What Is Probate and How Does It Work?

Len Burgess[1]

Len Burgess

Money Savings Advice Our guide to probate and how it works

When someone dies, a process called probate helps to sort out what happens to all of the belongings, property and money they left behind.

In its simplest form, probate involves adding up all of the deceased person’s assets (their estate), using it to paying off any debts, and then dividing whatever else is left according to that person’s Will.

The person who is named in the Will as the ‘executor’ has the power of probate for the Will. Many people decide to carry out this responsibility on their own, but if the financial situation of the deceased is complicated or the job feels overwhelming at such as distressing time, you can hire a legal specialist to help.

How Does Probate Work?

Probate involves gathering all the assets of the deceased person in order to pay creditors, beneficiaries and inheritance tax dues.

The person overseeing probate (normally the executor of the Will) tells HMRC how much the deceased person’s estate is worth and settles their inheritance tax bill if there would be more than £325,000 left after debts have been paid.

After this, they have to find out where the deceased held accounts, pay off any debts and close them down. This could involve speaking to banks, building societies, energy providers, mortgage providers, pension funds, hire purchase companies and even catalogues.

Once all debts have been paid, the executor distributes whatever is left among the people named in the Will.

This is a simplified version of what happens during probate in a straightforward case. In reality, the process involves a lot of separate steps and is heavy on paperwork. Because it is a legal process, things must be done in guidance with the law.

Even if the estate is anything but straightforward, the executor must make sure that probate follows the relevant law for that particular set of circumstances, or else they could be liable to pay for any mistakes out of their own pocket.

Who Is the Executor?

The executor is the person named in a will, whose job it is to oversee probate when the person whose Will it is dies. If there is any property in the estate or a large amount of savings in one place (£5000+), the executor will have to apply for a ‘Grant of Probate’ to start the process.

This is an official certificate from the government which allows the deceased person’s assets to be released to the person named on it for the purpose of probate. Sometimes more than one person may be named as executor, but only one of them need to apply for a Grant of Probate.

What if You Don’t Want to Be an Executor?

Not everyone who ends up being named as an executor wants to carry out the duty. Probate can be very time-consuming and is quite a technical process which can last for months.

At the best of times, it would be a big commitment to take on. So, it comes as no surprise  that many people feel overwhelmed by having to take on serious legal responsibilities just after losing a loved one. That time in anyone’s life can be extremely distressing without the addition of any extra burdens.

Luckily, you don’t have to act as executor if you don’t want to. For whatever reason, if you don’t feel able or willing to take on the role, you are free to turn it down. If so, the job is passed on to the next person named in the Will. If yours is the only name, it goes to whoever is the closest next of kin according to Intestacy Law. You can see how Intestacy Law prioritises different next of kin in the table below.

Intestacy laws decide how a person’s estate is shared out in cases where there is no Will, or a Will is not valid. Don’t worry- you won’t invalidate the Will by turning down your role as executor! These are simply the most relevant laws for dealing with cases where parts of the Will no longer apply. 

What Happens if There’s No Will?

If somebody dies without a Will, it is said they die ‘intestate’. When someone dies intestate, the process of sorting out what happens to their possessions, property and money is very similar to probate, but to differentiate between the two, is called ‘administration’.

Instead of the deceased person deciding who executes their Will, Intestacy Law decides who administers the estate by working through the next of kin in order of legal priority until the first willing person agrees. In all cases, the administrator must be someone who stands to inherit from the estate. To get the process started, the equivalent of a Grant of Probate is needed, known as a ‘Grant of Letters of Administration’.

After any debts and taxes have been settled, Intestacy Law is used again to decide how the rest of the estate is shared.

Who Becomes Administrator if There Is No Will?

In the priority listed below, next of kin may be asked to administer for an estate;

Married spouse or civil partner
Child
Grandchild
Parent
Sibling
Niece or Nephew
Other Relatives

Stages of Probate

Most people won’t have to deal with overly complex estates, so it is possible to follow some general steps to make sure that probate runs smoothly.  However, even simple cases should follow the same steps in order, to help make things simpler for the executor or administrator and to make sure the law is followed properly.

