There are many emotions that you have to work through when a family member dies that includes those associated with any practical formalities. The loss of a loved one comes with the responsibility of having to deal with the expense of handling all financial matters, including their estate. Below we offer a quick guide to inheritance tax, plus a quick guide to probate, explaining exactly what it means and the stages that you need to work through until completion and the transfer of money.
What is probate?
Probate is also referred to as a ‘grant of representation’ that refers to the legal process that deals with an individual’s estate once they have died. If there is a will then the responsibly lies with the executor, or executors, that are named in the will. A lay executor is a family member, while a professional executor is a solicitor. The professional executor who is usually a probate solicitor will be paid for their services as they conduct the entire probate process. If there is no will, there is no executor, with the next of kin named to conduct the probate process. They can also use the services of a probate solicitor.
The probate process
As the executor, you will need to obtain a grant of probate, or this can be done via a probate solicitor. In most cases, this is only needed for estates that are worth more than £15,000 or if the assets are going directly to a surviving civil partner or spouse.
The first step
If probate is needed then the first step is that the total assets will need to be calculated before you can apply for probate. This includes any savings accounts, pensions and property. There will also be lots of people to contact including utility companies, mortgage providers and credit card companies. All of these people will need to see the death certificate, with many requiring additional documentation. They will then freeze any accounts until the probate process has been completed.
The value of the estate
It is vital that when contacting any organisation that you ascertain exactly what is held in each account, as this is what you are owed. The total of all accounts will be calculated to work out an estimate of the entire estate. This estimate is important as it will estimate if assets are above or below the inheritance tax threshold.
Guide to inheritance tax
Inheritance tax is the tax that is paid on an individual’s estate when they have died. This includes all monies, property and possessions that equal more than £325,000. If the property is going to children or grandchildren, then the threshold increases to £450,000. The standard tax to pay is 40%. You will need to fill out a form, either on paper or online and return it to HMRC. This is an incredibly detailed evaluation of all assets. Many individuals leave a life insurance policy to cover any inheritance tax costs. The inheritance tax process is complex and ideally should be dealt with by a professional.
The grant of representation
Once all of the above is done, you can then send off your probate application. This will include the probate form, death certificate, inheritance tax form and fee. Once complete, you will receive your grant of representation that will allow you access to all assets.
For help and additional information regarding issues of probate and inheritance tax, please do get in touch with us today.