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Facts About Probate

When it comes to probate, there are very few people who really understand all the ins and outs of it. These people are the ones who work in a role that means they come into contact with the issues of probate on a daily basis. For most people, however, their dealings with probate are very limited – and some people may never need to have much to do with it at all. And that’s why it can feel so alien and so complicated when they do suddenly have to contend with it.

There are some facts about probate – and wills – that it may be useful to remember if and when the times comes for needing to be more involved in the probate process.

If you have no will, then your assets won’t necessarily go straight to your spouse, even if that’s what you assume will happen. Without a will, you will have been deemed to have died intestate, and if that happens then there are strict rules about who will inherit what. This is true whether you are legally married, or whether your partner is considered your common law spouse. Stepchildren won’t automatically inherit either. And that’s another reason why you should update your will regularly. If, for example, you divorce and remarry, you may need to revise your will otherwise your estate could be passed to people you would rather it didn’t go to.

Care home fees… this is something that many people worry about. However, you can actually protect your estate from having to be used to pay for a care home. This is when it is useful to speak to an expert in wills who will be able to ensure that the right caveats and legal inclusions are in the right places.

Remember, even if you want a relative to inherit your assets, if they are jointly owned by both you and someone else, the surviving owner will receive the entire asset, no matter what it says in your will.

You can leave assets to children in your will, but they won’t be able to receive the asset until they are 18 (or older if you stipulate a higher age in your will). The asset will need to go into trust until that time.

If you have no blood relatives, your estate may instead go to the government if you have not made a will. In order to make friends or charities as beneficiaries, you will need to ensure that you have a will that states this.

Finally, everything that goes to a spouse or civil partner, or to a charity, from your estate does so tax free. For everyone else, there is potentially inheritance tax to pay. This depends on how much the estate is worth.

Don’t Get Caught With A Bill for Inheritance Tax

There is a lot of work that goes into being the executor of someone’s estate. And it will take you a lot of time to get everything done, which is particularly hard if you also have a full time job. But did you know it could also cost you a lot of money too?

That’s because executors can end up being the ones that have to pay the inheritance tax bill due to HMRC’s time limits on payments. Although it would be great to use money from the estate to pay this potentially large bill, the time limit may not allow for this, which is when the executor has to put their hand in their own pocket.

The insurer Royal London looked into the kinds of financial difficulties that arise when someone dies, and this catch 22 situation was unearthed many times. The big problem is that the tax needs to be paid, but the money from the estate isn’t available until the property is sold. The executor is therefore liable for the tax bill. The Royal London, as well as other companies, are asking for more time for the IHT to be paid – preferably until after the assets are released or the property is sold. This is especially important when the estate is a complicated one.

The time limit in place at the moment is six months. So, by the end of the sixth money after the death, the bill must be paid. If it is not, interest will be charged. This is not so much a problem with a simple estate, which generally can be completed within three to six months, but probate for a complex estate can take as much as a year – or even more – which is obviously outside of the time limit set by the government. So in this case, the executor has to pay, and reclaim the money later, from the estate.

One way around this problem is an installment system. HRMC offers this for some estates and some assets. The tax can be paid in installments over 10 years – but interest will be charged. However, once the asset is sold, the full amount will be due.

Does Everything Go Through Probate?

The simple answer is no, not everything will automatically go through probate. Anything that has only the deceased’s name in the title will need to be probated, and that will include bank accounts, property, vehicles, investments and so on. The probate court is the only body that can take the deceased’s name off a deed and put the beneficiary’s name on it.

However, if anything is jointly owned, then it is unlikely to have to go through probate. They will instead transfer automatically to the surviving owner. Assets that are in a trust also often avoid going through probate. This is not always the case, though, and will need to be checked by the appropriate authorities, just in case.

If both owners of a jointly owned asset die at the same time, then the asset will need to be probated before it can be given to the beneficiary. Transfer of ownership will happen automatically when the first owner dies if the asset is jointly owned, so even if your will states that someone else should inherit, the asset is legally not yours to give away. The surviving owner can choose to either follow your wishes or keep the asset themselves – it is their decision to make, and what is written in the will makes no difference in this instance.

Being tenants-in-common is a different type of joint ownership. If you die first, your share is distributed exactly as your will dictates – if there is no will then it will be distributed as per the rules of intestacy. So the deceased has control of what happens with their share, but it will need to go through probate before it can be distributed.

