Wills: Blog

Probate is the general term used to describe the right to deal with a deceased person’s estate. When a person dies, a representative is appointed to gather their assets, pay their debts and distribute the estate to those people entitled to it.

If a person dies with a will
The executor appointed in the will can apply to the courts for a ‘grant of probate’ to entitle them to administrator the estate. Once they receive this authorisation they can access the deceased person’s accounts and assets to begin to wind up the estate.

If a person dies without a will
If there is no will, a close relative of the deceased can apply to the courts for a ‘grant of letters of administration’. If they are granted, the applicant is known as an administrator of the estate. They are then authorised to access the estate and can begin to distribute the assets accordingly. In certain circumstances, such as when the beneficiary of the estate is a child, the law states that more than one person must act as an administrator.

Collectively, administrators and executors are known as representatives of the estate. In order to gain a grant of representation, either as a grant of probate or a grant of letters of administration, the representative must take an oath in court to administer the estate properly and correctly. They can be liable to prosecution if they carry out their duty in bad faith or act negligently.

Further, the courts will not make any such grant until all Inheritance tax liabilities have been paid. This can leave representatives in a difficult position whereby then cannot pay the inheritance tax without a grant from the courts and they cannot gain a grant from the courts until they have paid the inheritance tax. As well as inheritance tax, the representative may need to pay for funeral expenses and grant costs. Various solutions may be available to help such as bridging loans and provisions to make tax payments from the deceased’s bank accounts.

Inheritance tax in the UK is calculated by completing a set of Inland Revenue accounts which detail the extent and value of the estate. There may be no tax payable if the value of the estate falls within the ‘nil rate band’ or the assets are classed as exempt. However the representative will still have to file accounts whether there is a tax liability or not. Representatives are responsible for accurately assessing the estate and making payments, they can be held personally liable for any under payment of taxes. Inheritance tax must be paid within six months of the deceased person’s death, after which time, outstanding payments accrue interest at 4%.

Organisations such as banks or building societies will only allow access to the deceased person’s accounts once they have received a grant of representation. The grant is proof that the courts are allowing the named person to collect the deceased person’s money on their behalf.

Clearly the role of a representative is an important one and it is essential to make a will and choose an executor carefully.

Many people put off making a will, it’s estimated that two out of every three people in the UK have not written one. Having a properly drafted will can give total peace of mind to you and your family by knowing your assets will be distributed according to your wishes after your death.

It’s recommended to review your will on a regular basis to make sure it’s up to date and your assets and your wishes remain the same. If your personal circumstances have fundamentally changed, or there has been a change in legislation affecting your estate, then you may be advised to draft a new will.

Most will writing professionals would suggest drafting a new will if any of the following events occurred:

Divorce
Any gifts left to your spouse or civil partner will not be distributed and will be added back to the remainder of your estate following your divorce or decree absolute. However it is a good idea to draft a new will to reflect your new status and intentions.

Marriage
You should make a new will when you enter into a marriage or a civil partnership. All wills are revoked on marriage unless the will was drafted in contemplation of the forthcoming wedding and allows for this.

Separation
A separation has no effect on a will, unlike a divorce, therefore it is an important time to redraft your will to make sure your intentions are clear.

Birth of a child/grandchild
If you have become a parent then it’s recommended to consider the appointment of guardians for your children in your will. Guardians take on the parental responsibility of your children in the event of you and your partner’s death. You may also wish to include any new children or new grandchildren as beneficiaries in your will.

Change in executors
Your will does not become invalid if your executors have died or lack the mental capacity to carry out the role. It would therefore be wise to appoint new executors should they no longer be able to act on your behalf.

Substantial change in assets
Over time the assets you own will change. However if there is a significant change in wealth, or if you have disposed of assets you previously had planned to bequeath to your beneficiaries, then you would be advised to make a new will.

Death of a beneficiary
Again if those who you planned to benefit in your will have passed away before you, then it may be necessary to redraft your to reflect your new wishes.

It is not expensive to make a will with many online will writers offering their services from as little as £30. Not making a will is a false economy with the potential for unnecessary inheritance tax liabilities and possible family feuds. For this nominal amount you can get total peace of mind and assurance that your assets will be directed according to your wishes after your death.