Intestacy), the pathway is very similar to that listed above but slightly more complicated, and is as follows:
- All surviving children who may be over the age of 18. If none exist, then to –
- All grandchildren who may be over the age of 18. If none exist, then to –
- All great-grandchildren who may be over the age of 18. If none exist, then to –
- All surviving parents. If none exist, then to –
- All siblings of the full blood (i.e. you share both parents in common). If none exist, then to –
- All siblings with whom you share one parent in common. If none exist, then to –
- All surviving grandparents. If none exist, then to –
- All surviving aunts/uncles who are blood-related to you. If none exist, then to –
- All nieces/nephews of the above aunts/uncles. If none exist, then to –
- All surviving half-blood aunts/uncles. If none exist, then to –
- All nieces/nephews of the above. If none exist, then to –
- The Crown (government).
Again it is every person who is a member of the class mentioned above.
Care must be taken to show you have tried to find all members of classes entitled to act as Administrators and to be beneficiaries under intestacy, so it is always advisable to do a Will search with a Will search website, place an advert in a local newspaper appealing for possible beneficiaries, write to solicitors near to the decedent’s home to ask if they hold a Will, and possibly to instruct a probate solicitor to take the legwork out of it!
Even if you do instruct a probate solicitor, you will need to provide them with all the financial documentation you can find in order that they can deal with the estate.
I hope this is of assistance to those of you tasked with dealing with the estates of those who have recently passed away. It seems very complicated but taken slowly step-by-step, you can do it!
Find more resources on bereavement here
Sometimes it can help children to come to terms with the loss of a friend or family member, when they know what happens next. On Jump! Mag, we try to answer that question.