20/03/20

Kitsons Probate Q&A: What is Probate and How Does it Work?

In the following article we take a look at what probate is, how it works and the different questions you may have during the process.

Q1. What is probate?

Probate is a general legal term used to describe the legal process for dealing with a person’s assets and liabilities after they have died. A Grant of Probate is the legal document you obtain as Executor, which gives you legal authority to deal with a person’s assets (i.e. selling their house or closing their bank account).

Q2. Do you always need a Grant of Probate?

Not always, it depends on the value and type of assets that have been left behind. If the deceased owned a property and you intend to sell it as Executor you will need a Grant of Probate before you can legally complete the sale to the buyer. If the deceased left behind significant savings and investments then usually the banks or investment houses will require a Grant of Probate before they will transfer or liquidate the assets they hold.

However if the deceased left behind only jointly owned assets or assets of a low value (i.e. only fairly modest savings) then you may not need a Grant of Probate.

Q3. Who is legally responsible for dealing with a person’s assets after they have died?

If the deceased has left a valid Will behind then the Executor or Executors named in that Will are the only people who have legal authority to deal with the estate. The Executors must pay all the debts left behind and ensure that the terms of the Will are carried out in full.

If there is no valid Will left behind then the Intestacy Rules provide that the closest surviving blood relatives will have an equal right to deal with the estate. In those circumstances if those relatives wishes to sell a property or cash in assets they will usually need to obtain a Grant of Letters of Administration, which is the equivalent to a Grant of Probate but applies where there is no valid Will left behind.

Q4. Do I have to be an Executor?

No. If you are named as an Executor in a Will and the person who has made that Will has died, you can choose to step down completely as an Executor by signing a legal document.

However if you decide to do that you need to do so as soon as you become aware you are an Executor as if you take active steps as an Executor (paying bills and managing the estate) you cannot then choose to step down.

Q5. Do I need to involve a lawyer if I am dealing with an estate as Executor or can I do it all myself?

If you feel confident that you understand the legal process and you have the time to deal with it then you can deal with it yourself from start to finish. However if you have any doubts about the process or your responsibilities or you simply don’t have the time then you can ask a lawyer to do the work for you. A probate lawyer can handle everything for you until the estate is finalised and distributed or they can just deal with one element for you, such as obtaining a Grant of Probate.

Q6. If I use a probate lawyer to deal with an estate, who pays their legal fees?

The probate lawyer will act for the Executor (or if there is no Will the Administrator) and the Executor will sign the lawyer’s terms of business and agree the lawyer’s fees at the beginning of the case. Those legal fees would be paid out of the funds in the estate (with the prior permission of the Executor) and not by the Executor personally.

Q7. How can I pay for the funeral?

If a relative or friend has died, often the first issues to deal with will be what were their funeral wishes, who pays for the funeral and how is it paid for. Usually the Executors will organise the funeral but should take account of the wishes of the deceased and the family as to what the precise arrangements should be. If there is a dispute, the Executor has the final say.

Most banks allow the payment of funeral expenses even if an account has been frozen. The best practice is to send the funeral account to the deceased’s bank and ask them to pay it direct to the funeral director (assuming there are sufficient funds to pay the funeral bill).

Q8. Is there a deadline for dealing with an estate?

There is no immediate deadline, however if you are an Executor you need to quickly establish what assets are in the estate and what liabilities there are. If there is a property you need to make sure the insurance is up to date. If you don’t then as Executor you could be held personally liable for any damage to the property (i.e. a fire). In general you need to identify and safeguard the deceased’s assets as quickly as possible.

If the estate is liable for inheritance tax then as an Executor you have 12 months from the date of death to submit details of the assets and liabilities to HM Revenue & Customs. If you miss that deadline the estate will be penalised financially and the beneficiaries could look to the Executor to pay that penalty personally. In addition if there is inheritance tax to pay, any unpaid tax will start to accrue interest at 4% from 6 months after the date of death. There are also deadlines for the payment of income tax and Capital Gains Tax to be aware of. So whilst there is no immediate deadline as an Executor you need to be proactive and aware of the deadlines above otherwise the beneficiaries may be critical of you, particularly if you cause the estate financial loss.

Q9. As an Executor am I personally liable for the deceased’s debts?

An Executor has a legal duty to pay the deceased’s debts from the estate assets. If there are insufficient funds in the estate to pay all the debts then the Executor is not personally liable to pay those debts. However if the Executor overlooks a debt and distributes money to the beneficiaries then the creditor could bring a claim against the Executor personally if there isn’t enough money left in the estate to pay the debt. As a result an Executor must tread carefully and make sure that all the debts have been identified and settled (or sufficient funds held back to pay them) before any payments are made to the estate beneficiaries.

If you have any further questions please do not hesitate to get in contact with one of our Private Client Team.

For Exeter based enquiries: charlie.siegle@kitsons-solicitors.co.uk

Plymouth: marjorie.creek@kitsons-solicitors.co.uk

Torquay: jonathan.dickson@kitsons-solicitors.co.uk

Kitsons Solicitors - Charlie Siegle

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20/03/20

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Kitsons Solicitors - Charlie Siegle

Charlie SieglePartner

Charlie is a Partner and Head of our Private Client team in Exeter

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