Obtaining a Grant of Representation Flashcards
What is a grant of representation?
An official document confirming the personal representatives’ (PRs) authority to act. It proves the PRs’ title to the deceased’s assets. Asset holders usually require proof of appointment before releasing funds.
Who are Personal Representatives (PRs)?
A generic term for those who administer a deceased person’s estate. This includes both executors and administrators.
○ Executors are appointed by a will and obtain a grant of probate.
○ Administrators are appointed when there’s no valid will, or no executor able to act. They obtain a grant of letters of administration
What are the different types of grants of representation?
○Grant of Probate: Given to executors named in a valid will.
○Grant of Letters of Administration with the Will Annexed: Given when there’s a valid will, but no executor is able or willing to act.
○Grant of (Simple) Letters of Administration: Given when there’s no valid will
What is the role of a solicitor in estate administration?
Solicitors advise on winding up an estate, whether a grant is needed, and help with the process of obtaining a grant. They also advise on inheritance tax (IHT) matters and completing the IHT400 form. They ensure compliance with data protection regulations for beneficiaries.
What is an IHT400 form and when is it needed?
An inventory of the deceased’s assets and liabilities, used to calculate IHT. It’s required for estates that are not ‘excepted’. The form is sent to HMRC. It is also used for claiming reliefs and exemptions.
What are ‘excepted estates’?
Estates that meet certain criteria and do not require the submission of an IHT400 to HMRC. There are three categories of excepted estates: small, exempt and non-domiciled.
○Category 1 (‘small’) estates: Generally, the gross value of the estate plus certain transfers within 7 years of death must not exceed the nil rate threshold.
○ Category 2 (‘exempt’) estates: The gross value of the estate (plus specified transfers and exempt transfers) must not exceed £3 million.
○ Category 3 (‘non-domiciled’) estates: Where the deceased was never domiciled or treated as domiciled in the UK and owned limited UK assets
What is the nil rate band (NRB)?
The threshold below which inheritance tax is not charged. It is currently £325,000 but can be increased if a spouse or civil partner has not used all or part of their own NRB. The NRB in force at the death of the survivor is increased by whatever percentage of the NRB of the first spouse to die was unused by them
What are ‘specified transfers’ and ‘specified exempt transfers’ in relation to excepted estates?
○Specified transfers are chargeable transfers of cash, personal chattels, quoted shares, or land made within the seven years before death.
○Specified exempt transfers are transfers exempt due to spousal/civil partner, charity, political party, or housing association exemptions made within the seven years before death
When is IHT payable?
Generally, IHT is due six months after the end of the month in which the deceased died. However, IHT on non-instalment option property must be paid before the grant. IHT on instalment option property (like land) can be paid in 10 annual instalments
What is ‘instalment option property’?
Certain assets, mainly land and some business property, that allow for inheritance tax to be paid in 10 annual instalments
What are some ways to fund IHT before obtaining the grant?
○Direct Payment Scheme: Allows banks to pay IHT directly to HMRC from the deceased’s accounts.
○Life Assurance: Funds from policies payable to the estate can be used.
○Assets Realisable without a Grant: Certain assets up to £5,000 may be accessed without a grant.
○Loans from Beneficiaries: Beneficiaries can provide loans to pay IHT.
○Bank Borrowing: PRs can borrow from banks to pay IHT.
○National Savings: Funds from NSB accounts or certificates.
●Heritage Property in Lieu of Tax: Some pre-eminent assets of national interest can be offered to HMRC. * Obtaining a Grant on Credit: In exceptional cases, a grant can be obtained on credit
What are Forms PA1P and PA1A?
○PA1P: Used when applying for a grant of probate or letters of administration with a will.
○PA1A: Used when applying for letters of administration when there’s no will (intestacy). Both forms are used for paper applications to HMCTS. Online applications require the same information
What is ‘probate value’ of an estate?
The value of the property that passes under the grant to the PRs. It excludes assets such as jointly owned property, life policies assigned or written in trust, and trust property in which the deceased had a life interest. The probate value is used to determine the probate fee
What is the order of priority for a grant of letters of administration with the will annexed?
According to NCPR 1987, r 20, the order is:
○Executor
○Residuary legatee or devisee holding in trust
○Other residuary legatee or devisee
○Personal representative of residuary legatee
○Other legatee or creditor
●Personal representative of other legatee or creditor
What is the order of priority for a grant of simple letters of administration (intestacy)?
According to NCPR 1987, r 22, the order is:
○Surviving spouse or civil partner
○Children and issue of deceased children
○Parents
○Whole blood siblings and their issue
○Half-blood siblings and their issue
○Grandparents
○Whole blood uncles and aunts and their issue
○Half-blood uncles and aunts and their issue
○The Treasury Solicitor (if claiming bona vacantia)
○Creditors or those with a possible future beneficial interest