In some cases, assets such as insurance policies and bank accounts allow you to name a beneficiary when you set them up. When you die, those assets will be paid directly to your beneficiary without needing to go through probate. There are some circumstances when that does not happen including when the beneficiary has died first or is incapacitated, if the beneficiary is a minor, or if you choose to simply list ‘my estate’ (or similar) rather than naming an individual.

Trust assets avoid probate, unless it is a testamentary trust. This kind of trust will need to go through probate.

What Is Probate And Why Is It Needed?

Probate is something that you have probably heard of, but may not have had to deal with, so it could be something of a mystery. Yet most people will have to face probate at some point in their lives, and the more that is known about it, the better and easier it will be.

Probate is basically the legal process of administering the deceased’s estate. This means that any claims on the estate need to be resolved, and whatever is left – money, property, possessions and so on – is distributed to the people who are mentioned in the will or, if there is no will, then the people who are legally entitled to the estate through the rules of intestacy.

Probate has to be taken care of after someone dies unless their estate is worth under £5,000, and although it may seem like a simple task, there is a lot to think about. If the estate is not a complicated one, then probate will take a shorter amount of time, but it will still be many weeks, perhaps even months. And if the estate is complicated then it can even take years to untie all the knots and ensure that everything is as it should be. It does depend on the estate itself, the will or lack of one, and the time given to ensuring that probate is done. If it is down to a solicitor to do it then they will have many other cases to look at, for example, and your case may not get the time it needs to be completed quickly. If you try to do it yourself, it can also take a long time as you may not have the know-how to make things happen quickly.

The best advice is to use a specific probate company to assist you. They will be able to give the time and effort that will be needed.

Could Probate Be Going Digital?

The probate process is a rather old fashioned one. It’s been the same for decades, and although many people complain about how long it takes – many months in some cases, certainly weeks in others – up until now nothing has been done about it.

But that might be about to change.

Last month, the government launched a beta version of a new online probate service, designed to make probate a lot faster and easier to deal with. At the moment, it is a private system and it is being tested, but after this initial six month test it is hoped that it will roll out to the general public who should be able to go through probate digitally.

The changes have come after the probate service, HM Courts and Tribunals Service, and a target group of solicitors came together to discuss the clear problems associated with the probate process. There are around 280,000 new probate applications each year, and if the majority of those could be done online, it would save many weeks of misery for the families of the deceased.

The online form would be for private individuals or for solicitors, depending on what the executors were tasked with doing. This would mean that those who prefer for a solicitor to carry out the work on their behalf can still take advantage of the online system, vastly reducing the time it takes for the probate application and process to be completed.

The online version even includes a digital statement of truth, which means that no one is required to swear an oath. There will soon be an online payment function too, meaning that everything can be done in one visit to the website, completing probate in days or perhaps even hours rather than weeks and months.

Destroying A Will

Wills are so important that when it comes to needing to destroy one, it isn’t as simple as just putting it in the bin. If you decide that you no longer want your will, or you have written one that supersedes it, then you need to ensure that it really has been destroyed. And that means not just the original, but the copies as well.

The main thing to remember when destroying a will is that it must look intentional. You must destroy it in such a way that it is clear you intended to do it. Just a little tear, or a partially burned document won’t count; it could have been an accident. Tearing the will into many pieces or burning it entirely to ash will count, as this will be seen as definitely wanting to destroy it. Copies must be destroyed as if they are not, the destruction of the will will be seen as accidental, so the will will not be revoked.

If a will is destroyed by mistake, by some accident, for example, then it is still perfectly valid. It is the intention behind the destruction that will be taken into account. However, if your will is accidentally destroyed, it is best to make a new one. This is where a copy or copies of your will will play an important part.

If you are unable to destroy your will for any reason – such as a physical disability – then someone else may destroy it on your behalf. However, you should bear in mind that it must be done in your presence.

If you are unsure about anything relating to your will, and what you can and can’t do regarding it, simply contact us. We’re here to help you.

Are Banded Probate Fees About To Come Back?

Probate experts are worried that the government might decide to revive their somewhat controversial ideas about reforming probate fees, and if they did that, many people could end up paying thousands of pounds more in probate costs.

