Wills

Question 1

What is a grant of representation?

Answer 1

An official document confirming the personal representative’s authority to act.

Question 2

Why is it necessary to have the grant of representation?

Answer 2

Personal representatives will have to gain control of the deceased’s assets so they can realise or sell them in order to pay for the deceased’s debts and pecuniary legacies.

However, before asset holders (banks, building societies and insurance companies) will release funds to the PRs, they usually require PROOF that the PRs have been properly appointed.

Additionally, in order to sell most assets, the PRs must prove to the purchaser that the have title to the assets.

Question 3

What 2 things does the grant of representation prove?

Answer 3

Confirms the personal representative’s authority AND

Their title to the deceased’s assets.

Question 4

Where do you apply for to get a grant of representation?

Answer 4

His Majesty’s Courts and Tribunals Service Probate (HMCTS).

Question 5

Who are the personal representatives?

Answer 5

Will either be the deceased’s executors (will) or intended administrators (no will).

Question 6

How can PRs be identified in the following situations?

1) The deceased left a valid will which appoints executors, one or more of whom is able and willing to act.

2) The deceased left a valid will but there are no persons able or willing to act as executors.

3) The deceased left no will or no valid will.

Answer 6

1) Executors will obtain a grant of probate (using form PA1P).

2) Administrators will obtain a grant of letters of administration with the will annexed (using form PA1P).

3) Administrators will obtain a grant of (simple) letters of administration (using form PA1A).

Question 7

How many PRs do you need?

Answer 7

1 PR may obtain a grant and act alone - even if the estate included land which may be sold during the administration as just 1 PR can give the purchaser a good receipt for sale proceeds (unlike trustees where there must be 2).

However, 2 ADMINISTRATORS are usually required where one of the beneficiaries of the deceased’s estate is an infant (a minority interest) or only has a life interest.

This is the case whether the grant is one of simple letters of administration or letters of administration with the will.

In contrast, 1 executor can ALWAYS act alone in these cases.

Question 8

What authority does an executor have BEFORE the grant as opposed to a administrator?

Answer 8

An executor has the authority to act in the administration of the estate from the WILL. The grant of probate just confirms this authority. Despite having full power from the time of the deceased’s death, the executor will be unable to undertake certain transactions (e.g. sale of land) without producing the grant as proof. Similarly, banks and other institutions will not release money to the executor without seeing the grant.

Conversely, administrators have very limited power BEFORE a grant is made. Their authority stems from the grant. The grant of letters of administration vests the deceased’s property in the administrators.

Question 9

What must the solicitor do if there is a will?

Answer 9

• Establish the identity of the beneficiaries and the nature and extent of their entitlements (e.g. whether as legatee or as residuary beneficiary)
• Check if any of the gifts in the will have failed due to lapse or ademption.

Question 10

What must the solicitor do if the deceased has died intestate?

Answer 10

• Establish which members of the family have survived so they can advise on the distribution of the estate according to the intestacy rules.

Question 11

According to GDPR, what must solicitors do?

Answer 11

Inform the beneficiaries that they are holding personal data on them, the purposes for which the data will be used and the rights of the beneficiaries as data subjects.

Question 12

How will the solicitor begin calculating inheritance tax liability?

Answer 12

The solicitor will ask the PR for details of the deceased’s assets and obtain any associated documents e.g. building society passbooks and share certificates.

From these details, it is possible to begin to assess the size of the deceased’s estate and any IHT liability.

Question 13

How does a solicitor find out the balances on certain assets?

Answer 13

The balances on the deceased’s bank and building society accounts and the amount due on any life policies can be obtained by writing to the asset holders.

Question 14

How are assets usually valued?

Answer 14

Assets are usually valued at their open market value but special rules apply to related property and the valuation of quotes shares.

An estate agent/auctioneer can be asked to value the deceased’s residence or other land and the contents of the house.

A valuation of unquoted shares should be obtained from an accountant.

Question 15

Some assets can be accessed without a grant from the PR. This can be useful where the deceased’s family needs funds immediately for paying IHT or for discharging other bills.

What are these assets?

Answer 15

Administration of Estates (Small Payments) Act 1965 - These permit payments to be made to persons appearing to be BENEFICIALLY ENTITLED to the assets without production of the grant.

This is NOT available if the value of the asset exceeds £5000. Additionally, as the payments are made at the discretion of the institutions concerned, PRs cannot insist that payments should be made.

If payment is refused, the PRs will have to obtain a grant before the asset can be collected.

Subject to these points, payments can be made in respect of:
- Money in the National Savings Bank and Trustee Savings Bank (but not other bank accounts)
- National Savings Certificates and Premium Bonds and
- Money in building societies and friendly societies.

