Queen Elizabeth II 1926 - 2022

The death of a loved one is something that sadly most of us will experience at some point in our lives.

Knowing what steps you need to take following a death can feel overwhelming at an already challenging time.

At Hampstead Wealth Management we work closely with a number of professional advisors, who are experts in Wills, Probate and Estate Administration matters.

Working in tandem with these advisors, we are able to support you every step of the way through this difficult time, to ensure that all practical and financial matters are dealt with as swiftly and as tax-efficiently as possible.

 

To be able to progress through the process of registering a death and carry out the associated administration, you will first need to obtain a medical certificate, which confirms the cause of death.

This should, where possible, be obtained on the day of the bereavement.

Once you have the medical certificate, you can register the death.

You will need to contact the Registrar of Births, Deaths and Marriages at the local register office in the district where the person died.

This should happen within five days of the death unless the coroner is involved.

You will need to make an appointment to register the death and you will be asked to take along documentation relating to the deceased including:

  • NHS card
  • Birth Certificate
  • Driving licence
  • Marriage or civil partnership certificate (if applicable)
  • National Insurance number of the deceased and the National Insurance number of a surviving spouse or civil partner (if applicable)
  • Passport
  • Proof of address e.g. a council tax bill or utility bill

it is also advisable to take some supporting documents that show your own name and address, such as a utility bill.

When the death has been registered, you will be given a Green Certificate for burial or cremation which you need to provide to the Funeral Director.

You will also be able to purchase certified copies of the death certificate which will be required to manage the estate of the person who has died. The cost is between £8 and £12 depending on your location. We would recommend asking for at least a few additional copies to assist in the administration of the deceased’s estate.

You will need to locate the most up to date Will, particularly as this may include your loved one’s wishes as to whether they are buried or cremated, plus any other funeral preferences.

If the Will is not located at the deceased’s home, it may be stored with the solicitor or other professional that drafted it. Alternatively, it may be held by a solicitor local to the deceased or with whom they had a relationship or with a bank who also offer will drafting and storage services.

If you can’t locate the Will, you can carry out a Will search. There are companies that can assist with locating missing Wills. These companies do charge a fee and their search will include the National Wills Register.

Please contact us if you would like us to put you in touch with an expert in this field.

If you have been unable to find a Will, the estate will need to be administered under the assumption that the deceased didn’t leave a Will. This is called dying intestate and the estate is administered by the next of kin under the rules of intestacy.

It is important to establish whether your loved one has a pre-paid funeral plan in place, in which case you can contact the provider who will handle the arrangements.

If not, contact a local funeral director and they will help you to plan the funeral. You’ll be asked if the deceased had any funeral preferences, which is something you may already know. Otherwise, it’s likely that any specific wishes will be recorded in the Will.

If you are the next of kin or a close member of the family, you may be asked to act as a ‘Legal Personal Representative’ to handle the administration of the estate including probate matters if this is required.

There are two types of Legal Personal Representative, and both carry out similar roles:

  • Executors:

In the Will, the deceased usually names the person or people they want to take on the role of executor.

If the deceased has made a Will, they will have named who they wish to take on the role of executor. Sometimes there is just one ‘sole’ executor although it is also common for the duties to be shared by two or more executors who act ‘jointly’.

If you have been named as an executor the responsibility of managing the estate falls to you, so you should carefully consider what this means and how it may impact you.

Although you may be keen to ensure beneficiaries receive funds swiftly and the estate is handled efficiently, there are some potential pitfalls to avoid

  • Administrators:

If there is no Will, or the named executor is unable or unwilling to act, the law sets out rules to determine who should administer the estate and who will benefit.

In the case of no Will, under Intestacy Rules, it is usually the next of kin who will take legal responsibility to administer the estate. In cases where the executor is unable to act, the residuary beneficiary would usually take responsibility.

This person is known as the Administrator.

It is important to know that even if you have been appointed as an Executor in the Will or as an Administrator, you are not compelled to take on the role.