Right now, there is a flat fee of £215 for probate applications. Earlier on in 2017, the Ministry of Justice did suggest that this could be changed, and that a banded structure of fees be put in in its place. This would be based on the value of the estate, with estates that are worth more paying more in probate fees. An example would be a £500,000 estate having to pay £4,000.

This idea was scrapped for a number of reasons, one of which was that charities would have lost a massive £18 million a year in legacy income.

Although the idea was shelved, that doesn’t mean that it has completely disappeared. Instead, it is considered ‘dormant’ meaning that once the government is in a position to bring the measures in again, they may well do exactly that. It would be brought back in its existing form, and then taken to a vote in the Houses of Parliament.

How Long Should Probate Take?

There is no one definitive answer to the question of how long probate takes from beginning to end. Some cases take just a few weeks, whereas others can take many months – even years. It depends on the complexity of the estate and how quickly the executor works amongst other things.

The executor may not be able to complete their work as quickly as might be hoped if, for example, they already have a full time job. Plus, being an executor takes time even if there isn’t a job or family commitments vying for attention. Everything needs to be done in the right order and at the right time because mistakes are difficult to rectify – especially if they are to do with an inheritance that has already been paid out.

But it might not be simply that the executor has to prioritise their own work and family over the will. It could be that delays are caused because it is difficult to identify all the assets and liabilities of the deceased (for example if there are no clear records). Perhaps the deceased was a beneficiary of a trust, or had made gifts in the seven years prior to their death – these too can cause issues and turn a straightforward estate into a complicated one that requires more time to handle properly.

Disputes also lengthen the time it takes to finalise probate. If someone challenges or contests the will then all proceedings must halt until the problem is dealt with.

However, in general terms, if there are no complications then probate can be completed within six to nine months.

Probate Price Increase Has Been Scrapped – For Now

There have been suggestions of a planned raise in probate costs (and a general change of how probate will be charged full stop) recently, but with the general election being called these plans have now been scrapped. The Ministry of Justice has said that there is just not enough time to get the proposals through Parliament before the election takes place. Of course, this hints that once the election is out of the way the new charges may still be put to Parliament, but for the moment at least they have been put on hold.

Critics of the new probate fees – called a stealth death tax by man – are pleased about the governmental turnaround, but with the new reforms bringing in an extra £300 million each year, any new government may be keen to start the idea up again.

The current flat fee of £215 (£155 if using a solicitor) for all estates over £5,000, will remain in place with no changes taking place for the moment. The new probate fee structure was to have been on a sliding scale, meaning that any estates under £50,000 would have no charge at all, but for estates of over £2 million the cost would have been £20,000. Although an additional 25,000 estates would not have to pay any probate fees at all, the majority of people would end up paying a lot more than before.

What Do You Need To Do If You Inherit Property?

Although it is something that many people won’t end up experiencing, it is something that does happen on occasion – property is sometimes left to an individual in a will. It sounds like an ideal thing to happen; a new house without the hassle of actually going through the purchasing process. But what do you need to do once you have been declared the beneficiary of what looks like a very generous inheritance? And is it actually as great as it seems at first?
If you are given property, you have a choice. You can either keep it, or you can sell it. Depending on what you choose to do at this point dictates which rules you need to follow.

If you choose to sell the property, you may have to pay Capital Gains Tax. Capital Gains Tax is a tax paid on any profit made by selling something that has increased in value. This can be property, but it could be anything such as a business or lease. When it comes to an inherited property, if the value goes up after the date of death you will need to pay Capital Gains Tax on the difference between that value and the final sales price. In these cases, therefore, it is often best to sell the property sooner rather than later to minimise the amount of tax you will need to pay.
Keeping the property throws up some more questions. Will you live in it or rent it out, for example? If you choose the rental option, you will need to pay Income Tax on your rental earnings. Even if you don’t want to rent it out you may have to. If the property was the deceased’s second property, and they were already renting it out, their will may state that you need to do the same thing.
If you decide to live in the property yourself, and you have an additional property that you decide to keep, you will need to let your local tax office know, and tell them which is your primary principal residence. This needs to be done within two years of acquiring the second property. If you are unsure, think of which property you would sell first if you had to. The other property will be your primary one.
Something else to bear in mind is Inheritance Tax, which becomes payable on estates worth over £325,000.


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