The government funds the national administration, and all its services from the tax it collects. There never seems to be enough money to go around. Therefore it takes a final bite out of most estates in the form of probate fees, and inheritance taxes.
- INHERITANCE TAX applies to that part of an estate over £325,000, and calculates at a rate of 40%. However, you should be able to dodge it if you leave the premium amount to your spouse, civil partner, a charity or a community amateur sports club.
- PROBATE FEES are currently set at £215 for an estate worth over £5,000. However, you may be able to stretch this to £50,000 depending on which banks and financial institutions are holding your assets when you die.
The above expenses DO NOT include the fees that solicitors charge to wind up an estate, in the event that they play a role.
The Probate Process: A Brief Overview
You leave an estate – in other words your assets and liabilities – after you die. Someone else has to sort this out. This is why you should leave a will stating who gets what. However your executor must first settle all your debts, and arrange your inheritance and other taxes.
However, if you don’t leave a will then the Probate Court appoints an administrator to wind up your estate. In this instance, your married partner is first in the queue followed by your legitimate children. If you did not marry but you have an estranged son then they collect the lot. This could be yet another reason to leave a legal will.
However, a family friend or business partner can’t just go ahead and implement your will. The government also has a finger in the pie, and it wants its full portion of inheritance tax. Therefore, your executor (or administrator) must first have their rights affirmed in a Grant of Probate.
A Grant of Probate (where there is a will), or Letters of Administration (where there is none) only materializes after:
- The need for a probate (or letters) is established
- The estimated value of the estate is known and reported
- Satisfactory arrangements have been made regarding inheritance tax
Thereafter, the person responsible for your estate may apply for their grant in person, by mail, or over the internet.
A Brief Review of Distributing an Estate
Your administrator or executor can now finalize the estate. This involves:
- Making arrangements regarding inheritance and personal tax
- Diligently searching for debtors and paying them in full
- Distributing the remainder of the assets to the rightful inheritors
- Providing a final account to the Probate Office to close out
Their Grant of Probate (or Letters of Administration where there is no will) opens the doors to complete the above steps. Never burden a friend with this task, unless they know what is involved and agreed to do it in full knowledge of the process.