DIY Probate Guide
This topic covers off the following themes:
What is probate?
Probate is the term typically used to describe the process of finalising the affairs of someone once they have died. The lesser known term for this is estate administration. Probate, or the Grant of Probate, is the legal document obtained when there is a Will for Executor(s) to rightfully deal with someone’s estate once they have died. When there is no Will, the Administrator(s) will apply for Letters of Administration. These documents are required to deal with the estate including the financial and legal processes for property, personal possessions, bank accounts, building societies, shares and distributing out to those who are due to inherit.
Probate may not be required if the deceased had assets held in joint names i.e. property, money, shares. These assets will pass automatically to the surviving owner.
Financial institutions and organisations can determine their own probate thresholds and probate may not be required in order to access the funds. It’s worth contacting the individual organisations to find out what their probate threshold is.
Your choices for probate and estate administraton
If you are the Executor (you have been named in the Will) or Administrator (the Next of Kin where there is no Will) of an estate, you will have the responsibility of carrying out the legal and financial processes for the deceased’s estate. There are typically three choices for you to consider: Do-it-yourself (DIY), instruct a solicitor, or instruct a probate and estate administration professional.
1. DIY
The DIY choice means you will have to do everything yourself. This includes locating the Will, valuing the estate (noting assets and liabilities), paying back any debts, obtaining the Grant of Probate, closing all accounts including utility and financial institution accounts, managing the property, paying Inheritance Tax (if applicable), completing the Income Tax work, distributing the funds to the beneficiaries and much more. Click here to find out more about the step-by-step probate process.
This is a time-consuming and stressful option for Executors and Administrators. The financial and legal responsibility remains with you and you are personally liable should the estate administration not be completed correctly.
2. Instruct a solicitor
When it comes to complex arrangements, a solicitor is a reliable first point of call. Instructing a solicitor to complete the administration of an estate means they will handle the complex legal and tax form filling, however, they will typically ask the Executor to sign the paperwork. The positive aspect of this approach means the Executor or Administration does not need to translate the legal jargon to accurately complete the paperwork. The negative aspect of this approach means the Executor may still be liable for any issues undertaken by the solicitor.
There are solicitors in the United Kingdom that specialise in probate and estate administration, however, it is common for multi-field solicitors who practice in various areas of law to complete this process on behalf of Executors and Administrators too.
3. Instruct a probate and estate administration professional
Typically, probate and estate administration professionals will go one step further than the solicitor. Probate and estate administration professionals typically focus solely on providing these services whereas a solicitor may specialise in many areas of law. Where the solicitor will obtain the Grant of Probate in the name of the Executor, the probate and estate administration professional will typically obtain it in their own corporate name when completing the estate administration. An example of this is our sister company, Kings Court Trust. When completing the full administration of an estate, Kings Court Trust will take out the Grant of Probate in their name, removing the responsibility and liability from Executors and Administrators.
When comparing your choices for probate and estate administration, consider just how involved you can be. Ensure you are comparing the quotations on a like for like basis and choose an option that best suits your needs as an Executor or Administrator.
Step by step guide to probate
Applying for the Grant of Probate can be done online, by post or by visiting your local Probate Registry. If completing by post, you will need to fill in the Probate Application Form (PA1P). There is a fee for the application.
Before you submit your application for probate, you will need to have estimated and reported the estate’s value. Depending on this value, you may be required to pay Inheritance Tax. You will also need the original Will, the original death certificate or an interim death certificate from the Coroner.
Once the Grant of Probate is obtained, the Executor can complete the full estate administration. Probate is a term that has become synonymous with estate administration but the reality is, it just forms one small part of the wider, complex process. Click here to see what’s involved in estate administration.
Dealing with insolvent estates
An insolvent estate is where there are more debts and liabilities than there are assets and therefore money is owed. Unfortunately, the death of a person does not mean their debts are released from the estate. Dealing with insolvent estates can be a complicated task for Executors or Administrators.