Whilst some people will find the process reasonably straightforward disputes over estates are increasing and there have been several cases where Executors have faced personal financial and legal claims from beneficiaries, creditors and tax authorities. If you would like to discuss your options, please get in touch.

When you have located the Will, this needs to be checked to ensure that it is “legally valid”.

This means determining that the Will is:

  • In writing and is the latest version
  • Signed by the person who made it; and
  • Witnessed by two adult witnesses

Additional checks can be carried out by a legal professional if required. These include establishing whether:

  • The Will and its contents were created without the deceased being put under pressure
  • The deceased had the mental capacity to execute the Will

It is important to know that where a witness to the Will or their spouse is also a beneficiary, the Will remains valid but the gift to the witness or their spouse will fail. If you are concerned about the validity of a Will get in touch with us.

It is important to identify all the assets and liabilities of the estate and ensure there is sufficient monies for creditors and to cover Inheritance Tax (IHT).

Even if the estate falls below the IHT threshold, you will still need to declare it to HM Revenue & Customs (HMRC).

It is important to obtain a full valuation of any possessions, money, bonds, shares and debts (and previous gifts in the seven years prior to death) to ensure you understand the value of the estate for tax assessment and distribution purposes.

Typically, this will include:

  • Money and investments held in bank and savings accountings, pensions ISAs and shares
  • Personal possessions such as jewellery, household contents and any vehicles
  • Any property owned by the deceased

If a property is held in joint names, consideration will need to be given as to whether it passes to the surviving person or whether the deceased’s share is an asset of the estate and passes in accordance with the terms of the Will.

A review of the title deeds/land certificate or entry on the land registry should clarify this point for you.

If you are struggling to identify the assets held by the deceased, some companies provide an assets search facility. If this is something you feel you may require, we can provide you with details of companies to use.

A Grant of Probate is the legal document which confirms that the deceased’s Will is valid and gives authority to you, the Legal Personal Representative, to administer the estate and follow the deceased’s wishes in their Will.

If the deceased died without a Will, you can instead apply for a ‘Grant of Letters of Administration’.

A Grant isn’t required every time someone dies. Usually, it won’t be necessary if the deceased held all their assets in joint names with someone else who is still alive, or if they owned very little.

If a Grant is not needed, you can gather together the deceased person’s assets. You will need the Death Certificate and your own ID (such as a passport and proof of address) to show that you are the Executor.

The Estate can then be distributed to the beneficiaries as set out in the Will, or in line with the Rules of Intestacy.

A Grant of Probate is usually required where the deceased had assets in their sole name of over £5,000.

Some high street banks will now release funds of up to £50,000 without a Grant but this is discretionary, and each bank has its own threshold before requiring a Grant.

If you are not sure whether a Grant is needed or require advice, we are happy to assist you.

Applying for a Grant of Probate involves:

  • Completing a probate application form
  • Completing an Inheritance Tax form (even if no tax is payable)
  • Sending the application to your local Probate Office, together with the death certificate, the original Will and three copies of it and an application fee
  • Forms PA1P and PA1A (Probate Application Forms):

You will need to complete a form PA1P if there is a Will, or a PA1A if there is no Will. You can complete the form online or send it by post; however, you will need to send HM Courts & Tribunals Service (HMCTS) the original Will and report the value of the estate of the person who died to HMRC and calculate and pay any inheritance tax due.

  • Completing an Inheritance Tax form:

 As already outlined, you will need to complete an inheritance Tax form to accompany your Grant of Probate application.  There are two main forms – IHT 205 and IHT 400.

IHT 205 is required for estates where the person died whilst living in the UK and the estate is not subject to tax. This is known as an ‘excepted estate’.

To be excepted, the estate must:

  • Be under the current £325,000 threshold (otherwise known as the ‘nil rate band’)
  • Twice the current threshold (£650,000) due to the transferable nil rate band being available from a deceased spouse or civil partner. This arises when one party to a marriage or civil partnership dies and the amount of their estate that is chargeable to IHT does not use up all the nil rate band to which they are entitled
  • The gross value of the estate is less than £1m and because all or part of the estate passes to the deceased’s spouse, civil partner or charity, it makes it exempt from IHT

For the Grant of Probate to be issued in this case, the Probate Application Form (PA1P or PA1A) and the IHT 205 are submitted to the Probate Registry and the Grant will be issued, usually within three months.