• Chattels - moveable personal property such as furniture, clothing, jewellery and cars can normally be sold without the PRs having to formally prove they are entitled to sell.
• Cash found in the deceased’s possession (their home)

Question 16

What assets do not pass through the PRs hands (do not pass under the deceased’s will or intestacy and so do not vest in the PRs)?

Answer 16

• Joint property - whether it was an interest in property or pesonalty, this passes by survivorship to the surviving joint tenant. This makes the PRs grant irrelevant in this respect. The survivor can get the property transferred into their sole name by producing the deceased’s death certificate to the relevant institution.
• Insurance policies assigned or written in trust - If the deceased insured their life but assigned the proceeds or wrote them in a trust for others. The beneficiary can obtain the proceeds of the policy by producing the deceased’s death certificate to the insurance company. These proceeds will NOT attract IHT as they are not part of the transfer of value on death.
• Pension benefits - Death in service benefits under a pension scheme are often payable to persons to be selected at the discretion of the pension fund trustees. Payments are made to the beneficiaries on production of the death certificate. Also don’t attract IHT as it doesn’t pass under the estate.

Question 17

What happens if IHT is payable BEFORE the grant is obtained?

Answer 17

Before the PRs apply for grant, they send the IHT form IHT400 to HMRC (or IHT401 for a person domiciles outside the UK) and pay any IHT due before the grant to HMRC.

HMRC will write to the PRs confirming receipt and processing of the IHT400 form and providing a unique code and details of the estate values which will be required when submitting the grant application to HMCTS.

Where IHT is payable before the grant, it’ll be necessary to find ways of funding the IHT (given that it isn’t possible to gain access to most of the deceased’s assets).

Question 18

How does the application and fee work when preparing to apply for the grant?

1) For legal professionals for grants of probate
2) For grants of letters of administration

Answer 18

1) Applications by legal professionals for a grant of probate must be made online.

2) Applications for the grants of letters of administration (with or without the will) are made by post but can be made online if specific conditions are fulfilled.

Postal applications are made by sending a completed form PA1P if there is a will (i.e for grants of probate/grant of letters of administration with the will annexed) or PA1A where there was no will.

Question 19

What is the fee payable for the grant?

Answer 19

Same regardless of whether the application is made on paper or online.

The fee for paper application is paid by cheque. For online applications made by legal professionals, the firm must open a ‘HMCTS Payment by account’ from which payment is taken automatically when the application is submitted.

Fee is currently £300 for estates over £5000.

For estates under £5000 there is no fee.

Question 20

What are the additional documents required that the HMCTS need to give out the grant?

Answer 20

The deceased’s will and codicil, if any.

Before issuing the grant, HMCTS may require further evidence of the validity of any will (through an affidavit sworn before a solicitor who is NOT acting for the PRs or a witness statement verified by a statement of truth).

Question 21

What are the additional documents required that the HMCTS need to give out the grant? In the following situations:

1) Evidence of due execution/capacity

Answer 21

1) If no attestation clause or doubts about execution of the will, they’ll need evidence from an attesting witness to establish that the will has been properly executed.

If there is doubt about mental capacity of the testator to make the will, the affidavit from a doctor may be necessary. Esp. helpful if a doctor examined the testator to ascertain whether they had sufficient capacity at the time the will was made.

Question 22

What are the additional documents required that the HMCTS need to give out the grant? In the following situations:

2) Evidence as to knowledge and approval

Answer 22

May be doubts as to whether the testator was aware of the contents of the will when they executed it - either because the will was signed by other than the testator due to illiteracy or frailty of the testator, or due to suspicious circumstances.

In any of these circumstances, the attestation clause should’ve been adapted to indicate that the will was read over to the testator or independently explained.

If not, the evidence is provided by the means of an affidavit or a witness statement by someone who can speak as to the facts (usually the attesting witnesses but could be an independent person who explained the provisions of the will to the testator).

Question 23

What are the additional documents required that the HMCTS need to give out the grant? In the following situations:

3) Evidence as to remote witnessing

Answer 23

Unless the attestation clause had been amended to give details of the fact that the will was witnessed remotely, evidence in the form of an affidavit or witness statement will be required from the witnesses or anyone else who was present (remotely or physically).

Question 24

What are the additional documents required that the HMCTS need to give out the grant? In the following situations:

4) Evidence of plight and condition

Answer 24

If the state of the will suggests it has been interfered with in some way since execution, the registrar will require further evidence by way of explanation.

This may happen where the will as been altered since execution, an attached testamentary document may have been removed or where the will gives the appearance of attempted revocation (e.g. where it’s torn).

Again, usually an affidavit or witness statement of plight and condition will be needed by some person who has knowledge of the facts.