Whether the Executor is dealing with solvent or insolvent estates, the personal liability still remains. In insolvent estate cases, the rules of bankruptcy apply whereby groups of creditors must be paid in a specific order of priority. If the Executor does not follow these rules, they will be personally liable for all misdirected monies.
In England and Wales, the order in which debt should be paid to creditors is:
Secured creditors
Reasonable funeral expenses
Testamentary expenses
Preferential creditors
Unsecured creditors
Interest due on unsecured loans
Deferred debts, for example between family members
In Scotland, the order in which debt should be paid to the creditor is:
Outlays and remuneration of the interim trustee followed by the permanent trustee
Death-bed and reasonable funeral expenses
Privileged debts: Any other expenses incurred in administering the deceased’s estate. Expenses of sequestration are excluded
Preferred debts: contributions to occupational pension schemes and remuneration owed to the deceased debtor’s employees
Ordinary debts: cover all other debts
Confirmation in Scotland
Confirmation is the Scottish equivalent to the Grant of Probate. It is the legal document issued by the Sherriff court, giving Executors the rights and responsibilities to complete the estate administration process. In England and Wales, this document is called Grant of Probate .
Confirmation is required in order to take care of the affairs for a deceased persons estate, including obtaining funds from various institutions and organisations. Unlike the Grant of Probate, when applying for Confirmation, an Executor must provide inventory. That is, a list of all the deceased’s assets at the time of death. The inventory will determine whether Confirmation is required. Where the inventory includes at least one item of money or other property in Scotland, Confirmation will always be required.
In Scotland, there are two types of Confirmation that can be obtained: one for small estates and one for large estates. A small estate is defined as an estate where the deceased’s money and property does not exceed £36,000. Any estate in excess of over £36,000 in total is defined as a large estate. In calculating whether an estate is small or large, an Executor needs to subtract any debts owed by the deceased including funeral expenses, gas or electricity bills or the balance of a mortgage.
Confirmation in Scotland with a Will
In Scotland, when the deceased died with a valid Will the process remains unchanged. That is, the Executor must provide inventory to the Sherriff court and apply for Confirmation for a small estate or Confirmation for a large estate. To find out more about small and large estates in Scotland, click here.
Confirmation in Scotland without a Will
When the deceased died without a Will in Scotland, the estate becomes intestate. For intestate Scottish estates, the Next of Kin may need to obtain a Bond of Caution before applying for Confirmation of the estate. Depending on the size of the estate i.e. small or large, there may be an additional step in the process for Confirmation application. If the estate is large, you will need to apply to be appointed as the Executor, using the Dative Petition Procedure. It is advised to seek legal advice in relation to this.
What are probate fees and how are they paid?
As of 26 January 2022, the fee for obtaining a Grant of Probate is £273 for all applications. If the estate value is under £5,000, there is no fee associated. The probate fee is due at the point of application to the Probate Registry; whether that’s in person, through post or online.
There are typically three ways in which you can complete the probate and estate administration process: Do-It-Yourself (DIY), instructing a solicitor, instructing a professional estate administration provider. Click here to find out more. If you decide to instruct a solicitor or professional to complete the estate administration, there are three ways you could be charged for this work: time and expense, percentage fee of the estate or a fixed price.
1. Time and expense
Time and expense pricing comes down to the professional recording and tracking the hours worked to complete the estate administration. It will also include any expenses incurred to complete the process. When instructing a professional who offers services off a time and expense basis, it is often difficult to receive an accurate cost for the work involved. A quote may be provided from the outset with an indication of the time and expenses involved however, this may change – especially when various aspects of the process are reliant on third party providers i.e. HM Revenue & Customs or The Department for Work and Pensions. Caution is urged when instructing a professional working on time and expense because the initial quote may not equal the final bill.
2. Percentage fee of the estate
Another way in which professionals charge for estate administration services is through a percentage fee of the estate. Typically, a percentage value is agreed from the outset and that percentage of the estate will be payable. From here, the estate value is calculated by combining all assets, subtracting all liabilities and taking a percentage of the remaining value. The outcome is the percentage fee.
