When disposing of an estate, you will sometimes need to obtain a document called a Grant of Probate, or, depending on the situation Letters of Administration. If needed, this document is an official statement to asset and debt holders, informing them that you are the executor in charge of distributing the assets and paying off the debts. It allows them to communicate with you, safe in the knowledge that they are resolving the estate with the designated representative.
You will need to apply for, and obtain a Grant if the value of the deceased’s estate exceeds £5,000.00 or if there is property, such as a house, to dispose of. Banks, building societies and other asset holders can, at their discretion, ask to see a Grant regardless of the value of the asset they hold.
That being said, you are unlikely to need a grant if the estate is passing to a surviving spouse, or if the assets are held in joint names and are passing to the joint owner.
Once you have established whether or not you need to obtain a Grant, you will need to follow the below steps to successfully obtain the Grant.
Your first step will be to work out the value of the estate. In the simplest terms, you will do this by adding together the estate's assets and subtracting the estate's debts.
The asset holders will inform you of the value of each of the assets at the time of death. You need to enter these figures into the Inheritance Tax form, and this will calculate the value of the estate.
You must do this even if the Estate is below the Inheritance Tax Threshold. For more about Inheritance Tax see Law Cat: The who, what and Why ofInheritance Tax.
For a detailed step-by-step walkthrough of how to value an estate for tax purposes, you should read LawCat: 5 steps to value an estate
To know which form you need to fill out you need to understand the differences between the forms. Form IHT205 is the form that you need to fill out if there is no inheritance tax to be paid, either because the estate is too low in value or because the estate is an exempted estate.
The IHT400 is the form that is filled out when there is inheritance tax to be paid. However, there will be some situations where there is no inheritance tax to be paid, and the IHT400 will still be the form you need to fill out.
If you think that there is no inheritance tax due on the estate then you should start filling out IHT205, you may soon find however that you will need to change to form IHT400.
Complete a probatePA1 application form.
To complete this form, you will need to know the basic details of the person who has died, e.g.: their first name & surname, date of birth, date of death, and marital status. You will also need to know some more specific information e.g.: did the deceased own any assets under another name, was the deceased adopted.
You will have to fill in questions about the Will if one exists. As well as any information on any foreign held assets e.g.: did the deceased own a holiday home abroad.
Section five of this form discusses the relatives of the deceased. Section six is a section where you provide your details.
Section seven is where you provide details of any inheritance tax owed by the estate. You can get these figures from the inheritance tax forms completed at Step Two.
Section eight applies to those who are applying on behalf of someone who has been nominated as an executor but has lost capacity. You will need to provide details of the person you are applying on behalf of.
Section nine is a helpful checklist that allows you to make sure that you have completed all of the forms and enclosed all of the necessary documents. Following this checklist means that your application is far more likely to be accepted.
Swear an oath. You can obtain an oath from the probate registry or draft one yourself, although if you choose this, then you need to be careful as an oath will only be valid in certain formats.
Swearing the oath will not take long, you will need to swear it in front of a solicitor or a local probate office, and this will cost approximately £5.00.
Send your application to the probate registry.
You should include:
- The probate application form PA1,
- The Inheritance Tax form, an official copy of the death certificate,
- The Oath,
- The original will and three copies – and any codicils,
- The application fee of £215 – a cheque made payable to HM Courts and Tribunals Service (there’s no fee if the estate is under £5,000.00).
You can pay for extra copies of the grant (50p each) – this means you can send them to different organisations at the same time.
Once you have received the Grant of Probate, you can continue with gathering in the assets and paying the deceased’s debts.
You should now have a basic understanding of hen you might need a Grant of Probate as well as what steps to follow to obtain a Grant.