UHY Ross Brooke Estate Planning LLP

The probate process explained by our Abingdon specialists

Who are the Personal Representatives?

This is the first fact to establish before anyone starts dealing with the probate process. Is there a valid will which names executors?

Is there confidence it is the most up to date will? Are one or more of the executors willing and able to act? Should just one executor take the appointment or should more than one act jointly?

Where there is no will/uncertainty the will found is the most recent one, should a will search and statutory advert be used to protect the ‘would be’ personal representatives?

Notification and asset freezing

Asset holders and institutions like pension payers and government departments will need notifying of the death. Subject to various de minimis exemptions, this typically results in assets being frozen until a grant has been obtained, meaning bank accounts cannot be operated or closed, and assets like properties and shares cannot be sold or transferred.

Inheritance tax and application for grant

There will be an information gathering exercise to create a snapshot of the assets and liabilities of the deceased as at the date of death. These will be collated along with details of any lifetime gifts, existing trust arrangements, and available exemptions or reliefs to put together an inheritance tax return and an application to the Court for a grant.

Where inheritance tax is payable it must be paid before the grant can be applied for, although installment options and a direct payment scheme to use frozen bank accounts of the deceased can be used to navigate what can be a difficult cashflow situation for the personal representatives.

HMRC operate a ‘process now, challenge later’ approach to tax returns. So returns are taken at face value on submission and the self assessed tax being paid is sufficient to enable the grant to be applied for. But, there is the potential for a return to be subsequently challenged during the administration period, commonly with regard to asset (property) values, but also in regards to availability of reliefs or exemptions and other such matters.

The tax position should be considered provisional until a clearance certificate has been applied for, typically at the end of the administration period.

Asset collection

Once the grant has been obtained, it can be used to access the previously frozen assets, enabling the personal representatives to gather the assets of the deceased under their control and to settle any outstanding liabilities.

The minor legacies left by the deceased can be paid out at this stage too.

Decision making

At this stage, the personal representatives can take stock of the situation and consider the options open to them before finalising the estate. Do any beneficiaries wish to make a variation to the terms of the will? Is any trust created under the will wanted or should it be wrapped up straight away? Do particular
beneficiaries want particular assets or should all assets be shared out equally? Are assets to be retained and transferred to beneficiaries, or should they be sold and the cash proceeds paid out instead? What are the differing tax consequences of the different routes open to the personal representatives, including the tax positions of the beneficiaries?

Finalisation

Once all the above has been dealt with, the personal representatives will be ready to finalise the administration. A clearance certificate from HMRC might be wanted, some record of the estate transactions will be prepared (formal estate accounts or otherwise), asset sales or transfers will have been dealt with and final distributions to beneficiaries will be made. Where necessary any income or capital gains tax reporting relevant to the administration period will be dealt with.

Likely timescales

The timescales are likely to vary significantly according to the complexity and scale of the estate and the information being provided to us. In the very simplest ‘grant only’ or ‘tax and grant – simple’ cases where values can be provided up-front and there are no complexities to work through, an application might be able to be made within 4 to 8 weeks of us being instructed, the speed of issue of that grant then being
dependent on HM Courts and Tribunal Service performance.

More commonly it will take some time for valuations to be gathered / details of transferable allowances etc to be established and targeting 4-6 months for the making of an application will be more realistic, especially given the mandatory 20 working day hiatus between sending an inheritance tax return (where tax is payable) and making the application.

If there are difficulties getting access to relevant information, especially if there are overseas / trust / complex aspects, this timeframe will be longer and could be 6 -12 months.

In cases where work like company valuations or assessments of the availability of inheritance tax reliefs are necessary in order to establish the position of the estate, the timeframe will be similarly extended.

Where estate administration services are being provided, it is likely to add a minimum of 6 months beyond the date of securing the grant of probate so as to satisfy the statutory period for claims against the estate. Between 6 and 12 months is a realistic timeframe for administering most estates, although complex cases or those where unexpected issues arise could take notably longer.