Probate and estate administration

You have three options:-

1. Take up the appointment. You should be aware that once you have taken up the appointment you cannot retire from it until the Administration is complete. There are exceptional circumstances such as severe ill health which would allow you to retire before then. Additionally if the Will or intestacy creates on-going trusts, you will become a trustee of that trust (unless the Will directs otherwise) and so your obligations will continue beyond the administration period. You can retire as a trustee, provided there are enough trustees who are continuing, or if not, if you are replaced by a suitable person.
2. Do not take up the appointment – “renounce probate”. You may not then interfere in the Administration and you will have no say in any decisions taken.
3. Retain the option to join in at a later date – have “power reserved”. In practice joining in later causes additional work and so normally it is only done when absolutely necessary for example on the death of one of the other PRs.

No. The debts of the deceased are met from the deceased’s assets.

If however you distribute assets before all debts have been paid, or ascertained, you may find yourself liable for debts which you later discover. This will be so if you have not retained enough money to meet those debts. You can protect yourself from unknown creditors by placing notices in a prescribed form and in prescribed publications. This is sensible when you are not familiar with the deceased’s financial affairs.

If the assets of the estate are insufficient to meet the debts, the estate is insolvent. A special process needs to be followed in winding up an insolvent estate, but to the extent that there are insufficient assets to meet all the debts in full any remaining unpaid debts are in effect written off. It is vital that PRs approach the administration in a cautious manner in the case of an insolvent estate and take professional advice as appropriate.

What happens to foreign assets, and who is ultimately responsible for them will depend on a number of factors, including the relevant foreign law. This is a specialist area, but one in which we have the necessary expertise to advise.

Even where there are no assets in the UK, but the PRs are based in the UK we can act for PRs in a co-ordinating capacity by acting as a central reference point for the PRs, co-ordinating advice from advisers in foreign jurisdictions, and ensuring that the PRs’ UK legal and fiscal obligations are satisfied.

If the will is specific about what you are to receive, for example a fixed sum of money or a particular possession, then provided the deceased left enough money, or the possession in question, you can expect to receive that sum or possession.

If the deceased no longer owns the possession then you are not entitled to a substitute, or the cash equivalent. You will receive nothing.

If there are insufficient assets in the estate, then your cash gift will be reduced proportionately with the other cash gifts.

If you are to receive a prescribed share of the estate, for example “one half of”, then you are what is called a Residuary Beneficiary. Your share will be of “Residue” that is to say what is left after all tax, debts, specific gifts and administration costs have been taken. How much you will receive will depend of course on the value of the assets, and the extent of the liabilities, gifts, tax, and costs.

The entitlement of beneficiaries who take a share is subject to the interests of those left a specified sum of money or item. It is possible therefore that the former will receive nothing while the latter receive their entitlement in full.

At the stage of obtaining the grant it should be possible to say with a fair degree of accuracy what your entitlement might be, but it will not be possible to say exactly how much you will get until the administration is complete.

As a Residuary Beneficiary, you should expect to see the estate accounts which will give you a full picture of the administration of the estate and show how your entitlement has been calculated.

Usually gifts of possessions and of fixed amounts of cash can be made as soon as the PRs have obtained a Grant and have control of enough cash. In a straightforward case this should be between 6 and 9 months after the death.

If you are entitled to a share of the estate then you could normally expect an interim distribution at any time after the liabilities and fixed legacies of the estate have been paid. A final distribution will only be made on completion of the Administration which at best will be shortly within a year of the death.

There are no hard and fast rules, and in complex estates it may take much longer.

If you are entitled to a fixed amount of cash, you are entitled to interest on that amount from the first anniversary of the death.

It is usual for all taxes to have been paid by the PRs. It is possible you will have an income tax liability on some of what you receive. If that is the case the PRs should provide you with the information necessary for you to deal with this.

The exact tax treatment of distributions and of gifts made by the deceased before he or she died is a complex area and will differ in each estate. We will advise you as necessary in each case.

