Estate Planning, Wills, Trusts & Probate

The first priority will be the funeral arrangements.  Importantly, the next of kin or the person attending the death will need to register the death with the local registrar, which is where you obtain the death certificate.  Either hospital staff or any funeral director can help lead you through this process.

With regard to the reading of the Will and obtaining probate, there are no important deadlines in this process until six months after the date of death, which is when interest begins to run on any inheritance tax payable on the estate.   Feel free to call us for further guidance and advice during this time, but please be assured that there is no urgency in dealing with the initial probate matters.

When people refer to “probate” they are typically referring to the entire process of managing a deceased’s persons estate, which broadly encompasses all of their outstanding liabilities, assets, and going concerns.  Strictly speaking, a grant of Probate is issued by the High Court in favour of the executors named in a Will.  For estates where there is no Will, the High Court will appoint Administrators, under a Grant of Administration, from one or more of those people that have an interest in the estate and have made the proper application.   A grant of representation refers to either type of grant; the term “personal representative” is used to refer to either executors or administrators.

Not necessarily.  Many small estates are composed wholly of assets held jointly with a spouse or other family member, and these assets pass automatically upon death to the other joint holder simply by producing a death certificate.  This is also the case with property: The Land Registry will shift title of property to the survivor of a joint tenancy on the basis of a death certificate alone.

A grant of representation is only required where assets of a certain value are held solely in the name of the deceased.  So, for example, even though a bank account is held in the sole name of the deceased, if it is less than £15,000, the bank’s own policy may allow that money to be distributed on the basis of the beneficiaries completing a form of indemnity.  However, if the solely held assets are worth more than £15,000, statutory law decrees that the bank must have sight of a grant before they can distribute those funds to the personal representatives.

Similarly, if a property is held solely by the deceased, the Land Registry will require sight of a grant before they will shift the title of the property to either the new owner, or the beneficiaries.  Each case must be looked at individually to determine whether a grant is required.

That depends largely on the personal representatives’ confidence in dealing with the necessary formalities.  This will be most practical in cases where there is no IHT payable, and where there are only one or two beneficiaries.

This is one of the most common questions we receive, and it is one of the most difficult to answer.  Obtaining a grant of representation is a milestone that is often reached relatively quickly, but resolving the administration of the estate usually takes much longer.

Obtaining the grant requires payment of IHT, which in turn requires a proper valuation of the entire estate and all of its assets and liabilities.  Once that is done, the tax documents approved and the IHT paid, an application is made to the probate registry for the grant.  Once the grant is in hand, all of the assets need to be collected and accounted for before the proceeds can be distributed to the ultimate beneficiaries.  Income tax will also be payable on any income accrued during the adminstration period.

In cases where the entire estate passes to a spouse, and most of the assets are held jointly, the whole process may take no more than a month or two.  By contrast, the administration of even a relatively low value estate where there are many different types of assets (e.g., properties to sell or various financial holdings) can easily run to many months.  Complicated estates may require administration over the course of years, and any litigation can result in formidable further delay.

Given these various uncertainties, we aim to handle your matter in an expedited fashion, and to provide our clients with regular updates as to progress.

Inheritance tax, commonly referred to as IHT, is a tax that may be payable in many circumstances (for instance upon making a large gift into a Trust) but in the probate context, it is payable before a grant of representation will be issued.  That is, a personal representative will need to have a receipt from the Capital Taxes Office before the Probate Registry will issue the grant.

The personal representatives are personally liable to pay IHT, but of course the funds are drawn from the estate.  IHT can be paid directly from the deceased’s bank accounts if there are enough liquid assets available, or a bank loan may be obtained in those cases where the assets are not in a form that allows such a payment (eg, property, ISAs).  IHT on property, such as the deceased’s former residence, may be paid in ten annual instalments, but interest charges will accrue on the outstanding tax.

Calculation of IHT can be a rather complex calculation, but as a rule of thumb it is payable at a rate of 40% on all those assets in an estate in excess of the Nil Rate Band for that year.  The entire estate will pass free of IHT if left to a surviving spouse or a charity, although even in these cases submission of inheritance tax forms is required.

The Nil Rate Band is set each year by the Chancellor as part of the government’s annual budget, and represents that portion of the estate which passes tax free to the beneficiaries.

The process of obtaining a grant of representation involves swearing an Oath to the High Court that you undertake the fiduciary duty of properly valuing the assets, gathering and distributing the estate, and providing accounts of these actions to the High Court or third parties upon request.  This fiduciary duty should not be taken lightly as it involves personal liability on behalf of the executors up to the value of the entire estate.

If there is any reason that you do not wish to assume this responsibility, or you feel that you may be unable to honour the duty of care required, you may wish to renounce your right to act as a personal representative.   If you are a named executor, you may renounce all involvement with the Probate, such that the responsibility falls either to another executor or another member of the family or interested party.  Another other option is to have your power reserved, such that another named executor may act.  This latter option is a useful when it may be desirable for you to step into the proceedings at some future date (for instance, if in the course of the administration the other executor becomes unable to complete the process, or less frequently, to check on allegations of fraud).  We can advise you on the particulars of these options and which may be the best option for you.

There is no requirement that a grant be obtained at all, so long as the assets and liabilities may be handled without one.  In cases where a grant is required, such as for the transfer of title to property, again there is no deadline and we occasionally see clients who realise they require a grant many years after the death of the proprietor.

However, the deadline that most people are concerned with is that imposed by HM Revenue and Customs, which begins charging interest on any unpaid IHT beginning six months after the date of death.  Normally, this six month period is adequate time to get the tax documents in order, although there is a small fine payable if those documents have not been filed within a year of the date of death.  Whether all of the IHT is paid on that deadline depends on the facts of the particular estate.