IHT 400 is required where there is IHT to pay or no tax to pay but the estate does not qualify as an excepted estate.

The form is substantial, and the main body of the form is supported by schedules that you complete depending on the circumstances of the case.

Guidance notes issued by HMRC to support completion of the form are extensive and completion of this form is not a trivial task.

Following completion of the IHT 400, if tax is payable, you will be required to obtain a tax reference number.

This can be done online by completing an IHT 422. It can take up to three weeks to be issued, so it is worth doing this early in the process.

You are required to pay Inheritance Tax due upon application for the Grant of Probate. If this is not paid within six months of the end of the month in which the deceased died, interest will be charged.

To pay IHT you may be able to access funds from banks, building societies or national savings and some investment managers will liquidate a portfolio prior to the issue of the Grant of Probate to assist.

In these circumstances, most payments are made direct to HMRC. If you don’t have access to funds, you can apply for a loan, but this can be costly in arrangement fees etc.

IHT 421 Probate Summary Form:

The IHT 400 and tax payment is submitted to HMRC with an IHT 421 Probate Summary Form.

HMRC will acknowledge that the tax has been paid by stamping the IHT 421 and sending this to the Probate Registry.

This will indicate to the Probate Registry that the tax has been paid and they can proceed with the application and issue the Grant.

If you require assistance with probate and IHT forms, please get in touch with us.

Once you have received the Grant of Probate, you can begin to collect the assets and pay any debts owed by the estate.

This might involve closing bank accounts, selling property, collecting pensions and selling or transferring stocks and shares.

It’s a good idea to open a separate bank account for the estate’s incomings and outgoings.

The sale of the property can be onerous. You will also need to ensure that all household utilities are brought to a close and you cancel the relevant insurances when the sale completes.

You will be required to review the deceased’s personal income tax affairs and, if necessary, submit a final return to HMRC.

In addition, returns covering the administration period may be required.

Please contact us if you are unsure whether a return is required or if you would like help with the relevant submissions.

Before the estate is distributed to those who are entitled to benefit, it is important to make sure that no one is still owed money from the estate of the person who has died.

To protect yourself, you should place a notice in the London Gazette and a newspaper local to where the deceased lived to give creditors the chance to claim anything they are owed.

If a notice is placed and the estate is then distributed after a period of two months has elapsed, you should be protected from personal liability if creditors come forward once the estate has been distributed.

  • Partial Distribution of Estate Assets

Estate administrations can take many months to complete and some assets (e.g. property) may take time to sell. However, cash assets may be collected in very quickly following issue of the grant.

Where cash is held by the Legal Personal Representative, they may consider making an interim payment to the beneficiaries.

If the Legal Personal Representative is happy to make an interim payment, they will discuss this with the beneficiaries and any agreed amount is usually paid direct to the beneficiary’s bank account.

  • Legacies in a Will

A legacy is a gift the deceased specifically references in the Will. This might be a lump sum cash payment, possessions such as items of jewellery or a donation to charity.

You will need to plan for all of the relevant distributions included in the Will and this may include arranging for specific items to be delivered to the recipient or making payments into the beneficiaries’ bank accounts.

  • Final Distribution of the Estate

As the money from the estate is collected, one of the last jobs is to prepare the estate accounts.

This will provide a record of the estate and should be sent to the beneficiaries with their final payment.

Tax certificates should also be prepared for the beneficiaries, detailing the amount of income they have received.

The beneficiaries will need this information when considering their own tax affairs.

It is important to remember that you can be held personally liable if an estate is wrongly distributed.

 

If you have any concerns about the steps you need to take after someone dies or you would like help and advice with any aspect of probate and estate administration, please contact us.

 

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