If you are unable to obtain satisfactory explanations for the way the estate is being administered then you can apply to the court if necessary to have the PRs removed and others appointed in their place. You can also apply to the court for an order that the PRs prepare full accounts of the estate.

Such a court application should be a last resort only. You should always try to resolve your concerns between you; indeed the court will expect you to do so and you could be liable for costs if you do not talk first to the PRs and their solicitors.

It is possible that a disappointed friend or member of the family may seek to challenge the Will. This might be because they allege the Will itself is invalid, or wrongly worded so that it does not correctly reflect the wishes of the deceased, or that the deceased should have made provision for someone left out of the will.

If you think there may be a dispute about the Will or you believe there are grounds for challenging the Will, please let us know immediately. We will be able to advise you and help you take any immediate action necessary to protect your position, and to act on your behalf in defending or bringing a claim.

The trustees of the Trust will be responsible for ensuring that the Trust assets are properly dealt with following the death of a beneficiary of the Trust. However it is important for the PRs to liaise with the trustees, for a number of reasons: there may be undistributed benefit still due to the deceased beneficiary; the will may have a bearing on the how the Trust fund is to be distributed; and the value of the Trust may have to be taken into account in calculating the IHT due on the death

Estate Accounts act as a record of the Administration of an estate. The exact form of the Accounts will vary depending on the size and complexity of the estate. Usually they start with a snapshot of the deceased’s assets and liabilities with values as at the date of death.

The main body of the Accounts show movements of cash and assets during the Administration period. A final section shows the entitlement of the Residuary Beneficiaries and shows any distributions made during the Administration.

Apart from standing as an accurate record of the Administration of the estate, they demonstrate to both PRs and Beneficiaries that the estate has been properly administered.

We aim to obtain a Grant within 6 to 9 months of the death, and to begin making distributions within a year. It is unusual to complete the process in much less than a year. Large and complicated estates can take longer. We will discuss likely timescales with you when we know the assets and liabilities comprised in the estate.

Exactly how long it will take will depend on how quickly information is provided to us and what sort of assets are included in the estate.

We generally find legal fees for administering an estate work out between 1% and 4% of the gross value. A more accurate figure can be given when the full extent of the assets and liabilities are known.

Find out more about our costs below.

Typically stage 1 will involve:

• Complying with Law Society and government regulations including client identification procedures
• Receiving instructions and considering the validity of the Will (and codicil(s)) or application of the intestacy rules
• Advising you on entitlements
• Obtaining from you the information we need in connection with the assets and liabilities of the estate and registering the death with the Bereavement Register
• Ascertaining and confirming details and valuations of the assets and liabilities
• Ascertaining and confirming details of lifetime gifts
• Preparing statutory notices for creditors, if required. The cost of the notices will be an administration expense
• Preparing the Revenue account (IHT400 or IHT205) and supplementary documents and considering and calculating IHT (if applicable)
• Arranging for the payment of tax and the submission of the Revenue account
• Preparing Statement of Truth for the Executors (or personal representatives) and arranging for the signing of the papers and submission of the application for probate
• Obtaining the Grant of Probate

Our list of services are outlined in the ‘key stages’ in the transaction.

The fees set out above are likely to be impacted by any of the following:

• Where Cripps Trust Corporation Limited are appointed Executors and we undertake for example the registration of death, funeral arrangements and house clearance;
• Availability of information and level of investigation required;
• Co-operation of executors, beneficiaries and information holders;
• Any disputes between parties or defective testamentary documents;
• Nature and extent of assets and availability of IHT exemptions and reliefs including the Nil Rate Band (currently £325,000) /any Transferrable Nil Rate Band from a pre-deceased spouse or civil partner /Residence Nil Rate Band and any Transferrable Residence Nil Rate Band;
• Multi Jurisdictional or trust elements;
• Earlier lifetime giving and the impact of this on the available Nil Rate Band;
• Agricultural or business property

Expenses and additional charges that you are likely to be required to pay include:

Probate court fees

• £300 plus £1.50 for each office copy probate (no VAT)

Statutory advertising for Creditors

• On average costs are around £200 (plus VAT*)

These are third party agency costs and vary depending upon where advertisements need to be placed. For example, just the London Gazette or the London Gazette and a local newspaper.

