LAST WILL AND TESTAMENT

It is estimated that there are currently over 25 million people in the UK who do not have a valid Will in place and more than that, over 2 million people over the age of 65 who do have not have a Will in place at all.

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Why are Wills so important?

A will is your final wishes and directions to your family or friends. A basic will allows you to appoint who will administer your estate (executors), name any guardians for minor children, let your family know of any funeral wishes, name any specific gifts of personal items or monetary gifts, name any beneficiaries and alternative beneficiaries. It is a set of legally binding guidelines that you are leaving for your family and friends. 

A Will can also allow for you to undertake some trust planning to look after your families’ interests.

A Will should be reviewed every 3 to 4 years or so. Remember that life events can mean a Will becomes invalid (marriage or divorce for example) or worse still, leave beneficiaries out (from births or deaths).

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Trust Planning in Wills

Trust planning is probably the single biggest advantage of a well worded Will. Some of the advantages:

• Allowing a partner to live in your house after your death without giving them the house in title. 

• Allowing for a disabled beneficiary to receive funds without affecting benefits

• Protecting a mentally challenged beneficiary

• Protecting half of your house

• Protecting half of your estate from stepchildren

• Protecting half of your estate from spousal remarriage

• Protecting from sideways disinheritance

• Providing for beneficiaries that may be spendthrift or have problems with drugs or alcohol

• Providing for your grandchildren by leaving in trust until a predetermined age (minimum of 18)

• Protecting your bloodline

• Tax planning

What happens if I don’t make a Will?

If you fail to make a Will in your lifetime, your estate will pass according to the rules of intestacy which are laid out in the Administration of Estates Act 1925.  

This is a very common situation. We often have clients come in and tell us that their parents had 3 children but didn’t have anything to do with one or two of them, or a similar situation with siblings where no children exist. This will not matter under the rules of intestacy. Each bloodline person of that group will be given an equal share according to the rules. If no bloodline family exists, the estate  falls to the Crown.

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How much does it cost to make a Will?

We charge £240 plus VAT for a standard Will. Will trusts are charged individually.  

PROBATE

What is probate and when is it needed?

Probate is the word used to deal with the administration of someone’s estate after they have died. 

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What makes up a person’s Estate?

A persons estate is any property, land, financial assets (stocks, shares, investments, bank and building society accounts) and personal items that belong to the person.

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Who issues probate?

His Majesties Court and Tribunal Service (HMCTS) is the only government department that can issue a grant of probate or letters of administration. There used to be regional probate registries throughout England and Wales, but in April 2018, most of the registries were closed and only a few offices are now left open. Unfortunately, this change came about just before the Covid-19 pandemic, which led to huge delays in gaining grants of probate/letters of administration.

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What is the difference between a Grant of Probate and Letters of Administration?

A Grant of Probate is usually issued for someone who has died with a valid Last Will and Testament in place making clear what their wishes are in relation to the beneficiaries of their estate after their death.

Letters of Administration on the other hand, are issued when no valid Last Will and Testament has been left. In this case, the administrators of the estate will follow the rules of intestacy that are laid out by the Administration of Estates Act 1925. For the most part, these rules follow the bloodline, and if no bloodline can be identified, the estate falls to the Duchy of Lancaster (the Crown).

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Do we have to apply for Probate?

This depends on the value of the estate. Generally speaking, if the estate value is less than £5,000, and there is no land or property, then you likely won’t need to apply for a grant of probate or letters of administration. There are some exceptions to this rule however, where some providers will have a much larger minimum threshold before requiring a grant of probate. Some banks allow for up to £30,000 if a valid Will has been left and it falls to one person (like a child or surviving spouse) as opposed to a number of beneficiaries. Every financial provider is different, however.

I’ve heard that I don’t need probate if I have a Will?

We’ve heard this many, many times from clients. Unfortunately, this is not correct. If an estate is over £5,000 in value, you will need to apply for probate. 

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I’m the only beneficiary from my parents estate and they only left a house to me. Do I need probate?

This is another question we hear a lot. You will need a Grant of Probate (or Letters of Administration), because the house cannot be transferred into the beneficiaries name without it. If you don’t apply for probate, how will you gift the house to your chosen beneficiaries?

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Is there Legal Aid available to deal with Probate?

No. Unfortunately, there is no financial aid available to help pay for the cost of Probate.

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Do we need to submit a tax return when we apply for probate?

Yes. Every probate matter must submit a tax return to HMRC when applying for probate. This is due to inheritance tax calculations, which must be identified. You have to submit a tax return regardless of whether there is Inheritance Tax to pay or not.

How will we know if there is Inheritance Tax to pay?

When identifying the value of the estate, the final total will show you whether there is Inheritance Tax to pay on the estate. Your solicitor will do these calculations for you, or you can use the government calculator online to identify whether there will be a tax liability on the estate.

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How much tax will I have to pay?

