What do you do when probate is granted?
02 January 2018
The grant of probate gives legal authority to deal with the estate of someone who has died, including selling or transferring their property, closing their bank accounts and cashing life insurance policies.
Understanding a grant of probate
When someone dies, their personal affairs need to be wound up, such as any outstanding debts paid off and their money and possessions distributed to the people set to inherit them. This process is known as estate administration, or probate, and the person who carries out this task is called the personal representative.
The term grant of probate refers to the document that gives authority to administer an estate when there is a will. If there isn't a will, this document is called a grant of letters of administration. Both documents work in a very similar way and for simplicity we will refer to the grant of probate in this article.
The personal representative is responsible for applying for probate. If the person who died left a valid will the personal representative is also known as an executor. If there is no will then the personal representative is known as an administrator.
With our Probate Complete Service we take full responsibility for obtaining Grant of Probate and dealing with the Legal, Tax (not VAT), Property and Estate Administration affairs*.
*We can also pay all the costs of a Co-op Funeralcare funeral, providing the estate owns sufficient assets which can be sold in due course to repay our costs.
What is a grant of probate for?
The Grant of Probate gives the Personal Representatives legal authority to take control of the assets in the Estate, and in many cases gather these assets into the estate ready to be cashed, transferred or sold. This could include selling or transferring property, closing bank accounts and cashing life insurance policies.
When the probate registry issues the grant of probate it's a milestone, because it enables the administration of the estate to proceed.
Closing bank accounts
Liquid assets (such as bank accounts and other cash holdings) are often the first assets to be dealt with after the grant of probate has been issued. Although some of these might have been dealt with already becase a grant of probate isn't always needed to close bank accounts.
This is because all banks have a maximum threshold of money that they are willing to release without a grant of probate. If the amount of money held in the account exceeds the bank's probate threshold, then money will not be able to be withdrawn and accounts will not be able to be closed until probate is granted.
For more information, see bank limits for probate.
Cashing life insurance or pension policies
Many life and pension polices, where lump sums are payable to the estate, require the grant of probate before the money can be claimed. This is because the grant of probate gives the personal representatives authority to act on behalf of the estate.
In some circumstances, insurance companies and pension providers may only pay out to the person named on the grant of probate.
Selling the property
As the estate is comprised of everything that the deceased person owned at the time of their death, this will include any property they owned. Therefore, it is the executor’s or administrator’s duty to deal with the property as part of the estate administration.
For property owned jointly as joint tenants, probate won't be needed, but it will be needed for any property owned in the deceased's sole name, or as tenants in common with someone else.
The grant of probate enables the sale of a property to proceed. It is worth noting that the property can be put up for sale before the grant of probate has been issued, contracts cannot be exchanged without it. Once the grant of probate has been obtained, the personal representatives have the authority to sell or transfer the property.
If the property was owned with someone else as tenants in common, then this means that each person owns a specific share of the property. The share owned by the deceased person will be inherited by whoever the deceased has left it to in their will, or in line with the rules of intestacy if there is no will. Again, this cannot be done without a grant of probate.
If the property was owned with someone else as joint tenants, then the property will automatically transfer to the surviving co-owner.
Administering the estate
Once funds have been received into the estate, it is the responsibility of the executors to administer the estate and there is an order in which this needs to be done.
Any outstanding debts that the deceased person has on their estate will need to be paid as part of the estate administration. Many of these debts will have been known about when the application for the grant of probate was made, and these should be settled at this point. There may of course be further debts that arise during the course of administration, so it is crucial to retain enough money in the estate to account for these.
Sometimes notices are placed in the press to make creditors aware of the person’s death and ask them to make their claim against the estate. These are called statutory advertisements. They will usually give a deadline that creditors need to make their claim by. Protection will be offered to the personal representatives in case any creditors come forward after the deadline, so there will be a degree of certainty regarding the amount of debt on the estate.
Distributing the estate
Once outstanding debts have been paid, the personal representatives can then distribute what’s left in the estate to the beneficiaries (the people or organisations that will inherit from the estate). If the deceased person left a will, then this sets out who the beneficiaries are. If there is no will, then the beneficiaries will be determined by the law under the rules of intestacy.
If a specific amount of money or a specific item has been left to an individual in the will, then this is known as a “legacy”. Legacies are always paid or transferred first and then the personal representatives can see what’s left in the estate once all liabilities and legacies have been paid. They will then be able to determine whether an interim distribution can be made to the residuary beneficiaries (those set to inherit what is left).
It is not unusual for distributions to the residuary beneficiaries to be made in two parts. The first payment will be made when the majority of funds have been received and the second (often smaller) payment made once the estate administration is complete. In some instances, it may be that the cash assets have been dealt with, but a property sale is yet to complete, meaning a larger payment is due to beneficiaries at a later point.
When all of the assets have been collected in and all debts are known (for example the final utility bills will not be issued until the property sale has completed), the personal representatives can prepare the final estate accounts.
Responsibility of the personal representatives
Personal Representatives are responsible for every penny coming in and going out of the estate, and the final estate accounts can be scrutinised by the beneficiaries. If the personal representatives have instructed our probate solicitors to act on their behalf, we will take on full responsibility for this, including preparing the estate accounts.
If the personal representatives are acting without legal support, they will need to prepare their own estate accounts and they can be held personally liable for any mistakes they make during probate.
Appointment as a personal representative is lifetime appointment and this responsibility doesn’t end when the estate has been distributed. This means that if any previously unknown assets come to light in the future, the personal representatives are obliged to deal with them and ensure that they are distributed to the beneficiaries.
How long will estate administration take once probate is granted?
The time required to complete the administration of an estate once probate has been granted is dependent upon the size and complexity of the estate. Factors that may affect the time it takes will include the assets owned by the deceased (including any foreign assets or properties) any outstanding debts they had and whether there is any Inheritance Tax to be paid.
The deceased person’s property is often the most time consuming asset to deal with, and a difficult sale could delay the estate administration process significantly.
Other factors which can delay the estate administration process further include contentious matters (where beneficiaries, trustees or executors disagree) and claims that are made against the estate.
Claims against an estate can be brought within six months of the grant of probate being issued. These claims are normally made under the Inheritance Act by anyone who may think they are entitled to inherit from the estate. Claims can also be made by the Department for Work and Pensions who sometimes investigate whether the right amount of benefits were paid to the deceased during their lifetime.
On average, however, administration of an estate will usually be concluded within six to nine months from the date of death.
Please note that if Inheritance Tax is due on the deceased persons’ estate, then the Inheritance Tax has to be paid before a grant of probate can be issued.