When someone passes away, their affairs will need to be handled by someone, with assets gathered and debts paid. In the UK, this process is known as probate and involves various legal and financial responsibilities. The key players during estate administration are executors and administrators as they are tasked with executing the deceased’s wishes or managing their estate, depending on whether a valid will exists. To learn more about the probate process, fees, tax implications, and other considerations when dealing with an individual’s estate, read on.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
More about probate and probate fees
If the person who has passed left a valid Will, they will likely have named an “executor”. To prove they are entitled to deal with the estate and to execute the Will as the deceased wishes, the executor must obtain a “grant of probate”. In the case that there is no Will, the person who handles their affairs is known as an “administrator” and they must obtain “letters of administration”.
Executing an estate plan is unfortunately not a free process. A universal probate fee of £273 applies to applications made since January 2022 onwards, regardless of whether they are submitted by solicitors or individuals. Before this came into effect, the fee varied, with solicitors paying less than individuals. It’s important to note that this fee only applies to estates valued at more than £5,000. There is no fee for estates valued at £5,000 or less. The only exception is that if probate has already been granted and a second application is needed, then a fee of £20 is charged, regardless of the value of the estate.
Duties of Executors and Administrators
The duties of an executor or administrator are not to be taken lightly. They have several legal responsibilities that must be done, including registering the deceased’s death, collecting all estate assets, preparing asset lists, settling debts and taxes, covering funeral expenses and administration costs, and distributing the estate per the terms of the will. The list doesn’t end there — executors may even need to pay legacies, transfer property, or hold assets in trust as specified in the will.
Trusts and Probate
Assets held in trusts are not usually included in probate. However, when someone has absolute entitlement or a general power over the trust assets, they won’t be excluded. Trusts might still be subject to Inheritance Tax (IHT) if certain conditions are met. It is the responsibility of executors to review all trusts, gifts, and assets during the valuation of the deceased’s estate.
Can anything be done to avoid probate?
In some cases, yes, you can take steps to avoid probate. For specific assets, you can transfer them into a trust, which is often referred to as a probate trust. There are some limitations to this due to IHT changes, so it’s best to consult with a professional before making any assumptions.
Consult a professional for better understanding
While it’s an important role to take on for a loved one, managing an estate means you will need to navigate complex legal and financial concepts. Executors and administrators’ roles are crucial in executing the deceased’s wishes, settling debts, and ensuring tax compliance, so it’s essential everything is done right.
Understanding the probate process, tax implications, and options for avoiding probate can help expedite estate administration and minimise tax burdens for beneficiaries. This is why you should seek legal and financial advice if you are ever tasked with dealing with an estate to ensure compliance with current laws and regulations. To learn more about probate, taxes, and estates, get in contact with the experts at Dental & Medical Financial Services today.