What is Probate and How Does it Work?

INTRODUCTION

Navigating the Probate process is one of the more complex and frequently misinterpreted aspects of estate planning.

This article aims to dispel common myths about Probate and explain what it is and how it functions. Handling a loved one's Estate requires an understanding of Probate, regardless of whether you are a Beneficiary or an Executor.

DEFINITION AND PURPOSE OF PROBATE

Probate is the legal process of dealing with a person's property, money and other assets (known as a person's "Estate"), when they pass away.

It is regarded as an essential step in ensuring the Estate is appropriately managed, and the deceased individual's assets are distributed in accordance with their wishes as laid out in their Will.

COMMON MYTHS ABOUT PROBATE

There is often a widely-held assumption that there is no need for Probate if you have a Will in place. This couldn't be further from the truth. Probate is less about having a Will in place and more about what assets you have in your possession.

Sometimes, the nomenclature of "Probate" is used for ease of reference. But it's worth understanding that Probate isn't just a single event. You should view it as an entire process in its own right, the culmination of which is a required document of vital importance, allowing you to manage a deceased person's Estate.

WHAT IS A GRANT OF PROBATE?

A "Grant of Probate" is a certificate issued by the Government that allows the Executor of the Will to carry out any requests specified by the deceased individual in their Will to manage their Estate and distribute the deceased individual's assets.

If you happen to be the Executor of a Will (this may be more than one person), you will be responsible for dealing with the process of Probate.

ASSET THRESHOLDS FOR PROBATE

The Government stipulates that to apply for Probate (or a Letter of Administration when there is no Will), the deceased person should hold a threshold of £5,000 in assets.

However, you should be aware that other institutions set their own threshold. For example, a bank might set the threshold at £50,000. In other words, if the deceased person has a balance of £10,000 in their account, the bank may not require a Grant of Probate (or Letter of Administration).

On the other hand, an institution like the Land Registry requires a grant of Probate for anything of value, even if the value is one penny.

PROBATE PROCESS AND TIMELINES: GUIDELINES FOR EXECUTORS

Here's a Quick Guide on Probate:

1. Assets + Will? Probate is Required. Expect Things to Proceed Smoothly

• If you have assets and a Will in place (testate), the Executor is responsible for applying for a Grant of Probate.

• Typically, the process takes 4-8 weeks for the Grant of Probate to be issued. In this scenario, you can expect the process to be reasonably straightforward. However, Executors should still expect some minor hurdles.

2. No Assets + Will? No Probate is Required. Expect Some Minor Roadblocks

• If you don't have that many assets, but still have a Will, Probate might not be required.

• However, you should still expect some minor roadblocks in the form of necessary notifications. For example, you'll need to inform financial institutions, government bodies and other relevant bodies about the death and the existence of the Will. 

3. Assets + No Will? = Probate is Required. Expect Some Challenges

• If you have assets but don't have a Will in place (intestate), the next of kin or the appointed Administrator must apply for a Letter of Administration.

• You may face additional hassle, particularly when determining the distribution of assets according to the rules of intestacy.

• These rules will dictate who inherits what assets and require additional documentation, such as proof of relationship. In addition, identifying the appropriate individual to manage the Estate might be challenging, especially in cases of blended or estranged families.

4. No Assets + No Will? No Probate Required. Expect Some Minor Roadblocks

• If you have no assets and no Will (intestate), Probate will not be required. However, you should still expect some minor roadblocks, such as completing the necessary notifications to the relevant bodies outlined earlier, but this time notifying about the lack of assets and the absence of a Will.

WHO APPLIES FOR PROBATE?

The individual(s) dealing with the Estate of the deceased individual is called the "Executor" or "Administrator." This is the person named in the Will as responsible for dealing with the Estate, applying for Probate and distributing assets.

The Executor must apply for a special authority before dealing with the Estate and distributing any assets.

STAGES OF THE PROBATE PROCESS

Although every Probate case is unique, the process generally follows these steps:  

a. Grant of Probate Pre-Application Phase:

• Registration of Death: Once the deceased person's death has been registered and before you do anything else, you'll need to obtain a copy of the deceased person's death certificate to manage their assets.

• Verification of Will and Executor: You'll then need to ensure that the deceased individual already has a Will in place and that the named Executor(s) is/are the person(s) carrying out the Probate process hereafter.

• Role of the Executor: You must be aware that only the appointed Executor can be legally involved with the probate process.

• Asset Valuation and Communication: You can expect to communicate a lot with several entities associated with the deceased person - for example, financial institutions, government institutions, businesses, etc. So you must clearly understand the deceased individual's Estate and assets to ensure seamless communication and speed up the process. It's also essential to understand the valuation of assets, as you'll need to submit an inheritance tax return (IHT). See (b) below.

• Understanding the Complexity of the Estate: Before applying for a grant of Probate, it's helpful to bear in mind that a Grant of Probate depends on the Estate's complexity and the individual requirements of each organisation or entity you are communicating with.

b. Grant of Probate Application Phase:

• Application Submission: Once you've ticked off the steps above, you're ready to apply for a Grant of Probate.

• Expect Potential Delays: Be aware that sometimes Probate gets delayed due to an issue related to the Will, an Executor or personal representative dies before taking out the Grant or after the Grant has been obtained, an inheritance tax issue, litigation, tracking down heirs to the Estate, or a delay caused by a third party. You must keep the potential of any delay to a minimum. For more information, please refer to our FAQ: "Why has my probate been delayed?"

• Submit Inheritance Tax Return: You'll also need to submit an inheritance tax return (IHT), which is also required at this stage, so hopefully, you'll have familiarised yourself with the valuation of assets as indicated above.

c. Receipt of Grant of Probate:

• Distributing the Grant: Once you receive the Grant of Probate, send a copy to any relevant party so that you're able to gain full access to relevant assets.

• Be Aware of Intestacy Rules: If there isn't a Will in place, the rules of intestacy apply. The rules of intestacy then dictate how the Estate will be distributed, not the wishes expressed in the Will.

• Settlement of Outstanding Debts: If there are any outstanding debts, you may not gain complete control of any relevant assets until the debts are paid off first.

• Estate Administration: Once you have complete control of all relevant assets, you'll be able to administer and manage them in line with what was specified in the Will.

Need to know more?

While many aspects of probate can be managed independently, it an sometimes be a complicated process depending on the nature of the Estate.

This is when specialised guidance from a company like Squiggle can simplify the process without the need for expensive legal advice. 

If you're not sure about next steps in the Probate process, book a callback and we'd be happy to arrange a no-cost, no-obligation discussion with you to lay out the different options available to you.

Alternatively, call us on 01233 659 796.

Or contact  us here.