Probate Frequently Asked Questions

What is Probate?

"Probate" is the term used for the legal procedure for dealing with a person’s estate after death. Generally speaking if the estate is valued at less than £5,000 it is not necessary to apply for Probate. However, sometimes where there is only one asset in the estate, such as a bank account and the balance in this account is less the £15,000, the bank may release the funds without applying for Probate.

What does it involve?

To apply for Probate, the Personal Representatives (PRs) of the deceased have to accumulate all relevant details about the deceased and his/her estate, eg. establishing whether there is a Will, identifying the Executors or Administrators and beneficiaries, calculating the value of the estate, including liabilities and assets. Once all details have been collected the relevant documentation has to be lodged with the Probate Registry. The Probate Registry will then issue a Grant if they are happy with all the information supplied – this gives the PRs authority to deal with the assets, such as sell a property or encash any investments.

What is Inheritance Tax?

Generally speaking, Inheritance Tax is a personal tax levied on a deceased’s estate, where the estate is valued at more than £285,000 (the NIL Rate Band). The value of the estate over this amount is charged at 40%. For example if an estate is valued at £385,000, the first £285,000 would be inheritance tax free but the balance of £100,000 would be taxed at 40% - resulting in an inheritance tax bill of £40,000.

Can it be avoided?

There are many ways in which your Inheritance Tax liability can be reduced or wiped out, e.g. by life time gifts, having an Inheritance Tax friendly Will prepared for you and your spouse. It is however, very important that you seek specialist legal advice on inheritance tax planning.

Joint Tenancy / Tenants in Common – what do these terms mean?

Joint Tenancy is where two people own a property jointly and on the death of one of them, the property will automatically pass to the other, ignoring any provisions in their Will or the rules of Intestacy, if they have left no Will, for example a joint bank account.

Tenancy in Common is where two people own a property jointly but on the death of one of them, the deceased’s share be it 50% or any other share, will NOT automatically pass to the other but will pass as per the instructions in the deceased’s Will or the rules of Intestacy.

Capital Gains Tax considerations?

There can be Capital Gains Tax considerations when someone dies but usually the gain between the date of purchase of a property and the death of purchaser will be wiped out and no capital gains tax will be payable.

In lifetime, Capital gains tax is a consideration for someone selling a property which is NOT their main home, such as an investment property.

   Amanda Rees 

   01792 529638

   a.rees@johncollins.co.uk

Related Topics

Wills, , Court of Protection Receiver, Trusts, Choosing Executors, Storing your will, Inheritance Tax, Why Should I Make A Will, Probate, Contentious Probate