Question 25

What are the additional documents required that the HMCTS need to give out the grant? In the following situations:

5) Lost will

Answer 25

A will which was known to have been in the testator’s possession but cannot be found following the death is presumed to have been DESTROYED by the testator with the intention of revoking it. - Though this is possible to rebut.

If the will has been lost, or accidentally destroyed, could get a copy of the will kept in the solicitor’s file or a reconstruction.

An application should be made to the registrar, supporting by appropriate evidence in the form of an affidavit or witness statement from the applicant for the grant of probate.

Question 26

What does the form IHT 400 cover and when should it be delivered?

Answer 26

The IHT400 is an inventory of the assets to which the deceased was beneficially entitled and of their liabilities and is the form for claiming reliefs and exemptions and calculating the IHT payable.

It should be delivered within 12 months of the end of the month in which the death occurred.

Usually PRs aim to deliver the account within 6 months of the end of the death month to comply with IHT time limits for the payment of interest.

Until it’s submitted, no grant of representation can be issued.

Question 27

What happens if the estate is excepted regarding the IHT 400?

Answer 27

If the estate is excepted, PRs do not now submit any IHT form to HMRC.

Information as to the value of the estate is included on the forms submitted to the HMCTS which is passed on to the HMRC.

HMRC has 60 days from the issue of the grant of representation to ask for additional information. If no such request is made, the estate receives automatic clearance.

If an estate which initially appears to be excepted is subsequently found not to be so, the PRs must submit the IHT400 within 6 months of the discovery.

Question 28

What are the 3 categories of excepted estates?

1) Small estates

Answer 28

The categories of the excepted estate are set out in the Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004.

Category 1 = small estates
These are ones where the gross value of the estate for IHT purposes AND any specified transfers and specified exempt transfers in the 7 years prior to death DO NOT exceed the current nil band rate threshold (£325,000). This is also increased if the deceased’s spouse/civil partner predeceased them without using all or part of their NRB. (Note: only possible to use the NRB of one spouse or civil partner).

If the deceased was entitled to any trust property which they had a life interest in, this cannot exceed £250,000.

Specified transfers = chargeable transfers of cash, personal chattels, tangible moveable property, quoted shares or securities or an interest in or over land (unless the land becomes settled or is subject to a reservation of benefit) made in the 7 years before death. If there was a transfer of UNQUOTED SHARES, the estate can’t be excepted.

Specific exempt transfers = Transfers of values made during the 7 years before death which are exempt under the following exemptions: Transfers between spouses/civil partners, gift to charities, gift to political parties, gift to housing associations, maintenance funds for historic buildings or employee trusts.

Gifts which are exempt under the normal expenditure out of income exemption are treated for this purpose as chargeable if they exceed £3,000 in any one tax year.

Question 29

What are the 3 categories of excepted estates?

2) Exempt Estate

Answer 29

These are estates where the bulk or the estate attracts the spouse (or civil partner) or charity exemption.

• The GROSS value of the estate (plus specified transfers and specified exempt transfers made in the 7 years before death) must not exceed 3 million and
• The NET chargeable estate after deduction of liabilities and spouse and/or charity exemption (plus specified transfers and specified exempt transfers made in the 7 years before death) must not exceed the nil rate band.

*Note: again if the spouse has pre-deceased the testator, their nil rate band can be transferred over to a maximum of £650,000.

– The chargeable trust property included in the estate does not exceed £250,000 and the total amount of trust property including exempt amounts does not exceed £1 million.

Question 30

What are the 3 categories of excepted estates?

3) Non domiciled estates

Answer 30

This is where the deceased was never domiciled or treated as domiciled in the UK and owned only limited assets in the UK.

Question 31

What is the procedure for excepted estates?

Answer 31

PRs provide no information directly to HMRC. Instead, they include this on the applications for a grant:

1) the deceased’s full name and date of death and
2) a declaration that:
The estate is an excepted estate and whether they are claiming against the estate the unused proportion of the IHT nil rate band of a pre-deceased spouse/civil partner and

3) The gross value of the estate for IHT plus any specified transfers and specified exempt transfers made by the deceased in the 7 years before death
The net value of the estate for IHT less any allowable debts
The net qualifying value of the estate (minusing any spouse, civil partner or charity exemptions).

Question 32

How long will HMCTS have to pass this info on to HMRC?

Answer 32

Will have 1 month to pass this info on to HMRC.

Question 33

When must an IHT400 form be used?

Answer 33

An IHT 400 form must be used whenever the deceased dies domiciled in the UK and the estate is not an ‘excepted one’.

The PRs sent the completed IHT400 and relevant supporting schemes to HMRC.

The PRs or their solicitor use the form to calculate the amount of any IHT payable and they also pay any IHT due before the grant.

HMRC will write to the applicant providing a unique code and details of the estate values which must be included in the grant application. The application can’t be submitted to HMCTS until the code and values have been received.