Percentages can vary and are typically charged at 3-5%. In some extreme cases, we have seen percentages as high as 20%. To put this into perspective, let’s say a professional charges a fee of 5% of the estate value:
(+) Asset: Property = £150,000
(+) Asset: Bank Account 1 = £35,000
(+) Asset: Shareholding 1 = £5,000
Estate value = £190,000
(-) Fee due to professional = £9,500
Funds remaining for distribution = £180,500
Third party costs and VAT can be charged additionally, which further increases the fee and can be misleading.
Caution is urged when instructing a professional who works off a percentage fee of the estate. The percentage value may seem small however when put into perspective, it can equal a significant chunk of a beneficiary’s inheritance. The fee is not always appropriate for the amount of work involved to administer the estate.
3. Fixed fee
Fixed fee pricing for the administration of an estate is a transparent approach for Executors and beneficiaries to see exactly what the fee will be at the end of the process. A fixed fee provider will diagnose the estate and provide a fee based on the work involved to complete the estate administration. Typically, this fee is provided at the outset before instruction and will include the majority of the costs, removing the risk of any significant additional charges. This is our preferred method of charging for the administration of an estate. However, caution is urged when you receive a fixed fee – it is essential to understand exactly what is included in the fixed fee and what is an additional charge.
When comparing all three pricing options, we encourage asking all providers what is included in the fee, what isn’t included in the fee and of the processes that aren’t included, what are the additional costs involved. This will give Executors the best chance to maximise the estate for the beneficiaries.
When do I need probate?
Probate isn’t always required. In fact, if this is the first death of a couple, probate is not usually required. The estate will typically pass to the surviving spouse. For example, if there is jointly-owned property and money, this will pass to the spouse or civil partner. Where this is the second death of the couple, the chances of needing probate are increased. Probate is required when there is property, where there are assets in certain institutions i.e. banks, building societies, pension funds or insurance companies, with money typically over £10,000 or more.
In essence, probate (the Grant of Probate) gives the legal authority to a person, the Executor, to withdraw the funds from the accounts and distribute to the beneficiaries. When money within institutions exceeds their probate threshold, the institutions will not release the funds without seeing the probate document. When money within the institutions does not exceed their probate threshold, the bank will generally release the funds without seeing any documentation, after a small estates threshold form has been completed.
There is no set probate threshold within the UK set by Government - it is entirely up to each individual institution to set their own limit and it can vary greatly from one institution to another.
Probate in Northern Ireland
In Northern Ireland, the process of obtaining the Grant of Probate is similar to the process for England and Wales. In Scotland, this process is different and the document is called Confirmation. In Northern Ireland, one must apply for the Grant of Probate to the Northern Ireland Courts Service. Where the deceased died with a Will in Northern Ireland, the Executor can apply for probate at the following location:
Probate Office
Royal Courts of Justice
Chichester Street
Belfast
BT1 3JF
Where the deceased lived in Counties Fermanagh, Londonderry or Tyrone, the Grant of Probate application can be submitted in the Belfast location above or:
District Probate Registry
The Courthouse
Bishop Street
Londonderry
BT48 6PY
Where the deceased died without a Will and the estate is intestate, a DIY approach can only be used if the Next of Kin lives in the UK. If the Next of Kin lives outside of the UK, a solicitor must be instructed.
Probate on the Isle of Man
On the Isle of Man, the process of obtaining the Grant of Probate is similar to England and Wales. The Executors will need to apply for Probate at the Isle of Man Court. If the Isle of Man Court is satisfied with the application for the Grant, the Probate Registry will issue a sealed Deed which gives the Executors the authority to deal with the affairs of the estate.
Where the deceased died without a Will on the Isle of Man, the Next of Kin will need to apply for a Grant of Administration. The Next of Kin then becomes the Administrator who has the same responsibilities of an Executor. The estate must then be administered following the rules of intestacy.