Administration: Obtaining the Grant of Probate

Question 1

What obligations do the GDPR impose on solicitors with regards to beneficiaries?

Answer 1

Solicitors dealing with the estate of a deceased are required to inform the beneficiaries that they hold personal data on them, the purposes for which the data will be used and the rights of the beneficiaries as data subjects.

Question 2

How are assets held by the deceased at the time of death valued?

Answer 2

• Most assets are valued at their open market value.
• Specific rules apply to related property and shares shares in quoted companies.
• Auctioneer/ estate agent can value residence, land and contents of house.
• Valuation of shares in a private copy should be done by an accountant.

Question 3

List the assets in an estate which can pass to the PRs without a grant of probate.

Answer 3

• Assets falling within the Administration of Estates (Small Payments) Act 1965
• Chattels;
• Cash

Question 4

Which assets can pass under the Administration of Estates (Small Payments) Act 1965?

Answer 4

Provided the value is under £5k and the relevant institution is willing to pay out without a grant of probate:

• Money in National Savings Bank and Trustee Savings Bank (but not other bank accounts),
• National Savings Certificates and Premium Bonds and
• Money in building societies friendly societies

Question 5

What is the form IHT400?

Answer 5

The inventory of assets which decades was beneficially entitled, as well as info on their liabilities. Also the form for claiming reliefs and exemptions and calculating the IHT payable.

Question 6

List the types of excepted estates.

Answer 6

1) Small Estates;
2) Exempt Estates;
3) Non-Domiciled Estates;

Question 7

List the main three types of assets which pass outside of the will, and how are they obtained without a grant of probate?

Answer 7

No grant of probate is needed. instead the death certificate will need to be produced to the relevant company/ the land registry:

1) Joint Property;

2) Insurance Policies Assigned or Written in Trust;

3) Pension Benefits

Question 8

What is a small estate for the purpose of the excepted estates regulations?

Answer 8

• Those where gross value of estate for IHT purposes plus value of any specified transfers and specified exempt transfers in 7 years prior to death does not exceed the current nil rate threshold (325k).
• Note gross value of estate is is value before deduction of debts, exemptions and reliefs.

Question 9

What is an exempt estate for the purposes of the excepted estates?

Answer 9

Estates where bulk of estate attracts spouse or civil partner, or charity exemption.

• Ie gross value of estate (plus specified transfers and exempt transfer made in the 7 years before death) must not exceed £3million.
• Net chargeable estate after deduction of liabilities and spouse and or charity exemption (plus specified and exempt transfers made in 7 years prior to death) must not exceed nil rate band.

Question 10

Explain the concept of ‘non-domiciled’ estates for the purposes of excepted estates.

Answer 10

Where deceased was never domiciled in Uk and had limited assets in the UK.

Question 11

Explain the procedure for excepted estates.

Answer 11

PRs do not provide info dire try to HMRC, but include following info on applications for grant:

1) Deceased’s full name and date of death;

2) Declaration that:
a) that the estate is an excepted estate; and
b) whether they are claiming against the estate unused proportion of IHT NRB of a pre-deceased spouse or civil partner; and

3) The following 3 IHT estate values:
a) gross value of estate for IHT (plus any specified transfers and specific transfers made in 7 years prior to death)
b) net value of the estate for IHT less any allowable debts;
c) net qualifying value of estate that is net value of estate for IHT less any spouse or charity exemptions.

Question 12

When is an IHT400 used?

Answer 12

• Whenever deceased dies domiciled in their UK and estate is not an excepted estate.
• PRs send the completed form and supporting documents to HMRC.
• PRs (or solicitor) use form to calculate the amount of any IHT payable and then also pay IHT due prior to the grant.
• HMRC inform PRs once this has been done by sending receipted summary.

Question 13

How long should be left after sending the IHT400 and paying IHT prior to applying for a grant of probate?

Answer 13

At least 20 working days.

Question 14

Explain general rule for when payment of IHT is due.

Answer 14

It will be due 6 months after end of the month in which the deceased died. Eg if they died 10th January it would be due on 31st July.

Question 15

What is the maximum number of instalments which PRs can pay IHT by instalment for instalment property?

Answer 15

10 annual instalments.

