It's no secret that big changes have been made to the process of applying for probate in England and Wales in recent years. Ostensibly, these developments may seem to remove the need for Personal Representatives to obtain professional assistance, in 'straightforward' estate administrations. In this article, Nadine Walton, a Senior Associate in our Personal & Family team who is a solicitor qualified in England and Wales, considers some key reasons you should reflect before diving in to a process that can be far from simple, whatever the circumstances of the estate.
Background and Recent Changes in the probate process – England and Wales
The term 'probate' is often used as a generic one to describe the process of a deceased individual's Personal Representatives applying for a 'Grant of Representation'. Where the estates of deceased individuals domiciled in England and Wales are concerned, most Personal Representatives will need to obtain this document ('the Grant') to prove their authority to collect in the assets of the estate.
In September 2020, HM Courts and Tribunals Service (HMCTS) decided to implement a change to require that most applications for a Grant be completed online.
It was still however necessary at that time to ensure that either a 'Return of Estate Information' form (IHT 205) or Inheritance Tax Account (IHT 400) was filed. The filing needed to be undertaken prior to, or simultaneously with, the probate application.
The simpler IHT205 document was required where an estate could be classified as an 'excepted estate,' based on application of various eligibility criteria. In most cases, estates with a value of less than the inheritance tax threshold and without other 'complicating' factors were deemed 'excepted' estates.
For deaths occurring on or after 1 January 2022, HMRC introduced rules to mean a greater proportion of estates would be caught within the 'excepted' net. Additionally, the reporting requirements for these excepted estates were relaxed. The new rules dictate that in an excepted estate, an IHT205 form is no longer required to be submitted with the probate application.
By reason of the above changes, an assumption has arisen among many individuals that they can proceed independently with 'fuss-free' probate online. The idea this can save time and money has also gathered momentum in certain circles in the press.
The aim below is to provide just a few reasons this assumption should not be accepted at face value.
1. Retention of reliable valuations, proper records, and complete accounts
Even in simple estates, valuing the deceased's assets and keeping proper account of these as at the date of death is important, for future reference. When dealing with the estate of an individual who has pre-deceased their spouse, for example, it should be remembered that it may be essential to look back to the value of the first spouse's assets which were declared for probate, at the point the survivor dies.
The IHT205 form previously provided at least some form of inventory and record for unrepresented Personal Representatives; but no longer. A legal advisor should however ensure that appropriate valuations are arranged and full accounts are retained. Advice should also be provided on tax implications of changes in value during the period of the administration. Significantly, it should be noted that the classification of an estate as a 'straightforward' one can change due to circumstances and events arising in the administration period. Assets rising in value over this period, for example, may fall to be assessed under the Capital Gains Tax regime when they are transferred or sold.
2. Life before, and after, the Grant
There is often a view that obtaining the 'Grant' is the single, major milestone in an estate. This is not the case from the perspective of the legal advisor. Our role in administering the estate is about so much more than obtaining the Grant, with the mechanics of the application for this document often constituting one of the simplest steps in the process.
At Brodies, we constantly seek to add value for the client Personal Representative and beneficiaries where possible, spotting opportunities for planning and the need for further advice on distinct issues which frequently arise in the wider context of an estate administration.
If a trust arises under the Will for example, it's important to consider the legal and practical ramifications of this, as well as compliance requirements. Proper advice must be taken by the Trustees on their obligations and role.
The tax consequences of the estate must be considered, with Personal Representatives being made fully aware of timescales in which certain tasks must be carried out.
Where the Personal Representatives and beneficiaries are particularly concerned about taxation, or asset preservation, we will consider steps that could be taken to vary the terms of the Will or intestacy. This can involve creating new gifts or trusts in line with these objectives.
3. Particularly tricky issues and intestate succession
'Probate' is often used as an 'umbrella' term, to describe the process of obtaining a Grant of Representation in a deceased's estate. Actually however, if the deceased died without a Will, the Grant obtained from the Probate Registry in this case is not one of 'Probate' at all. Instead, a 'Grant of Letters of Administration' must be obtained. Where an individual dies intestate domiciled in England and Wales, the parties authorised to obtain this Grant are usually family members, determined by applying strict legislative rules.
Similar legal rules apply to determine the beneficiaries who will share in the estate, in specific proportions. These so-called 'intestacy rules' are extremely complex. The Personal Representatives are termed 'Administrators', rather than 'Executors', in such estates. Unfortunately, they do not benefit from as comprehensive authority as their counterparts in testate estates. Yet, in applying the intestacy rules to the deceased's family circumstances, the task of the Administrator is a hugely daunting, and inevitably risky one.
4. No 'one size fits all' approach
Clients sometimes worry that a legal advisor is going to take control of handling the estate of a loved one, which can be a process in which they understandably wish to remain involved. This feeling may have its root in financial concerns, personal reasons, or both. Brodies' approach is to provide expert advice to ensure the estate is administered properly and efficiently, but that does not mean excluding or 'taking over' from the Personal Representative. As advisers, we pride ourselves on being both commercial and personable in outlook, and work closely with the client Personal Representative to adopt the particular approach to the administration that they require. This can involve us recommending where tasks can more efficiently be carried out by that Executor/Administrator (provided there is a willingness). Every estate is different. Our objective is to ensure that as a client, you are satisfied that you received an excellent return from investing in a service of the highest quality.