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What does obtaining grant of probate involve?

By RJP LLP on 21 June 2022

The arrival of Covid-19 caused all sorts of challenges for people who were trying to write wills, manage inheritance tax issues and organise executorships. One of the main processes affected was obtaining grant of probate, which is the legal procedure undertaken when someone dies and their assets need to be transferred to their beneficiaries.

Obtaining grant of probate can be complicated and time consuming, involving calculating and settling inheritance tax liabilities first, which is why many people prefer to ask a professional to do it on their behalf. This article explains what probate is and how the process works, so that if you are in the unfortunate situation of needing to obtain it, you will understand how to proceed.

How does the probate process work?
When someone dies the executors or administrators of their estate are required to report their assets to HMRC using form IHT400, or form IHT205 for smaller estates. They also need to pay any inheritance tax (IHT) due, charged at 40% on chargeable estates. Chargeable amounts are arrived at after the deduction of certain available reliefs such as the lifetime exemption of £325,000, a deceased spouse’s unused lifetime exemption, and the residence nil rate band for both where applicable.

Once the IHT has been calculated and paid, HMRC issues a receipt, which then entitles the executors to apply for grant of probate from the Probate Registry. The exact process involved will vary slightly depending on the circumstances.

Grant of probate is obtained where the deceased left a will, and grant of letters of administration is the ‘variant’ of probate obtained where no will is in existence. In either case, the grant of probate or letters of administration are legal documents which enable the executors or administrators of the estate to deal with the deceased’s assets. This will be either in accordance with the deceased’s wishes, where a will is left, or in accordance with the rules of intestacy, where there is no will.

These legal grants are needed to perform basic activities, for example, closing bank accounts and selling or transferring property or investments. Until probate has been granted, the assets within an estate cannot legally be transferred to the beneficiaries, except in the case of jointly held assets, which revert to the survivor automatically.

If an estate has an IHT liability, this needs to be paid in full by the end of the sixth month after the month of death, or interest will apply. The IHT liability must be paid before probate or letters of administration will be granted, and this can have financial implications for the executors.

Not all IHT payments have to be paid within six months however; if property is held within the estate, the IHT applicable to that property can be paid over the shorter period of 10 years, or until the property is sold. Note however that HMRC will charge interest on the instalment payments.

An IHT reference is needed in order to pay the IHT due and this needs to be applied for online to avoid delays; however it usually takes only a week for a reference to be issued by HMRC.
If an estate needs to be reported to HMRC, regardless of whether IHT is payable, an IHT return must be filed by the twelfth month after the month of death and failure to meet this deadline means a £100 penalty is payable.

During Covid-19 restrictions, both HMRC and the Probate Service were experiencing a backlog, resulting in many delays, these now seem to be clearing and service is returning to previous levels. Nevertheless, obtaining probate can be complicated and require a lot of administration, which some specially qualified tax advisers are authorised to deal with, in addition to performing IHT calculations and estate tax planning.

RJP LLP is licensed by the Institute of Chartered Accountants in England and Wales to carry out the reserved legal activity of non-contentious probate in England and Wales.

If you would like to discuss how we can help you with probate services or IHT matters, please email us via partners@rjp.co.uk.

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The arrival of Covid-19 caused all sorts of challenges for people who were trying to write wills, manage inheritance tax issues and organise executorships. One of the main processes affected was obtaining grant of probate, which is the legal procedure undertaken when someone dies and their assets need to be transferred to their beneficiaries.

Obtaining grant of probate can be complicated and time consuming, involving calculating and settling inheritance tax liabilities first, which is why many people prefer to ask a professional to do it on their behalf. This article explains what probate is and how the process works, so that if you are in the unfortunate situation of needing to obtain it, you will understand how to proceed.

How does the probate process work?
When someone dies the executors or administrators of their estate are required to report their assets to HMRC using form IHT400, or form IHT205 for smaller estates. They also need to pay any inheritance tax (IHT) due, charged at 40% on chargeable estates. Chargeable amounts are arrived at after the deduction of certain available reliefs such as the lifetime exemption of £325,000, a deceased spouse’s unused lifetime exemption, and the residence nil rate band for both where applicable.

Once the IHT has been calculated and paid, HMRC issues a receipt, which then entitles the executors to apply for grant of probate from the Probate Registry. The exact process involved will vary slightly depending on the circumstances.

Grant of probate is obtained where the deceased left a will, and grant of letters of administration is the ‘variant’ of probate obtained where no will is in existence. In either case, the grant of probate or letters of administration are legal documents which enable the executors or administrators of the estate to deal with the deceased’s assets. This will be either in accordance with the deceased’s wishes, where a will is left, or in accordance with the rules of intestacy, where there is no will.

These legal grants are needed to perform basic activities, for example, closing bank accounts and selling or transferring property or investments. Until probate has been granted, the assets within an estate cannot legally be transferred to the beneficiaries, except in the case of jointly held assets, which revert to the survivor automatically.

If an estate has an IHT liability, this needs to be paid in full by the end of the sixth month after the month of death, or interest will apply. The IHT liability must be paid before probate or letters of administration will be granted, and this can have financial implications for the executors.

Not all IHT payments have to be paid within six months however; if property is held within the estate, the IHT applicable to that property can be paid over the shorter period of 10 years, or until the property is sold. Note however that HMRC will charge interest on the instalment payments.

An IHT reference is needed in order to pay the IHT due and this needs to be applied for online to avoid delays; however it usually takes only a week for a reference to be issued by HMRC.
If an estate needs to be reported to HMRC, regardless of whether IHT is payable, an IHT return must be filed by the twelfth month after the month of death and failure to meet this deadline means a £100 penalty is payable.

During Covid-19 restrictions, both HMRC and the Probate Service were experiencing a backlog, resulting in many delays, these now seem to be clearing and service is returning to previous levels. Nevertheless, obtaining probate can be complicated and require a lot of administration, which some specially qualified tax advisers are authorised to deal with, in addition to performing IHT calculations and estate tax planning.

RJP LLP is licensed by the Institute of Chartered Accountants in England and Wales to carry out the reserved legal activity of non-contentious probate in England and Wales.

If you would like to discuss how we can help you with probate services or IHT matters, please email us via partners@rjp.co.uk.