Question 16

What happens if land (which is subject to instalment payments for IHT purposes) is sold?

Answer 16

The whole amount becomes payable.

Question 17

Explain the HMRC direct payment scheme.

Answer 17

HMRC has agreed with British Banker Association and Building Societies Association on procedure allowing PRs to arrange payment of IHT to HMRC directly from deceased accounts.

Note the s theme is optional so PRs must check whether the relevant bank will participate in scheme.

Question 18

Explain the steps for the HMRC direct payment scheme.

Answer 18

1) PRs provide whatever identification bank requires. Should be done well in advance of applying for grant to avoid delay;

2) PRs complete a separate IHT423 for each bank and building society from which money is to be transferred.

3) PRs send each IHT423 to relevant bank/ building society at same time they send IHT400 to HMRC. IHT423 includes reference number from HMRC allowing them to match up the payment to the estate.

4) Bank or building society sends money directly to HMRC. Once received, HMRC emails receipt to HMCTS and notifies solicitor.

Question 19

True or False: Life assurance policies payable to deceased’s a
estate may be willing to release money directly to HMRC for IHT purposes?

Answer 19

True.

Question 20

Where bank’s require an undertaking from the solicitor in respect of a loan for IHT, how should this be worded?

Answer 20

Carefully so as to avoid any personal liability for the loan. Wording to the effect of ‘such money as comes into the solicitors control’ would commonly be used.

Question 21

True or False: Payment of tax may be made from National Savings Bank accounts or from the proceeds of National Savings Certificates, any Government stock held on the National Savings register or any other National Savings investment.

Answer 21

True

Question 22

Explain the use of a PA1P form.

Answer 22

Used where deceased left valid will.

Question 23

Explain the use of a form PA1A.

Answer 23

Used where deceased did to leave a valid will and died intestate.

Question 24

Which assets does the grant of probate exclude?

Answer 24

• Interests in joint property;
• Life policies assigned or written in trust;
• Discretionary lump sums under pension schemes;
• Trust property in which deceased had a life interest.

Question 25

Where the sole executor to a will lacks capacity to act, who becomes the executor?

Answer 25

The person who is acting for the executor lacking capacity, as their power of attorney.

Question 26

Can executors renounce right to act (ie take the grant)?

Answer 26

Yes but they must not intermeddle in the estate (ie do tasks a PR might do). Should they intermeddle they will be deemed to have accepted the task of being executor and cannot renounce the responsibility.

Question 27

What does the executor have to do if renouncing acting as a PR?

Answer 27

Complete form PA15 and file it with HMCTS.

Question 28

What is the maximum of PRs a grant of probate will be granted to?

Answer 28

4.

Question 29

What is a reserved executor?

Answer 29

Power can be reserved to an executor if there are already 4. This means they are not obtaining the grant, but can act if a vacancy arises.

Question 30

Explain the process of a grant limited to a single [part of an estate.

Answer 30

• Usually happens where specialist expertise for certain property is required.
• eg literary executors may be appointed to deal with an author’s bookstand others appointed for everything else. Where this happens a maximum of 4 can act for the books and another 4 for the remaining assets.

Question 31

When is it required that there is a minimum of two people applying for the grant of probate?

Answer 31

Where there is a life interest, or property under the will passes to a minor.

Question 32

Who takes the grant of probate when assets are passing completely on intestacy?

Answer 32

The beneficiaries on intestacy take the grant.

Question 32

Can step-brothers/sisters or step-children ever be entitled to a grant of probate on intestacy?

Answer 32

No.

Question 33

List the order of entitlement to the grant of probate in the absence of a will.

Answer 33

(a) the surviving spouse or civil partner;
(b) the children of the deceased and the issue of any deceased child who died before
the deceased;
(c) the father and mother of the deceased;
(d) brothers and sisters of the whole blood and the issue of any deceased brother or
sister of the whole blood who died before the deceased;
(e) brothers and sisters of the half blood and the issue of any deceased brother or sister of the half blood who died before the deceased;
(f) grandparents;
(g) uncles and aunts of the whole blood and the issue of any deceased uncle or aunt of the whole blood who died before the deceased;
(h) uncles and aunts of the half blood and the issue of any deceased uncle or aunt of the half blood who died before the deceased.