There is no easy answer to this question. Inheritance tax is a 40% tax over the nil rate band of £325,000. However, there are other allowances that you can utilise. Every person has a nil rate band (NRB) currently of £325,000. If you are married, then the NRB passes to the surviving spouse on 1st death, giving the survivor a £650,000 NRB. There is also the Residential Nil Rate Band (RNRB) which can add a further £175,000 to each persons normal NRB taking each NRB to £500,000. However, to claim the RNRB, you must meet specific criteria, so it is not available to everyone.

Can I avoid paying Inheritance Tax?

Yes and No. With careful financial planning over the years before you die, you can negate a lot of Inheritance Tax on your estate by using the 7-year rule and in some cases the 2-year rule but this generally relies on cash being available. It would be more difficult if your estate is mainly property or land. You won’t be able to avoid paying Inheritance Tax on an estate during probate however, but you can reduce what you pay by using Charitable exemptions etc.

Do you have to use a Solicitor or probate practitioner to handle probate?

In short, no. You can apply for probate as an individual, but the probate process is very complicated. If you make a mistake during the application process, it will result in the probate taking much longer, and if a serious mistake is made, it could affect your ability to gain probate at all. We would always recommend the use of a dedicated professional to handle probate for you. 

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Can I stop an application from being made by someone else?

Yes. If you feel that an application has been submitted in error, or by someone else, you can prevent the grant from being issued by submitting a caveat entry to the register. This will stop the application from moving forward for a period of 6 months.

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Can I change the outcome of a Will if I don’t want to inherit from it?

Yes, this is something we deal with a lot. Some beneficiaries don’t wish to inherit for a number of reasons but usually because they are independently wealthy and will suffer tax implications on their own estate if they inherit from their own parents. We can use a Deed of Variation in this scenario to bypass the original beneficiaries and leave to their children or siblings instead.

This is also often used when a Will was written prior to another child being born, and the original beneficiaries wish for their sibling to be included. 

How long does Probate take?

Probate takes between 12 to 18 months to complete in most cases. 

OUR PROBATE SERVICES:

Application Only Service (No IHT)

If the estate is relatively simple and no inheritance tax has to be paid, we can prepare the probate application and inheritance tax return for you. The information is provided by the Executors who will be responsible for dealing with the estate once the Grant or Letters of Administration have been received. This means that the Executors will have to gather in the estate, pay any debts, and distribute the estate to the beneficiaries. 

This carries a fixed fee of £1,000 plus VAT (plus the Probate Application Fee).

The timescale for this application ranges from 4 to 6 weeks to prepare the forms but relies on the Executors gathering in the necessary information swiftly.

Application Only Service (IHT Payable)

If the estate has an IHT liability, we can prepare the probate applications and inheritance tax returns for you to deal with on receipt of the grant. Inheritance Tax must be paid within 6 months in most cases, so gathering in all pertinent documents for the application will need to be done quickly. An estate that has an IHT liability is much more work, as there are numerous further applications that must be completed as well as the probate application, and the tax return is a much larger form.

Costs start from £1,800 plus VAT (plus the Probate Application fee). 

The timescale for this application ranges from 4 to 6 weeks to prepare all necessary forms, but again relies on Executors gathering in the necessary information swiftly.  

Full Probate Administration Service

Administering an estate is a difficult and demanding role. HMRC want any tax paid within 6 months, beneficiaries want their inheritance paid, debtors of the estate want their debts paid. The executors will have to deal with all of these issues, as well as dealing with estate agents (where property is involved) conveyancers, surveyors, and sometimes tradesmen if the property requires work before selling. The probate application process is a time consuming one. Filling in forms, liaising with banks and building societies, pension providers, utility companies, mortgage providers. It’s a lot of work and a lot of stress. We can take that stress off you by dealing with all of these elements on your behalf.

This will involve the following:

• Providing Initial advice. Explaining what is needed and why.

• Providing a client care letter and terms of business to you.

• Provide you with regular updates throughout the process.

• Obtaining the relevant documents required to prepare the application forms and tax returns (we will require some initial input from yourselves)

• Presenting the applications to the probate registry and obtaining the grant of probate or letters of administration.

• Collecting in the estate assets and dealing with providers

• Paying off the tax liabilities and dealing with HMRC throughout

• Paying out any debt liabilities and legacies and dealing with beneficiaries

• Selling any properties involved, dealing with agents and conveyancers on your behalf

• Distributing residue of estate to beneficiaries

On average Probate matters are dealt with within 18 months, but this does depend on how complex the estate is, and how many separate providers/debtors are involved.

Our costs will depend on how complex the estate is, what’s involved and how many parties we have to deal with. Our hourly rate is £250 plus VAT. Most cases are dealt with in around 25 hours which result in fees of around £5,500 plus VAT, but some can be between 50 and 60 hours which could see fees of up to £13,000 plus VAT. There is no one size fits all with probate unfortunately. Every case is different. 

Disbursements

Disbursements will apply to every case. No VAT applies to disbursements. 

The probate application fee starts at £273 now and for every official copy of the grant that we require will be an extra £1.50.

Other disbursements might include newspaper adverts, bankruptcy searches, land registry searches, banking fees and bank transfer fees.