Administration: Applications for a grant

Question 1

What are the pre-grant steps?

Answer 1

• Death certificate/funeral
• Secure estate assets
• Locate will/codicil
• Basis of distribution and identity of beneficiaries
• Schedule of assets and lifetime transfers

Question 2

Death certificate/funeral

Answer 2

• PRs may register a death - although this is more likely to be done by the family who then provide the PRs with the death certificate.
• Death must be registered before a funeral can take place
• PRs need official copies of the death certificate to send to institutions where the deceased held assets e.g. banks
• Government services (HMRC, DVLA, DWP) can be notified of the death via a centralised service when registering the death - if not used PRs should notify each institution individually

Question 3

Do funeral wishes need to be followed?

Answer 3

There is a moral rather than legal obligation to follow funeral wishes set out in a Will.

Question 4

Who pays for the funeral?

Answer 4

The cost of funeral is a post-death administration expense which is payable from the estate funds and may be taken into account when calculating inheritance tax.

Question 5

Securing estate assets

Answer 5

• PRs have a duty to preserve the value of the estate and may be personally liable ot account for loss or damage to the estate assets.
• The PRs should take steps to ensure valuable items and documents are kept safe.
• If the property is left vacant it should be secured and the insurers notified. If a vehicle is left unattended and off the road, insurers and DVLA should be notified.
• should also consider closing social media accounts

Question 6

Locate the will/codicil

Answer 6

• At the start of the administration process the PRs should obtain the original will and any codicils (copy will not suffice) + satisfy themselves the will is valid.
• check for any obvious failings + any documents incorporated into the will
• If appears to be intestate PRs should make enquiries to confirm this before proceeding
• Also can check the national wills register (but registering it is optional - so if it doesn’t show up it doesn’t mean there isn’t one)

Question 7

Who can see the will?

Answer 7

Before a grant is obtained only the executors are legally entitled to see it.

Once the grant is issued the will is a public document.

Question 8

Basis of distribution

Answer 8

• Will and any codicils should be read in full and the beneficiaries identified.
• If there is no will, the intestacy rules determine who benefits. Those entitled should be informed.
• Prs should provide beneficiaries with a realistic timescale for distribution of the estate
• Admin process often takes longer than some beneficiaries expect

Question 9

What is included in a schedule of assets and liabilities?

Answer 9

• Identify and value estate assets
• Identify the deceased’s creditors
• Work out what steps are required to manage the distribution of the assets
• Calculate any IHT due
• Establish whether the estate is solvent
• Estimate what each beneficiary is entitled to

Will need to talk to family members to get ideas about this and search the deceased’s home.

Question 10

What should you do after the schedule of assets and liabilities has been compiled

Answer 10

Contact any appropriate organisation to:
- notify them of the death and provide a copy death certificate
- request confirmation of the value of the asset at the date of death
- request instructions for how to close an account or transfer ownership of the items to the PRs

Question 11

Establishing values of assets: bank accounts

Answer 11

Bank accounts: PRs should request from the bank a summary of the account balance on the date of death plus any accrued interest

Joint accounts: should establish what proportion of the account was owned by the deceased. 50/50 is presumed but enquiries should be made to ensure an alternative arrangement had not been made.

Question 12

Establishing values of assets: chattels

Answer 12

Low value chattels: usually acceptable to estimate their value. Probate value is usually lower than their value for insurance purposes.

Single items worth more than £500 or unusual items: a formal probate valuation should be obtained. Can hire an organisation and cost is payable from the estate.

Question 13

Establishing values of assets: shares

Answer 13

Quoted shares: If the deceased owned quoted shares there are special rules for establishing the date of death value linked to stock exchange priced that day. The high and low for that day are calculated and are valued by taking the lower value plus one quarter of the difference between the higher and lower value.

Private co shares/partnership/sole trader: specialist valuer would usually be instructed.

If held through financial services company the broker will provide a list of shareholdings/investments and the date of death values.

Question 14

Establishing values of assets: land

Answer 14

PRs will usually instruct estate agents to prepare a valuation. Often more than one is appointed and the average is taken.

Where land is owned jointly the value of the deceased’s share should be established. A PR may need to view the land registry official copies.

Question 15

Establishing values of assets: Debts

Answer 15

PRs also need to collect details of the debts/liabilities owed by the deceased at death.

Often there will be evidence of loans and credit card statements. When utilities and phone companies are notified of the death they will provide a summary of amounts due to be paid at the date of death.

May also need to use s27 notice.

Debts should be repaid by the PRs. Usually the amount of the deceased’s debts are taken into account when calculating IHT - however this will not be possible situations where:
- deceased borrowed money to finance the purchase of IHT excluded asset
- a debt owed by the deceased is never actually repaid from the estate funds.

