Legal Issues on a Death

Jointly held property and accounts

There are two ways of holding property jointly, as joint tenants (JT) and tenants in common (TIC).  If the deceased held property as JT, it will automatically pass to the surviving owners.  The deceased’s name can normally be removed from the title by presenting a copy of the death certificate.  If it is held as TIC the property passes by will or intestacy.  It does not automatically pass to the survivor.

Joint bank accounts normally pass to the survivor.  The death certificate needs to be presented to the bank or share registrar to alter how the assets are held.  However, it may be that someone has been added to a bank account or asset of the deceased person as a trustee i.e. the funds are really the deceased’s. In that case it should not pass to the joint holder but his assistance may be needed in closing the account.  You may wish to speak to a solicitor for more information on this potentially complex area.

If all assets are held as joint tenants and any accounts in the deceased’s sole name can be closed by the small estates procedure, you may not need to get a grant of probate where there is a will, or a grant of letters of administration, where there is no will.  Depending on the size of the estate you may still need to do an inheritance tax form.

Joint assets & Investments

  • normally pass to the surviving named owner

Joint property

  • Tenants in common – passes under the will
  • Joint tenants – passes to the survivor

Small estates procedure

If the deceased left a small amount of money in his or her estate (ranging from £5,000 to £20,000), it may not be necessary to obtain a grant of probate or letters of administration to withdraw money from the deceased’s account with a bank or financial institution including share registrars. This can be useful if money is needed from the deceased’s estate to pay for immediate expenses such as the funeral, mortgage or house insurance. Each bank or financial institution has its own rules on what proof it requires and how much money it will release to the person acting in the estate of the deceased.  There are no standard rules unfortunately.

If the deceased had several bank accounts, each holding only a small amount of money, but in total exceeding £5,000, then it may still be possible to access the money in those accounts without a grant of probate or letters of administration. Again, each individual bank or financial institution will decide whether or not to release the money to the person acting in the estate of the deceased.

If a bank or financial institution does not require a grant, it may ask the person acting in the estate of the deceased to sign an indemnity. The purpose of this to protect the bank or financial institution if it later turns out that the money has been paid to the wrong person.

 

Did the deceased leave a will

The deceased may have written a will.  If they have not told you where it is you should look amongst their papers to see if you can find it or any mention to it.  You should also contact solicitors firms in the area in which they lived.  The will may be professionally drafted or homemade.  It must be signed by the deceased and two independent witnesses.

If there is a will, it will set out who are the executors of the estate i.e. the people who are appointed to arrange for the funeral, collect in the deceased’s assets, pay off their debts and distribute the money according to the will.  Do not panic if any of the beneficiaries or the executors have died or cannot be found.  There are ways to deal with this and the will is still a valid document, for example if the executors are dead the residuary beneficiaries i.e. the beneficiaries who receive everything after all other gifts are made, can apply.

The executors’ authority comes from the will itself and they can act immediately upon death.  The executors can deal with the estate themselves if it is simple and they feel capable, alternatively they can go to a solicitor to assist in obtaining the grant of probate and settling the estate.  Solicitors are there to assist the executors and can do as much or as little in the administration of the estate as required, e.g. you may wish to do some of the ‘leg work’ yourself.

 

Did the deceased die not leaving a will i.e. intestate

The first thing you need to ascertain is that the deceased did not leave a will.  If there is no will the person died intestate and the law sets out who can administer the estate and who is entitled to it.  The order is spouse, children, parents, brothers and sisters etc.  The diagram below sets out who can apply to be administrators of the estate and who the beneficiaries are.  It may surprise some people how the law works.

 

What to do as administrator/executor?

The group term for an administrator or executor is a personal representative (PR).  The PR is responsible for gathering all the deceased’s assets, settling their debts, disposing of the body, and paying out the beneficiaries in accordance with the will or intestacy law.  It is a job for life.  At the start a PR can renounce i.e. sign a document confirming they do not want to act, but only if they have not already played some role in the estate.  This is called intermeddling.  If there is more than one PR they do not all need to act and those not acting can reserve power, i.e. the person reserving power can apply to be added to the grant at a later date.  A maximum of 4 people can apply for the grant.  The PR will need to swear a written oath before in independent solicitor or commissioner for oaths and sign Inheritance tax forms.

