When do I need a grant of probate?

When somebody dies, the relative or executor or other allocated personal representative may be advised that a grant of probate is required to deal with the assets in the deceased’s estate. It is perhaps less known that there are occasions when this isn’t the case.

I thought I would take this opportunity to guide you through the different types of grants of representation and when & why you would require one.

 So what is a grant of representation?

Following the passing of the deceased, personal representatives, (those responsible for dealing with a deceased’s estate) are often advised they will need a grant of representation to deal with the assets in the estate. There are several types of grant of representation which confirm that person’s right to deal with assets and administration of the estate such as property, possessions and money.

The most common grant of representation is a grant of probate. This is a court sealed document issued by the Probate Registry and is given when a person has left a Will naming an executor or executors who prove the will through the probate court.

To get a grant of probate, executors must submit the original Last Will and Testament of the deceased (and any codicils) to the Probate Registry, who will ensure that everything checks out and that there have been no signs of alteration or tampering and further that the execution of the Will is in line with the law. Once satisfied that the Will is valid and any inheritance tax (IHT) due has been dealt with, the Probate Registry will issue a grant of probate.

The grant comprises details of the deceased, the personal representatives and the value of the estate. A grant of probate is a document of public record, along with the Will and any codicil. Anyone can apply for a copy or contact the Probate Registry to confirm the information contained within a grant. (Please see my next Article – ‘My Will, a public document?’)

When is a Grant of probate not granted?

The Probate Registry also needs to confirm that the correct people are applying for the grant. There is a strict order of who can apply for a grant where an executor is unable to act and there is no replacement.

In this sort of situation, the grant used is called letters of administration.

Similarly, where a person dies without a Will, rules of intestacy apply, the grant will be one of letters of administration. Again, there is a strict order of priority in terms of who can apply for this type of grant. It is usual that, in this instance, it is someone with a beneficial interest in the estate.

It is often assumed that dealing with an estate is more complex when there is no Will and that a grant of probate is always necessary when a person dies intestate. Whilst I could agree with that concept in many of the matters we face here at Nantes, it is the type of assets, how they are owned and their value, that ultimately determine whether the personal representatives need a grant of probate or not.

The most common and straightforward situation where a grant of probate will not be needed is where the deceased owned assets in joint names. This might be the family home or joint bank accounts for instance. If an asset is jointly owned, then it is likely to pass to the remaining joint owner by what we call ‘survivorship’ thus not requiring a grant of probate.

It’s because of this that it is so important when preparing a Will and dealing with an estate to establish the way the assets are held. A jointly-owned property by way of an example may be held as either joint tenants (a joint asset) or tenants in common (not a joint asset).

I shalln’t go in to too much depth on the complexities of property ownership and the administration of estates but needless to say, I urge you to make contact with us to establish your legal position in what can be a very complex situation.

Another situation where you may not need a grant of probate is where assets are held in a trust and not owned by the deceased in their personal capacity. Alternatively, the deceased may be a beneficiary of a trust themselves and entitled to benefit from an asset during their lifetime, which is not then distributed as part of their estate on death.

In this situation, the legal owners of the property will be the Trustees. They will be the people who can sell, transfer or otherwise deal with the assets. However, the deceased may still have an interest that must be declared for IHT purposes, and even if probate is not required, the estate might still have an IHT liability.

It is of paramount importance that you seek legal advice where the deceased was a beneficiary of a trust or created a trust during their lifetime. Please do give us a call.

Assets of lower value

Another very common situation is where the value of bank accounts or investments is below the threshold of the relative bank or financial institution. The Administration of Estates (Small Payments) Act 1965 sets out that a grant of probate isn’t required for assets below the value of £5,000. Banks, building societies and investment companies, will set their own level of risk in terms of the sums that they will release without a grant of probate. Some thresholds can be £50,000 or higher, so it is important to check the requirements of the particular asset holder.

Of course there will still be some administration involved as each institution will have its own requirements and forms to complete. The person claiming the funds would still need to prove their entitlement, either by producing a copy of the Will or confirming their relationship to the deceased.

Pensions

Pension payments are usually made at the discretion of the pension scheme. These generally fall outside of the estate for Inheritance Tax and administrative purposes. This means that a grant of probate is not usually required to release any lump sum pension benefits.

Personal possessions

Where the deceased has left a Will, the authority for an executor to deal with personal possessions has likely been included in their appointment under the Will. Whereas, if the deceased died intestate, personal representative gain their authority through a grant of probate. In summary, a grant of probate may be required to deal with the assets of a person who has died intestate but not necessarily where a person has left a Will.

In practical terms, however, the situation is again usually determined by the value of the assets concerned. Family members would not need a grant of probate to distribute sentimental items between them. An auction house or car dealership may want to see a grant as proof that the personal representatives can instruct them and collect the sale proceeds.

Insolvent estates

Where debts appear to exceed the assets and the estate is potentially insolvent, the personal representatives should consider whether they wish to take out a grant of probate at all.

Take caution here. Dealing with insolvent estates can be risky. The personal representatives may be personally liable to creditors if debts are not settled in the correct order, or payments are not apportioned correctly between competing claims.

Any creditor of an insolvent estate can apply for a grant of probate to release cash assets and settle debts due to them and others. This may be preferable to personal representatives getting themselves involved and becoming exposed to risk.  If dealing with an estate that appears insolvent, I cannot stress enough how important it is to contact us as soon as possible for legal advice.

Whether you think you need a grant or not, the Nantes team have a broad wealth of knowledge to help you get through the already troubling times that post-death administration can cause.

Call us for a warm, friendly chat and see how we can help ease the burden.