Probate: What is Probate?
What is Probate: the word “probate” is usually used when discussing sorting out a deceased person’s affairs after their death. The process should make sure that the deceased persons liabilities (bills, debts, tax) are dealt with correctly. Liabilities may be things like sorting out income tax, paying gas and electric bills and of course the funeral. Once probate has been granted by the Courts, the executors can then distribute the remaining assets go to the right people. Probate is also known as ‘administering the estate’.
So what is probate?
In practice, different terms are used in the probate process, depending on whether or not the deceased person left a Will and where they lived. Our expertise is in England and Wales, which is what we discuss below.
What is Probate? The “Estate”
In Probate terms, the “estate” of a person who has died consists of the assets (things they owned including financial assets and their share of jointly owned assets) and debts (liabilities) that the deceased person had. The net estate for probate purposes will be the assets less the liabilities which may include any tax due including Inheritance Tax.
1) What is Probate? When the person who died has left a valid Last Will
The ‘executors’ will be named in the Will and they are the folk appointed to deal with the person’s affairs after their death. Their responsibility is to carry out the work of probate. They can delegate all or part of it to professionals like us, and recover the fees from the deceaseds assets. The executors will apply for a ‘grant of probate’ from the probate registry. But before they can do that, they must discover the assets and liabilities of the estate and pay any Inheritance Tax due.
The “grant of probate” is a legal document confirming that the executor has the proper legal authority to handle the deceased person’s assets (property, money, investments and possessions). The executors need the grant of probate to prove that they have the right to get access to funds, sort out finances, draw money to pay bills. Then, finally, to collect and share out the deceased person’s assets as set out in their Will.
2) What is Probate? When the person who died did NOT leave a valid Last Will.
If no valid Last Will is found, which is surprisingly common, they are said to have died ‘intestate‘. This often happens when people have forgotten to sign Wills, lost or damaged them, or got married and not realised that this cancels any Will not made specifically with that marriage in mind.
The law then sets out:
- Who should be authorised to deal with the deceased’s estate through the probate process.
- Who should inherit from them.
- And in what proportions their assets should be paid and out to whom.
In the case of an intestacy (now valid Will), the relevant person or persons apply for probate in the form of a ‘grant of letters of administration’. Once the grant is issued, they then become the ‘administrators’ of the estate. Like the grant of probate, the grant of letters of administration is a legal document which confirms the administrator’s right to deal with the deceased person’s assets.
In some cases, for example, where the person who benefits is a child, the law states that more than one person must act as the administrator during probate.
What is Probate? The “personal representative.”
This is a general term which means executor or administrator – the person who will carry out the work of probate.
What is Probate? The “grant of representation.”
This is a general term which includes grants of probate and grants of letters of administration
Is a grant of probate/representation always required?
When a grant of Probate is needed
A grant of probate is almost always needed when the person who has died owned one or more of the following:
- Stocks or shares.
- Certain insurance policies.
- Property or land held in their own name or as ‘tenants in common.’
In most cases above, the bank or relevant institution will need to see the grant of probate before transferring control of the assets. However if the amount is small, some organisations, such as insurance companies and building societies, may release modest amounts of money to you at their discretion on production of the death certificate and a copy of the Will if there is one.
That said, my fathers estate was forced to go to probate to release just £1,500 from one investment house. They were the only people who required us to go through the full probate process. Had we been using a typical professional or (worse) a bank, it probably would not have been worth doing!
When a grant of probate may not be needed.
A grant of representation may not be needed where:
- the person left less than £5,000. Or
- they owned everything jointly with someone else and everything passes automatically to the surviving joint owner.
What is Probate? Probate and Inheritance Tax.
Probate will not be granted until some or all of any Inheritance Tax that is due on the estate has been paid to HMRC. The proportion depends on what the estate consists of. Potentially, payments for tax due on property can be staged over as much as ten years. We have experts in this area and would strongly advise against do it yourself entirely where trusts or inheritance tax may be involved.
Dictionary definition of Probate.
The action or process of proving before a competent judicial authority (in England and Wales, The Probate Registry) that a document offered for official recognition and registration as the last will and testament of a deceased person is genuine and has been correctly signed. The judicial determination of the validity of a will. (Or indeed, of the distribution under the Rules of Intestacy.)