Understanding Probate


Probate is a fundamental area of law as it affects everyone at some point in their life after the passing of a loved one. This article will address what probate is, how to apply for it, when it is or is not required and the role of an Executor and Administrator along with any differences between the two.

What is probate?

Probate is the legal process of administrating the estate of someone who has demised. The term itself refers to the process of an individual acquiring permission to carry out the wishes within the deceased’s Will and settling their estate. Administering assets includes identifying, and assessing the deceased’s property. Any debts, taxes or liabilities owed on behalf of the deceased are paid and the remaining assets are distributed accordingly. A professional surveyor may be required for these purposes especially if the estate falls within the requirement to pay Inheritance Tax (IHT).

How is the estate valued?

A professional surveyor may be required to value the estate as all assets need to be listed along with their value at the date of death. Debts and liabilities reduce the value of the deceased’s chargeable estate – including household bills, mortgages, credit card debts. The value of any assets left to spouses, civil partners or charities that are exempt should be deducted.  This gives a net value of the estate that’s taxable.

The value of the estate needs to reported to HM Revenue and Customers (HMRC).

What is Inheritance Tax?

IHT is a tax on the estate of someone who has died, including property, money and possessions. It is not required if the value of estate is below £325,000 threshold or if everything above this threshold has been left to spouse, civil partner or an exempt beneficiary such as a charity. Any value of gifts made within 7 years of death should be accounted for. If the value calculated, as outlined above, is above the basic threshold then there is IHT to be paid.

The standard rate is 40% and is charged only on the part of the estate which exceeds the threshold. There are certain exceptions to this tax such as if the estate is left to children, then the threshold can increase to 500,000. In order to pay IHT, you need a payment reference number which can be applied for here.

Is probate always required?

 Probate may not be required if the deceased had a small estate. A small estate is difficult to define as different banks have different thresholds for probate, nonetheless if the assets add up to a value of £5000 then they can usually be transferred without probate.

It may also not be required if the deceased held assets jointly in which case assets will automatically pass to the other party i.e. the surviving owner. A common example of this is a married couple being the joint owners of a property and the surviving spouse becoming the sole owner of the estate. When a joint owner of a property dies, a DJP form needs to be filled in order to remove their name from the register. This form should be sent to HM Land Registry, along with an official copy of death certificate.

What is an Executor and Administrator?

If a will is provided, it will name an executor who is entrusted with the responsibility of administering the estate in accordance with the will. If there’s no will available, known as having died ‘intestate’, then an administrator is appointed to deal with the estate. The deceased’s spouse, civil partner or child can apply to become the estate’s administrator.

What is their role?

The Executor and Administrator are responsible for overlooking all processes dealing with the deceased’s assets. They have the legal authority and responsibility to administer the estate and can ultimately be held responsible for any mistakes that are made.

Legal responsibilities include applying for grant of representation, which is legal confirmation of their legal authority to administer the estate. An executor will need to apply for a Grant of Probate and an Administrator will apply for Letters of Administration.

Tax related responsibilities include submitting and paying IHT return and completing any relevant Income Tax and Capital Gains Tax returns or any other outstanding tax owed. In relation to the estate, they are responsible for notifying and corresponding with all relevant organizations in order to transfer the deceased’s assets and pay the debts and liabilities remaining on the estate. The estate needs to be prepared and correctly distributed to beneficiaries according to the will, if it is provided, or the law in the absence of a will.

Can there be more than one executor?

Up to four executors can be named who can work together although only one acting executor is required. One executor can issue a notice of power reserved to confirm that the other named executors do not intend on having an active role within estate administration. The others can also choose to renunciate by signing a document known as the Deed of renunciation, consequently cancelling their appointment.

Breakdown of full probate process:

  1. The estate should be valued as outlined above. The figure produced determines whether probate is required and if IHT needs to be paid
  2. If probate is required then the relevant PA1 form (Grant of Probate or Letters of Administration) should be completed and sent to a local probate registry with an official copy of the death certificate, the original will (if it is provided) and an application fee. You should be contacted within four weeks with an outcome.
  3. The Executor or Administrator can then begin administering the estate.
  4. The estate accounts should be prepared to illustrate what has gone in and out of the estate and the final balance due to each beneficiary.
  5. The estate should be distributed to the beneficiaries according to either the will, or law of intestacy.

The process of probate also reflects the importance of creating a will, because it means your estate can be dealt with in accordance to your wishes and the process is reasonably straight forward. For more on how to create a will, please click here.

This article is intended for guidance only and should not be relied upon for specific advice.