Probate and the importance of forward planning

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16 November 2021

Probate - It’s a word most people have heard of but I suspect few have deep understanding of, especially when it comes to putting theory into practice. So we thought it would be helpful to offer some insights gathered from dealing with probate matters, and how we can make life easier for those left to administer someone’s estate.

Probate is confirmation of who is entitled to administer the estate of someone who has died.

Following the death, it is the probate office that gives a grant of probate to those who are entitled, under the will of the deceased, to be executors. If there is no will, the probate office gives the grant under the rules of intestacy.

Planning point one:

Ensure that you have a will and that it is kept up to date. The isn’t just about where your belongings end up. It clarifies who you want to deal with your estate.

The grant of probate allows the named person to instruct those who hold the assets of the estate. This might be banks, investment brokers or, if there is property to be transferred, solicitors. Of course, if many different organisations hold the assets following the death, this can be extremely time-consuming.

Planning point two:

Where possible, hold your assets jointly with those whom you want to benefit when you die. These assets will still be subject to Inheritance Tax (IHT) but they will pass automatically to the surviving joint holder. No grant of probate is needed. And the banks or brokers will transfer the assets automatically, on the production of a death certificate.

Planning point three:

One common challenge for a person in dealing with an estate is to ensure that all the assets are properly identified. Make a list of all relevant bank accounts, investments, properties, life policies and so on. It is sensible to give this to the executor named in the will or, at least, letting them know where the pertinent details are kept.

There is one more common issue, often a conundrum, to consider. Agreeing the IHT liability on an estate and making the IHT returns to HMRC is separate from the process of applying for probate. However, they are linked in an often unforeseen way. Why? Because the IHT must be settled before probate is granted. And here is the problem. How can the person dealing with the estate pay the IHT directly if they don’t have the authority to instruct those holding the assets to release them and enable the tax to be paid?

Planning point four:

This brings us to planning suggestion number four. Think about this in advance. Banks will make an exception and pay HMRC directly if requested, and if sufficient funds are held. Likewise, a life policy written in trust will pay out to the beneficiary without the need for probate. These proceeds can then pay the IHT.

Another option is to make sure that you and your partner, or relatives, hold enough assets jointly that they will pass on automatically. These can then be used to pay the tax without the grant of probate.

Even with the benefit of this advice, probate is a complex and challenging matter. At Haines Watts, we are among the few accountancy practices accredited by the Institute of Chartered Accountants in England and Wales (ICAEW) to carry out probate work. We have the necessary experience and expertise in these issues to help you plan ahead. Before they become a problem.