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Inheritance Tax and the probate process

Probate (or confirmation in Scotland) is the system you go through if you're handling the estate of someone who's died. It gives you the legal right to distribute the estate according to the deceased's wishes. Inheritance Tax forms are part of the process even if the estate doesn't owe Inheritance Tax.

Understanding probate terminology

If the deceased left a will, it usually names one or more ‘executors’ who can apply for the grant of probate.

If the named executor doesn't want to act, someone else named in the will can apply (depending on a strict order of priority). This person is called 'the administrator' and they apply for a grant of 'letters of administration with will'.

If the deceased died without leaving a will, a blood relative can apply for a grant of 'letters of administration’. This is based on a strict next-of-kin order of priority defined in the ‘rules of intestacy’. The person who applies is also called the administrator.

The catch-all term for a grant of probate, letters of administration with will or letters of administration is a grant of 'representation'. The catch-all term for an executor or administrator is 'personal representative'.

Different terms in Scotland and Northern Ireland

Scotland and Northern Ireland have different legal systems, processes and terms. The terminology is generally the same in Northern Ireland. However, in Scotland the process is called 'confirmation' and the personal representative applies for a grant of 'confirmation'. Different forms are required in Scotland and Northern Ireland too.

The probate process - at a glance

Here is an overview of the steps to take in England and Wales, with more detail in the sections below. Again, the process differs in Scotland and Northern Ireland - please follow the links above for more information.

  1. value the estate and speak to the deceased's banks and other financial organisations to establish whether you need a grant of representation (or confirmation)
  2. if you do need a grant of representation, complete the relevant application and Inheritance Tax form - the Inheritance Tax form will vary depending on whether or not the estate owes Inheritance Tax
  3. send the forms to the relevant government bodies (in England and Wales, that’s the Probate Registry and HM Revenue & Customs (HMRC)
  4. pay whatever Inheritance Tax is due
  5. attend an interview at the Probate Registry or local Probate Office and swear an oath
  6. wait for the grant of representation (or confirmation) to arrive in the post - banks and other organisations will ask to see this before they allow access to the deceased's assets
  7. pay any debts owed by the estate and then distribute the estate

Step 1 - Value the estate to see if you need probate

When you might not need a grant of representation

A grant may not be needed if the estate:

  • is a low-value estate - generally worth less than £5,000 (though this figure can vary) - and doesn't include land, property or shares
  • passes to the surviving spouse/civil partner because it was held in joint names

When you as the personal representative contact the deceased's bank or other financial institutions, they will either release the funds or tell you to get a grant of representation (or confirmation) first. Some banks and financial institutions may insist on a grant before giving you access to even a small amount of money.

When a grant of representation is usually needed

You will almost certainly need probate if the estate includes:

Step 2 - applying for grant of representation

If you're going through the process, you'll have to fill in an Inheritance Tax form in addition to the PA1 Probate Application form, even if the estate doesn't owe Inheritance Tax. The estate will only owe Inheritance Tax if it's over the threshold (£325,000 in 2012-13).

The Inheritance Tax forms you need depend on the following

  • where the deceased lived - England, Wales, Scotland, Northern Ireland, or abroad
  • the size of the estate
  • whether it is an 'excepted estate' (ie you don't need to fill in a full Inheritance Tax account - form IHT400).

Usually, if an estate has no Inheritance Tax to pay, it will be an excepted estate. However, this is not always the case. Some estates that don't owe Inheritance Tax still require a full Inheritance Tax account.

If you're not sure whether the deceased's estate is an excepted estate, you'll need to start by filling in a Return of Estate Information form (form IHT205 in England and Wales) to find out. Depending on your answers to certain questions, the form will make clear when you should stop filling out that form and switch to form IHT400 (a full Inheritance Tax account) instead.

Step 3 - send the forms to the relevant government bodies

If you have filled in form IHT205, send that and form PA1 Probate Application form to your nearest Probate Registry along with the original will, the death certificate, and the probate fee. If you have filled in form IHT400, follow the instructions on page 55 of the IHT400 guidance notes.

The process is different in Scotland and Northern Ireland (see the links below).

Step 4 - pay any Inheritance Tax due

If the estate owes Inheritance Tax, you won't get the grant of representation (or confirmation) unless you pay some or all of the Inheritance Tax first. The 'due date' is six months after the date of death.

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Steps 5 to 7 - what happens next?

Once you've paid any Inheritance Tax and sent off the forms to the Probate Registry, the process takes about six to eight weeks if there are no problems. There are three stages:

  • examination of forms and documents - Probate Registry staff check the forms and documents and prepare the papers for your interview
  • probate interview - all the personal representatives who have applied for a grant of representation attend an interview to review the forms and swear an oath, either at the Probate Registry or local probate office
  • probate is granted - the grant of representation is sent to you by post from the Probate Registry

After you get the grant of representation (or confirmation) and have paid any Inheritance Tax due, you can collect in the money from the estate, pay any debts owed by the estate and then distribute the estate according to the will or the rules of intestacy.

More useful links

See also...

 

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