When a person dies somebody has to deal with their estate (the money property and possessions left) by collecting in all the money, paying any debts and distributing what is left to those people entitled to it. In order to get authority to do this they usually need to obtain a legal document called a Grant of Representation from the Probate Registry.
There are three types of Grant of Representation:
- Probate
Issued to one or more executors named in the deceased’s Will. Note: Executors are people named in the Will to deal with the estate. - Letters of Administration (With Will) Issued when there is a Will but there is no executor named or when the executors are unable or unwilling to apply for the grant.
- Letters of Administration Issued when the deceased has not made a Will, or any Will made is not valid.
Why is a grant necessary?
Organisations/third parties holding money in the deceased’s name need to know to whom that money should be paid and the grant is proof that the person named in it may collect the money. When a person dies the estate left passes to the people named in his or her Will. If there is no valid Will it passes to his or her nearest relatives in accordance with the Intestacy Rules. The distribution of the estate is the responsibility of the person named in the grant.
Is a grant always needed?
Sometimes a grant is not required and if there is any uncertainty as to what is required then please do not hesitate to contact any member of our Private Client Department.
Am I Entitled to the Grant?
There are rules which govern who may be given a grant. The following points are a brief guide for you:
- If there is a Will with named executors they are the first people entitled to a grant.
- If there are no executors or the executors are unable or unwilling to apply, the next person entitled to a grant is any person named in the Will to whom the estate or remainder of it, after gifts have been paid, has been given.
- If the deceased has not made a Will, application for a grant should normally be made by his or her nearest relatives, again we would suggest that any member of our Private Client Department be contacted if you are uncertain as to whether or not you may apply for the Grant.
How is the Grant Obtained
It is necessary to ascertain the value of the estate, this will include the balance of any accounts held as at date of death, value of insurance polices and any other assets and a valuation of property (if the deceased holds any at the date of death).
Once we ascertain what the value of the estate is we can then establish whether or not inheritance tax will be payable. Please note that the first installment of inheritance tax must be paid prior to the Grant being issued.
We can then on the personal representatives behalf prepare the necessary forms to enable the Grant to be issued, including an Oath which is sworn (or affirmed) to be true by the personal representatives of the estate. The essential purpose of the Oath is to establish the applicant’s title to the Grant and confirms the deceased’s details and that the Will being admitted is the last Will and Testament of the deceased. The Oath also confirms the value of the estate. We will also complete on your behalf H.M. Revenue & Customs inheritance tax accounts either on Forms IHT205 (short form account where no inheritance tax is payable and the estate is within certain limits) or Form IHT200 a detailed account where inheritance tax is payable or there are other factors which, mean the estate is not an excepted estate.
Will there be any tax to pay as a result of the death?
Please see our fact sheet tax planning but, generally inheritance tax may be payable where your estate exceeds the level of the nil rate band and does not pass to exempt beneficiaries.
What Happens Next
Once the Grant has been issued we can arrange for accounts to be closed, assets transferred and/or sold as appropriate and any funds paid out on behalf of the estate will be sent to us and held on this firm’s client account on behalf of the estate. Liabilities are then paid with the funeral account taking priority and then any other debts. In some cases it is advisable to enter a notice in the local paper in case any debts are not known.
If there is property to be dealt with this can either be sold or transferred as appropriate and if there is any outstanding mortgage this will also be discharged from either the proceeds of sale or an endowment policy.
We will write to all third parties to ascertain whether any monies are repayable and we will complete the necessary tax returns to ensure that all income tax matters are dealt with up to the date of death.
We would then prepare Final Estate accounts showing all monies received on behalf of the estate and all liabilities paid and indeed how the remaining monies should be distributed i.e. in accordance with the terms of the Will or the intestacy provisions. The Final Estate accounts will then be approved by the personal representatives and the distributions made in accordance with the accounts.
How Long Will it Take?
Most estates are finalised within a year; simple estates may be wound up within a few months but, more complex estates can take a number of years depending on the assets and issues involved.
What to Do Now
If you do not have a Will and have concerns in respect of any of the matters detailed above then please do not hesitate to contact any member of Barrett and Thomson’s Private Client Department namely: Alan Collard (Head of the Private Client Department), James Gladwell or Mahreen Paswal who will be able to assist you further.