Question 16

Establishing values of assets: Lifetime transfers

Answer 16

The value of lifetime transfers made by the deceased in the 7 years before their death will have an impact on the IHT due following their death. There may be a tax charge in addition to the tax due in respect of the death estate assets.

Therefore important for PRs to ask questions of the family to establish:
- the nature of any transfer
- date it was made
- amount of value
- identity of the donee

Question 17

When is an executor named under a will unable to act?

Answer 17

They:
- pre-deceased the testator (or survived but died before taking out the grant).
- Are a minor (but their appointment is still valid and power can be reserved to the minor who can make an application later (18) if the administration remains complete.
- lack capacity
- are the testator’s former spouse/civil partner and the divorce/dissolution took place after the will was made.

Question 17

How many executors are needed?

Answer 17

Only one is required even where there are minor or life interests but practical to appoint two.

Can appoint as many executors as they like but a maximum of four people can be named on the grant.

Question 18

Grant of double probate

Answer 18

If power is reserved, a person can apply on a later date if vacancy arose and admin was still incomplete.

In this case they would apply for a grant of double probate.

Question 19

Death of a PR

Answer 19

At least one PR remains: Remaining can continue administration - if the number falls below the minimum needed an additional PR can be appointed.

No PR remains: either:
- chain of representation
- grant of letters of administration de bonis non

Question 20

Chain of representation

Answer 20

Applies if the last surviving executor dies having appointed an executor of their own and this person takes out the grant of probate for the last surviving executor.

This new executor automatically becomes executor of the original testator’s estate as well and no additional grant is required.
Does not apply to administrators.

Question 21

Grant of letters of administration de bonis non

Answer 21

Essentially a second grant is issued:

three requirements:
- administration is incomplete
- no remaining personal representatives; and
- there had been a previous grant of representation

Question 22

Grant of letters with will order of priority

Answer 22

NCPR Rule 20:
a) executor
b) trustee of residuary estate
c) residuary beneficiary (or beneficiary under intestacy)
d) PRs of anyone in (c) other than a trustee or life tenant of the residue
e) any other beneficiary or a creditor
f) PRs of anyone in (e)

• cannot apply if someone has a better right
• people within the same category have the same rights
• must explain why anyone with a better right is not applying (known as clearing off)

Question 23

Grant of letters of admin order of priority

Answer 23

Rule 22 NCPR:

a) surviving spouse
b) children of the deceased
c) father and mother of the deceased
d) whole blood siblings
e) half-blood siblings
f) grandparents
g) uncles and aunts
h) half uncles and aunts

If no one, the crown.
If not the crown, a creditor (or someone who may have received benefit if the estate was larger).

Must demonstrate nature of familial relationship and must also have beneficial entitlement under the estate.

Question 24

Application on behalf of a minor

Answer 24

An application on behalf of a minor may be appropriate where:
- no adult with equal or greater entitlement will act
- the minor is the only person within the category having the greatest entitlement or all in the category are minors

Note: an application by an adult with equal entitlement to apply is given priority over an application made on behalf of a minor

Question 25

How many administrators should there be?

Answer 25

• only one is needed unless there are minors or a life interested in the estate - then two will be required.
• maximum of four applicants may apply

Question 26

Can you reserve power to a minor?

Answer 26

Yes. They are entitled to make an application upon reaching 18.

Note: someone can also make an application on their behalf.

Question 27

Can you reserve power to someone who lacks capacity?

Answer 27

Yes. They are entitled to make an application when they have capacity again.

Note: someone can also make an application on their behalf.

Question 28

What are the options for an executor unwilling to act?

Answer 28

They have a number of formal options:

• renunciation
• reserving power
• appointing an attorney

Question 29

Renunciation

Answer 29

• An executor may formally renounce (give up) their right to apply for probate and admin continues as if they had not been appointed.
• Must sign a form of renunciation
• this form must be submitted when applying for the grant
• renunciation will also be noted on the grant
• renunciation is final and the executor cannot change their mind without court approval

Note: an executor cannot renounce if they have intermeddled

Question 30

What is intermeddling?

Answer 30

When a person has taken steps indicating they have accepted their appointment and are fulfilling the duty to administer the estate.
Such as:
- obtaining, receiving or holding the deceased’s assets or forgiving any debt or liability owed to the estate
- paying debts, selling assets, disposing of personal property

Acts of common humanity do NOT amount to intermeddling
- arranging funeral
- taking steps to secure the estate assets

Question 31

Reserving power

Answer 31

• Good option if does not want to act but wants to keep the option - can reserve the power to do so
• There must be at least one other executor who does take out the grant of probate.
• Can still reserve power if an executor has intermeddled
• To act later the executor who reserved power can apply for a grant of double probate

No form - but the executors who are applying for probate must give notice of their intention to apply to the executor to whom power is reserved and the reservation of power is noted on the grant.