Professional valuations of property and shares

These are third party surveyor or broker costs and vary significantly depending upon the nature of the asset.

Costs of a professional valuation report for a property may range from £750 – £3,000 or more (plus VAT*). Costs may be higher for particularly high value or complex valuations or those that involve agricultural property and a tailored costs quote would be agreed before proceeding.

Portfolio managers may have a standard charge in their terms and conditions for providing formal probate valuations of investments.

We may instruct third party agencies to provide share valuations to comply with HMRC requirements. These are usually around £5-£7 per holding, subject to a minimum charge (usually £50) plus VAT*.

In some circumstances, it may also be necessary to seek valuations of business property, unquoted shares etc from accountants or other professionals. Tailored quotes would usually be agreed before proceeding with such instructions.

Land Registry and Land Charges searches

• £6 (plus VAT*) for office copy entries of the title and title plan for any property in the estate.
• £2 (plus VAT*) bankruptcy search fee for each name searched prior to any distributions being made.
• Land Registry fees may also be incurred for any property transfer to a beneficiary which will be Land Registry Scale Two fees based on value of the property

Bank transfer charges

• £35 (plus VAT*)

*For VAT information see below.

VAT

VAT is charged at a rate of 20%.

On average it takes between two and four months from the date of instruction to the point of being able to apply for a Grant of Probate and then a further six to eight weeks for receipt of the Grant.

Typically this stage will involve:

• Registering the Grant of Probate with third parties
• Realising the assets of the estate and collecting the proceeds
• Liaising with estate agents (and our residential property team) about the sale of property
• Discharging liabilities
• Making arrangements for the tracing of beneficiaries (as required) and informing identifiable beneficiaries of their entitlements
• Paying legacies and obtaining receipts
• Liaising with HM Revenue and Customs (HMRC) (and third parties as required) to agree estate asset values and determine the IHT (and CGT) payable
• Managing the ongoing (and dealing with any final) payment of inheritance tax payable by instalments
• Dealing with the income tax matters to the date of death and for the period of the estate administration (calculating and preparing returns and arranging for the payment of tax arising)
• Preparing full estate accounts and dealing with the distribution of the residue to the beneficiaries.

Our list of services are outlined in the ‘key stages’ in the transaction.

The fees set out above are likely to be impacted by any of the following:

• Where Cripps Trust Corporation Limited are appointed Executors and we undertake for example the registration of death, funeral arrangements and house clearance;
• Availability of information and level of investigation required;
• Co-operation of executors, beneficiaries and information holders;
• Any disputes between parties or defective testamentary documents;
• Nature and extent of assets and availability of IHT exemptions and reliefs including the Nil Rate Band (currently £325,000) /any Transferrable Nil Rate Band from a pre deceased spouse or civil partner /Residence Nil Rate Band and any Transferrable Residence Nil Rate Band;
• Multi Jurisdictional or trust elements;
• Earlier lifetime giving and the impact of this on the available Nil Rate Band;
• Agricultural or business property.

If any of these assumptions are incorrect or change over time, the fees set out above may increase.

Expenses and additional charges that you are likely to be required to pay include:

Land Registry and Land Charges searches

• £6 (plus VAT*) for office copy entries of the title and title plan for any property in the estate.
• £2 (plus VAT*) bankruptcy search fee for each name searched prior to any distributions being made.
• Land Registry fees may also be incurred for any property transfer to a beneficiary which will be Land Registry Scale Two fees based on value of the property
• Bank transfer charges
• £35 (plus VAT*)

*For VAT information see below.

VAT

VAT is charged at a rate of 20%.

On average this aspect of the administration can be expected to take a further 4-7 months from receipt of the Grant but this is highly dependent upon the complexities of the estate and the work required to be undertaken.