THE LEGAL HELP COLUMN

Hello and welcome to our latest legal help column. Having spent the last two editions exploring what is needed for effective estate planning, it is probably appropriate to discuss what happens when the sad day comes and we have to deal with a death. Once again I am indebted to David Bevan, head of the Private Client team, for his time and patience in correcting my misconceptions.

So David, our hypothetical client has sadly passed away leaving a fairly recent Will, possibly with a codicil or two. What happens next?

Depending on the circumstances of the death, the initial action will be taken or directed by the Undertaker and the Coroner’s Office. Steps will need to be taken to locate the original Will so that an application can be made for the Grant of Probate

So, no matter how good the estate planning has been, there is still another legal hurdle to clear?

Yes, in most cases, but if the estate planning has been done well and is up to date, Probate action and the subsequent administration of the deceased estate will be much easier

Why do we need Probate?

Probate is the legal process which ensures that the deceased’s wishes and bequests will be met. A Grant of Probate is evidence of who is entitled to deal with the estate. Just consider what would happen if the Probate system did not exist. How would financial institutions know that they are releasing savings to the correct person? How could sales of the deceased’s property be legally completed? Who can guarantee that the executors will be willing or able to act? Once a Grant of Probate is issued the person or persons who are granted Probate are then under a legal obligation to deal with the estate in accordance with the wishes of the deceased as contained in the Will.

OK, I understand, so what is the process?

It is similar to other topics we have discussed in that there is either a do-it-yourself approach, or you can instruct a solicitor. With the DIY method the executor will need to collate and complete a range of documents and then attend an interview with the Probate Registrar, which is usually in the Potteries for this area. If a solicitor is instructed then the process is considerably easier for the executor, as the solicitor will know which documents are required and how to complete the forms. There are further advantages in using a solicitor, as the interview with the Registrar will not be required and, once instructed the executors can call on their solicitor to help with advice and guidance as the estate is dealt with.

Then what happens?

We could fill the entire magazine discussing the many matters that can arise in the actual administration of an estate. However, it is worth re-emphasising that the Grant of Probate puts a legal responsibility on the recipient to dispose of assets as directed in the Will, whilst also settling outstanding accounts such as council tax, utility bills and other possible debts.

Sounds as though it can be complicated

It can be. Much depends on the complexity and nature of the deceased’s assets, the Will and family relationships at the time of death. Once again, you have the choice of DIY or instructing a solicitor. It is always worth considering and perhaps getting a costs estimate from a solicitor as their specialist knowledge of such things as Inheritance Tax, Capital Gains Tax and Income Tax can actually help maximise the value of the estate, as well as making sure that it is effectively administered.

So are you saying that there are many instances where employing a solicitor can have a positive effect on the value of the estate?

Absolutely, taking maximum advantage of any reliefs, whilst limiting liabilities, is always going to benefit the estate. In addition the executors have less to do, which may mean fewer days off work, or less long journeys to make.

I have always avoided discussing costs within these articles as, without regard to individual circumstances, they can be very misleading.

I agree. It is important to spend a little time discussing the situation with a new or potential client before I can give them an accurate idea of likely costs, which are often less than they anticipate. One point I would make is that the cost should be based on the time the solicitor needs to administer the specific estate. I am aware that some financial organisations quote a fee plus a percentage of the value of the estate. This might be taken as suggesting that the larger the estate the more difficult is the administration. This is not necessarily the case - it is the complexity of the estate which takes time, not simply its cash value.

Is the administration of an estate a long job?

In terms of solicitors’ hours not necessarily. However, when there is property to sell and responses are required from a number of financial institutions and Government Departments, it is not unusual for it to take six months or even a year before everything is finished.

What happens when the executors are unable to act, or there is no Will at all?

If there is a Will and the executors cannot or will not act then the next person entitled to apply for a Grant to administer the estate will be any person named in the Will to whom the deceased has left his estate or the balance of that estate, after all gifts have been made.

If there is no Will then the process is similar but more complex than a Grant of Probate, and is called Letters of Administration. There is an order of priority as to who may apply which starts with a husband or wife and includes sons, daughters, parents, brothers, sisters and finally other more distant relatives. In the case of the deceased’s children and siblings, if they have died during the lifetime of the deceased then their own children can also apply to act.

That last part sounds as though it could get messy

Speaking frankly the answer must be yes, particularly if there are any relationship issues within the family. I know I keep returning to the subject but it is another excellent example of why we should all have a Will!

In the case of a Grant of Letters of Administration, is the process the same as a Grant of Probate?

Yes, but with the considerable added complexity of establishing that the person applying to act is entitled to do so, by reference to the priority order I referred to; and that can take quite a lot of work to sort out.

Final question, is a Grant of Probate always required?

No, but as usual it is difficult to be specific without filling up several pages. However, as a general guide, if the deceased left less than £5,000 or they owned everything jointly with someone else, then a Grant may not be required.

In these cases, the only way to establish if the estate could be administered without a Grant is to contact the relevant institutions such as Building Societies etc.to see whether they would release the assets without a formal Grant of Probate.

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My thanks again to David for his time.

As ever, I must point out that this article is not intended to be comprehensive or to provide specific legal advice. It should not be relied upon in the absence of specific advice given in relation to particular circumstances.

Graeme Barber
Bowcock Cuerden LLP
01270 611106
Email: info@bowcockcuerden.co.uk