Below are the main stages of probate. Remember that this is just a guide, and some cases may differ to this slightly based on individual circumstances:

  1. Register the death
  2. Check the Will and identify the Executor
  3. Apply for a Grant of Probate or Grant for Letters of Administration
  4. Calculate and pay Inheritance Tax
  5. Close bank accounts and withdraw funds
  6. Pay off outstanding debts
  7. Publish a public notice calling for any other creditors to come forwards
  8. Make insurance claims on existing policies
  9. Divide remaining assets among beneficiaries listed in the Will or Intestacy Law

Should You DIY?

When it comes to sorting out probate, there are three routes you can take: Research everything yourself; buy a DIY probate kit, with instructions and relevant forms to work through; or, pay a probate specialist to take care of it for you.

Your personal circumstances determine which is the better choice for you. Probate is a long process which requires attention to detail and lots of form-filling. Fortunately, most people’s estates are quite simple, so despite the heavy admin burden, the process follows a formula,  which you can research using online resources.

This means that it is possible to carry out probate yourself without having to get a professional involved. However, it is still a serious responsibility, and the executor could potentially be financially liable for any mistakes they make if they take the DIY route.

There is also your emotional wellbeing to consider: while some people find the idea of probate overwhelming at such a difficult time, others may find that it helps to have something to focus on other than their grief.

Whether or not you decide to go ahead with your role as executor or administrator is up to you. If you don’t feel confident or emotionally capable of dealing with the work, you can outsource it to a specialist. This definitely applied for more complex estates: for example, ones with lots of properties, or overseas assets. In these cases, it is almost always advisable to employ a professional.

How Much Does It Cost?

The cost of doing probate depends on whether you are doing it yourself and how much the estate is worth.

DIY

A Grant of Probate certificate costs £215 and is free if the estate is worth less than £5000. In fact, is the estate is worth less than this, many banks and financial institutions will not need a Grant of Probate certificate in order to release the funds.

In addition to this, you also need a copy of the death certificate for each account which needs to be closed. Each copy costs £11 in England and Wales, £8 in Northern Ireland and £10 in Scotland.

You can buy a DIY probate pack for about £20 online or from high street retailers.

Probate Specialist Fees

If you would prefer to hire a specialist, the cost of a Grant of Probate is £155.

They may charge you either a fixed fee, hourly rate, or a percentage of the estate. Most fixed fee services cost between £500-£1000, whereas a percentage-based fee could cost between 1-5% of the estate plus VAT.

Inheritance Tax

Inheritance tax needs to be paid at the start of probate from the executor’s pocket for a Grant of Probate to be given. Once the assets of the deceased have been released, the executor can take the money from the IHT bill.

Inheritance Tax can be quite costly; it is currently 40% on everything above the £325,000 tax-free threshold. One way to help pay it can be to apply for a Direct Payment Scheme, where money from the estate is paid directly to HMRC from one of the deceased person’s bank accounts.

If the assets are tied up in shares and property instead, HMRC may allow the tax bill to be paid in instalments over a period of up to 10 years. If the executor cannot afford to pay the bill upfront, they could be expected to take out an executor’s loan from a bank to pay it.

How Long Does It Take?

Probate can take anywhere from a few weeks to several years to complete. How long it takes depends on how complicated the estate is and what form the assets are in.  Most straightforward cases can be completed in under two months.

However, things can be delayed if there are overseas jurisdictions involved (if the person had property or bank accounts overseas) or if there is property which needs to be sold to pay off debts or beneficiaries.

What Happens if the Will Is Disputed?

If there is a dispute over the Will, it can be contested by law. For this to happen, somebody will need to prove that the Will was not an accurate representation of the deceased person’s wishes at the time of their death, or that the Will is invalid.

A Will is invalid if:

  • It is a forgery
  • The deceased had reduced mental capacity at the time of writing
  • The deceased was intoxicated at the time of writing
  • The deceased was coerced into signing the Will
  • A person who was financially dependant on the deceased has not been provided for

How Can Money Savings Advice Help You With a Will?

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Money Savings Advice Author Len Burgess

Len Burgess

Len Burgess is a professional financial writer who over the last five years has written hundreds of articles for all financial sectors. Len founded Money Savings Advice with the aim of helping consumers navigate their way around the financial world by providing easy to understand financial information and matching consumers with the best financial advisor based on their personal information.

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