We focus on providing a quality service that removes the burden of dealing with the estate from the personal representatives, at a cost that both fairly compensates us for the work undertaken, and provides the estate with good value for money.  We are happy to take instruction from you on as little or as much of the probate process as you wish, and our fees will depend upon your instruction.

Details of our fee structure are in our terms and conditions, but as a general rule, assuming that we handle everything from obtaining the death certificate to winding up the final accounts, we anticipate that a typical, medium sized estate in this area will result in charges of between 2% and 3% of the gross value of the estate.  Of course, this is a sliding scale, and the costs to a small estate will be proportionally larger than the same charges to a much larger estate, given that the same fundamental work may be required for handling either.

We are happy to discuss the potential costs in any given estate upon meeting to review the particular facts.  We typically refrain from providing estimates by phone.

In general, in almost every case it is preferable to have a Will than to go without.  You do not need a Will if you are happy to let the Government decide where your estate goes upon your death, but we have not met many clients who express this feeling.

There are choices that you can make regarding your Will that can help you avoid unnecessary payments of Inheritance Tax (IHT).  A Will is also helpful if you have minor children, so that the survivors will know who you would have appointed as a guardian for those children, and how you would wish to have the money in your estate managed on their behalf before they reach the age of majority.

We feel that the small investment of time and money in preparing a Will far outweighs the risks attendant in drafting a Will that may prove to have defects that only your intended beneficiaries discover to their regret.

We make every attempt to have the Will drafting process be as quick and painless as possible, and hope you might also enjoy the exercise of this small bit of planning that can provide a great deal of satisfaction and peace of mind.

Harold Bell Infields & Co. provides standard cost Wills to provide an incentive for everyone to have one.  We also provide complex estate planning advice at our usual hourly rates

There is an old quip in the legal profession that the difference between tax avoidance and tax evasion is twenty years.  The simple fact is that the personal representatives of an estate that evade paying inheritance tax will be guilty of a criminal offence.  However, with careful planning there are many ways that much if not most inheritance tax can be avoided.  That is, anyone with an estate that is likely to be chargeable to inheritance tax may have options regarding how those assets are held that may be beneficial in reducing the estate’s inheritance tax burden.   Those options include everything from simple discretionary trusts drafted as part of your Will, to the purchase of tax exempt woodlands that may be used to pass value to the next generation.  We would be happy to explore these options with you, the suitability of which will be dependent upon the size of the estate that you expect to leave behind.

The Nil Rate Band (NRB) is the amount of money that you can pass to your beneficiaries without paying any inheritance tax.  It is referred to as the “Nil Rate Band” because while your entire estate is subject to inheritance tax, within this first portion or band of your estate, a “nil rate” applies.  This band is adjusted annually by the Chancellor in the Government’s budget, and so a new NRB value will apply from the 6th April of every year, through to 5th April of the following year.  Determining what value applies is simply a matter of discovering what the NRB was for the financial year in which the death occurred.

An NRB discretionary trust is a device that can be incorporated into a Will that allows the drafter of the Will (the “Testator”) to specify that some or all of the value up to the limit of the NRB for the year of the Testator’s death should be deposited into a trust.  The result is the creation of a Trust upon which no IHT is payable, but from which the surviving spouse may be one of the beneficiaries.  This preserves the use of the entire estate to the surviving spouse but removes from the survivor’s estate, the value of the nil rate band, so that upon the death of the second spouse the remainder of the estate obtains the benefit of the survivor’s nil rate band.  As you can see, this effectively doubles the inheritance tax saving compared to an estate where the first spouse passed everything tax free to the survivor.   The use of these trusts and the various permutations of them defy the summary of a few lines here, but of course we would be happy to advise you on your particular case and whether this may be a good option for you.

A Deed of Variation, often referred to as a Deed of Family Arrangement, is a device by which the beneficiaries of an estate can alter who receives the benefit of that estate, or how much they receive.  This is based on the principle that any person should have the right to refuse acceptance of a gift.  By refusing acceptance, the gift reverts to the estate, where it may take advantage of whatever amount of the Nil Rate Band (NRB) may still be available to that estate.

Thus, for example, a surviving spouse who feels that her own needs are well taken care of, may wish to provide an immediate tax free gift to her children via her deceased’s husband’s estate.  Although the husband may have left his entire estate to his wife via his Will, the widow may enter a deed of variation to vary the terms of that Will to leave whatever sum she may specify directly to the children, up to the limit of the NRB.

The previous example suggests one common use of deeds of variation to take advantage of a deceased’s spouse’s NRB, however there are various other uses, including the dissolution of a joint tenancy, the provision of additional gifts at the beneficiaries’ discretion, or the shifting of assets from one beneficiary to another to redress some real or perceived inequity in the administration of the estate.

Deeds of variation must be executed by the beneficiaries within two years of the date of death of the deceased, and they are commonly used, both for very simple tax planning, and for relatively complicated re-arrangements of an estate.

The only way to avoid probate entirely is to ensure that all of your assets and liabilities are either held jointly, held in trust, are outside of your estate upon your death, or are small enough to be passed to beneficiaries without a grant of representation.   Even then, the estate may need to file Inheritance Tax documents.

This type of planning grows increasingly impractical as an estate gets larger, and of course holding all of ones assets jointly may not be practical for one of many reasons.  While avoiding probate is possible in some cases for some simple estates, and while it may be a desirable result in all cases, the risks and burdens that fall to you in planning with this as a priority may outweigh the modicum of benefit to your heirs.  However, we can help guide you through this planning process and would be happy to provide more advice on which options will best suit your estate.