Question 32

Appointing an attorney

Answer 32

Power may be given by the executor to the attorney:

After the executor obtained the grant: confirms a PR may delegate their functions to an attorney for a max of 12 months. Can be renewed if needed. Notice should be given to other executors.

Before grant obtained: attorney makes a parallel application for letters of administration (while other executor(s) apply for a grant.

Power of attorney must be provided to the probate registry as part of the application.

Question 33

What if an administrator is unwilling to act?

Answer 33

They can either renounce or appoint an attorney.

An administrator cannot reserve power.

Note: an administrator is not prevented from renouncing even if they have intermeddled with the estate.

If an executor renounced their right for a grant of probate they have not automatically renounced their right to apply as administrator - so may need to renounce both rights.

Question 34

What if someone who is entitled to act does nothing?

Answer 34

They should not do nothing.

If someone refuses can obtain a court direction to:
- Require a person to take out a grant
- Remove their right to apply
- Authorise another person to take on the administration

Question 35

IHT payment and account

Answer 35

The PRs of an estate have a duty under s216 Inheritance Act 1984 to:

• deliver an account to HMRC regarding the deceased’s estate
• Pay an IHT due

Question 36

What should be in the account to HMRC?

Answer 36

• all of the property comprising the deceased’s taxable estate immediately before death and the value of each item at the date of death
• the exemptions and relief that apply

The account provides the basis upon which the amount of IHT due (or not) is calculated and the form is provided to HMRC along with payment for any IHT due.

Question 37

When is the deadline for IHT?

Answer 37

Submitting the account:
- 12 months from the end of the month in which the death occurred.

deadline for paying IHT:
- 6 months from the end of the month in which death occurred after which interest becomes payable on the unpaid tax.

In practice this is submitted as soon as possible.

Question 38

IHT: instalment options

Answer 38

For certain assets, IHT can be paid by 10 equal annual instalments.

First instalment is on the usual deadline and subsequent instalments are are annually on each anniversary date.

available for:
- land and buildings

• company shares/securities giving the deceased control
• some unquoted company shares that did not give control where: payment cannot be made without undue hardship, rep 20% or more of the total tax for which the PRs are liable, or value of the shares is greater than 20,000 and 10% of nominal value of all the shares
• farms or interest in a farming business
• business or interest in a business
• timber

Question 39

What are the two categories of excepted estates?

Answer 39

• Low value excepted estate
• Exempt excepted estate

Question 40

What is a low value excepted estate?

Answer 40

One where there is:
- no IHT payable because
- the gross value of the estate is below the NRB (can include 2xNRBs where getting one from deceased spouse)

Question 41

What is an exempt excepted estate?

Answer 41

One where:
- the gross value of the estate is no more than £3M but
- no IHT is payable
- because after debts are deducted and spouse and/or charity exemption are applied the net value of the estate is below the NRB.

Note: can only consider spouse and charity exemptions for this - no other reliefs can be taken into account.

Question 42

What else can prevent an estate from being excepted?

Answer 42

• GROB
• Foreign assets exceed £100k
• more than one trust and/or trust where its value exceeds £250k
• specified transfers exceed £250k
• a claim is being made for the RNRB

Question 43

What form do you submit for changes to the IHT400?

Answer 43

The form C4 is used.

Question 44

How is money raised to pay IHT?

Answer 44

• direct payment scheme: some banks will be willing to pay pay HMRC directly - complete schedule IHT 423.
• borrowing: can borrow from a beneficiary or from a bank (but there will be interest from the bank)

Question 45

How do you apply for a grant?

Answer 45

Apply to the Probate Registry with enough information about the deceased’s estate to show that the correct grant has been requested> provided either:
- completing and then posting a paper application form to the probate registry; or
- submitting an online application via HMCTs service and answering questions.

Question 46

Three categories for a professional applcation

Answer 46

1. Mandatory online application
   - includes most grants of probate
2. Online application possible but not mandatory
   - some simple applications under NCPR 20 and 22 (sole applicant and no minority or life interests)
3. Mandatory paper application
   - non-standard grants and more complicated applications under NCPR 20 and 22:
   - second grants
   - grants to PR where chain of rep applies
   - grants where original will is missing or there are issues with the will
   - grants to attorneys
   - grants under NCPR 20 if a lift interest arises

Question 47

What are the two forms for a paper application?

