George Hay Chartered Accountants were one of the first accountancy firms in the country to obtain a licence to carry out non-contentious probate work. In our monthly column, we give you an insight into the process and provide an update on what is happening in the world of probate and estates.
One of the questions we are asked by Executors when somebody dies is, ‘what can I do before probate is “granted”?’
Assuming there is a Will in place, an Executor takes authority directly from the Will. They therefore have an immediate duty to protect the assets of the Estate.
Often overlooked, but vitally important, is the need to notify the insurers of the deceased’s property that the policy holder has died, and the house is now empty.
The next action is to secure assets. Are there any assets of value, that should be moved to a more secure location? You might want to tidy the house before sale, so a house clearance makes sense.
Quite often, the deceased may own a car; generally speaking, there is not a problem with selling this quickly. Everybody knows the value of a car deteriorates over time and is also at risk of being stolen, therefore it is perfectly acceptable for the Executor to realise funds at an early stage.
Where a sale like this takes place, it is important that an Executor can demonstrate they received a fair price for the asset, as this could be challenged later.
Some banks will release funds before Probate is granted. This is a concerning gesture and is at the discretion of each bank.
We have seen one bank choose not to release £10,000 to a widow who clearly benefitted under the Will, and others pay much more to the “next of kin” even though they are not a beneficiary under the Will. The maximum amount we have seen released is £50,000.
If money is released, it is important that the Executors account for it properly and in accordance with the Will.
Whilst all this is going on the Executors are also busy completing forms to obtain probate.
If the Estate is subject to Inheritance Tax (IHT), or if it is in excess of £1m (even if no tax is payable, say if it is being left to a spouse), then a form IHT400 is completed. This has to be sent to HM Revenue & Customs (HMRC) with details of all assets and liabilities.
For smaller Estates, a form IHT205 is completed, and this is sent to the Probate Office along with the application for probate.
You should note that if you have had to send a form IHT400 to HMRC, you cannot send the probate application in for a further four weeks.
The Probate Office claim to be turning applications around in four weeks; in reality, however, it is eight to 10 weeks.
Without probate, an Executor is unable to give a valid receipt for a transaction. In other words, if a bank pays out to an Executor because probate has been granted, then it cannot be liable for any claims made in error.
The biggest asset to be sold will be the house. Most estate agents and solicitors will accept instructions prior to probate being granted. A sale cannot be completed until probate is granted, and the Executors can give a valid receipt.
We therefore recommend all preparations are made for marketing, but the property is not advertised until probate is applied for. Hopefully, by the time contracts are ready to be exchanged, probate will have been granted.
If somebody has died without a Will, then a beneficiary can act as a quasi-executor by applying for letters of administration. In this case, there is no authority to act until probate is granted.
In reality, there may be some actions needed before this, and providing what is done is undertaken in the best interests of the Estate, then there should not be a problem. There is of course the risk of challenge by another beneficiary.
We appreciate the frustration of Executors trying to make progress. We get frustrated ourselves by the delays with HMRC and the Probate Office, as well as other institutions.
Sometimes, it is just necessary to wait…
To discuss our Probate & Estates services in more detail, contact Huntingdon-based Barry Jefferd on 01480 426500, or you can email us at email@example.com where your enquiry will be dealt with by one of the team.
Authored by Director of GH Probate Ltd., Barry Jefferd.
Our Probate service is provided through GH Probate Limited. GH Probate is the trading style of GH Probate Limited. Registered in England and Wales number 9630102. Registered Office: St George’s House, George Street, Huntingdon, Cambridgeshire PE29 3GH.
Authorised to carry out the reserved legal activity of non-contentious probate in England and Wales by the Institute of Chartered Accountants in England & Wales