The first thing that needs to be done is to ascertain the net worth of the deceased at date of death.  This can be done by contacting all the financial institutions, banks, share registrars etc and by obtaining a date of death value for any properties owned by the deceased.  Remember that jointly owned property needs to be included as the deceased owned it at date of death, even if it is not passing in the will.  This is needed for inheritance tax purposes.

The process for someone acting privately and someone instructing a solicitor differs in that if they act privately the executors/administrators will be called to the probate registry to have an interview and swear the oath and provide other information.

Inheritance tax

Inheritance tax forms need to be completed if you are applying for a grant.  If the estate is worth more than the nil rate band (currently £325,000) and the deceased is not leaving everything above £325,000 to their spouse or a charity or they do not have use of their deceased spouse’s nil rate band, the long IHT forms (IHT400) need to be completed and. tax is payable.  Otherwise the shorter IHT205 can be completed.  In some cases the long forms will need to be completed if the estate is below the nil rate band or if the estate exceeds £1 million even if tax is not payable e.g. there is property abroad above a certain value.

If the Long IHT forms need to be completed they are sent to HMRC together with any IHT payable and HMRC provide a receipt which can be sent with the oath to the probate registry (see below).  The IHT 205 can be sent straight to the probate registry with the oath.  HMRC then have a certain number of weeks to challenge the return, particularly any property valuations.

 

The oath

Once the tax forms have been prepared, the PR needs to swear the oath.  This is a document that sets out that the PRs are going to abide by the legal requirements and they give certain undertakings. The oath therefore needs to be sworn before an independent solicitor or a commissioner for oaths and the will (if there is one) also needs to be signed at the top by the executors and solicitor/commissioner.  The oath will vary according to the circumstances e.g. if there is intestacy or if someone is reserving power.

The oath, will and the IHT receipt or the IHT205 are than sent to the probate registry with the appropriate fee.  There is an application fee for the grant.  The private application fee is £105 and £45 when applying through a solicitor.  There is a charge of £1 for each copy of the grant.   It is normally wise to get a number of court sealed copies.

 

Documents to take when you visit a solicitor for the first time about a probate

If you are instructing a solicitor it is helpful if you take the following documentation to the meeting.  You should also take your passport or photo driving licence and a recent bank statement or utility bill showing your identity.

Documents relating to the death:
  • the will if there is one
  • death certificate
Savings/investments related:
  • bank & building society account statements
  • investment statements/share certificates
  • personal/company pension statements
Insurance

 

  • life insurance documents (including mortgage cover)
  • general insurance policies (home, car, medical etc)
State pension/benefits
  • relevant correspondence or statements from Jobcentre Plus (for benefits) and/or The Pension Service
Amounts owed by the deceased

 

 

  • mortgage statement
  • credit card statements
  • utility/ council tax bills in the deceased’s name
  • rental agreements/statements (private or local authority)
  • other outstanding bills
  • leases, hire purchase agreements or similar (eg for equipment, car or furniture)
  • educational and any other loan statements
Amounts owed to the deceased

 

  • outstanding invoices if the deceased ran a business
  • written/verbal evidence of money owed to the deceased
  • utility bill credits
Property: 
  • property keys
  • property deeds or leases for any property they owned,
Other possessions: 
  • existing valuations of property such as jewellery and painting (a current market valuation will be required)
  • any existing inventories of property/possessions
  • safety box deposit information
 (self) employment: 
  • PAYE form P60 and latest payslips if the deceased was employed
  • recent tax returns (if relevant)
Business related:
  • company registration documents, accounts, tax and VAT returns if they had a business

 

Disclaimer: This leaflet is designed to provide you with a brief understanding of probate.  It is not to be treated as a substitute for getting full and specific advice from a specialist lawyer