Answer 47

PA1A: deceased did not leave a will (NCPR 22)

PA1P: deceased left a valid will (executor act under the will or administrators are appointed by NCPR 20)

Question 48

What else needs to be included in an application for a grant?

Answer 48

• Confirmation of the identity of the deceased an the applicants
  Deceased: full name, date of birth, deceased, if went by another name this should be included, confirm marital status, value of foreign property
  Applicants: full name, address and contact details
• Justify the type of grant requested and their entitlement to act as PR: express statement confirming the type of grant should be included,
  executor: submit original testamentary documents
  admin (w will): state which category, clear-off anyone with a better right, state if anyone is a minor or has a life interest
  admin (no will): state familial relationship, clear-off anyone with a better right, state if a beneficiary is a minor
• Provide information about the value of the estate and inheritance tax (IHT) status of the estate
• complete the legal statement on the probate form confirming the information provided is correct and that they will administer the estate properly

Question 49

Application: IHT400 form

Answer 49

If IHT400 was completed: applicant must confirm this was sent to HMRC and IHT due was paid. HMRC will issue a letter confirming it has received and processed IHT400 and any payment - this will contain a unique code.

If excepted estate then applicants do not need to complete a form but should include gross and net values of the taxable estate in their probate application.

Question 50

Probate fees

Answer 50

The fee varies depending on whether or not a professional is applying. No fee for estates worth less than £5000.

There is no original grant - probate registry provides a number of sealed copies as requested by the PRs when making the application. One per asset holder and some spare copies.

Sealed copies are sent to asset holders.

Question 51

Death certificate

Answer 51

A certified copy of the death certificate should be provided on personal applications. Not required for legal professional applications.

Question 52

Testamentary documents and renunciation

Answer 52

If it exists an original will must be submitted with the application.

Form of renunciation should also be included.

Question 53

Inheritance tax forms

Answer 53

Excepted estates:
No IHT payable and no need to to submit an IHT form

Non-excepted estates:
- IHT400 will have been completed
- IHT400 and any tax due are sent to HMRC
- HMRC then provides confirmation to the applicants
- The Probate Registry will not issue the grant without the unique code and estate values from the letter.

Question 54

Power of attorney

Answer 54

If an executor appoints an attorney on their behalf the attorney’s details must be provided in the application form along with an express declaration of why the names executor is not applying.

Form PA11

Question 55

What is an affidavit?

Answer 55

A formal written statement of fact which a person signs under oath.

Person making the affidavit swears or affirms that the contents of the document are true.

If requirements are met, the facts contained within it can be admitted as evidence in support of legal proceedings.

Question 56

What are the legal requirements for making an affidavit?

Answer 56

• Signed by all parties and dated
• Completed and signed by the person witnessing (independent solicitor or commissioner for oaths) and their name, address and qualification must be stated
• Must follow immediately on from the text and not on a separate page

Question 57

When are affidavits required?

Answer 57

May be needed where there is a valid will but there is something about the document which renders its validity or interpretation uncertain.

Often relates to:
- Compliance with s9 WA 1837
- Knowledge and approval
- Date
- Physical condition of the will

Question 58

Affidavit: Compliance with s9 WA 1837

Answer 58

Would submit an affidavit of due execution.

Original will is submitted with the affidavit.

Will usually be made by one of the witnesses and will confirm that the will was executed in accordance with the formalities required.

Question 59

Affidavit: Knowledge and approval

Answer 59

Would submit an affidavit of due execution.

Affidavit would usually be made by one of the witnesses and confirms the circumstances in which the will was executed

Need can be avoided if the original attestation clause is drafted to reflect the special circumstances (e.g. read out loud to the testator)

Question 60

Affidavit: date

Answer 60

Would submit an affidavit of due execution.

Made by witnesses to confirm the correct date can be submitted with the original will.

Question 61

Affidavit: alterations

Answer 61

Affidavit as to alterations could be submitted by a witness to establish the timing of the alteration.

Question 61

Affidavit: poor condition of the will

Answer 61

• pin holes
• paperclip (indicating other pages were attached)
• non-consecutive pages or clause numbering
• signs of an attempt to revoke - burning or tearing

Affidavit of plight and condition
Affidavit of attempted revocation
Affidavit of search (confirm enquiries as to missing documents were carried out)

Question 62

Affidavit: original will is missing

Answer 62

Can apply for a court order to submit a copy of the will where the original will is missing or could have been accidentally destroyed.

Can use when applying for court order, an affidavit including:
- evidence that the will/codicil existed after the deceased’s death or rebut presumption the missing will was revoked in their lifetime
- confirmation the will/codicil was correctly executed; and
- the copy document submitted accurately records the testamentary wishes of the deceased