Probate is the name commonly used to describe the administration of a Will.
Probate can take a long time to complete because of the amount of organisations involved, and events will often be out of the control of the executors – for example waiting to sell a house. Even once the bulk of the administration of an estate is complete, ‘loose ends’ need to be tied up – for example getting final clearance from the Revenue on income tax, or perhaps inheritance tax. This can be a frustrating period for the beneficiaries of an estate, but unfortunately there is nothing executors can do other than deal efficiently and quickly with those things that are in their direct control.
What is Probate?
Probate is actually the Court Order which grants executors with the formal legal responsibility to deal with the administration of an estate. However, it is a phrase commonly used to describe the ‘administration of an estate’. For the purposes of this article we have used the phrase probate in that descriptive sense.
Who deals with Probate?
The executors appointed in the will of a deceased person are those responsible for administering the estate.
What is involved in Probate?
In its most simple of form, the administration of an estate (or ‘probate’) will include:-
- ESTABLISH THE ESTATE – notify all companies and get ‘date of death values’
- PAY INHERITANCE TAX (IHT) – this needs to be done before Probate is granted
- PROBATE APPLICATION – apply to the Probate Registry for the ‘Grant of Probate’
- REALISE ASSETS/PAY LIABILITIES – ie encash bank accounts, sell houses, pay bills, etc
- LOOSE ENDS – clear off income tax, any IHT queries, and so on
Once these are dealt with, all legacies and residuary gifts can be paid out.
1) Establish Estate
So, what needs to be done before probate is granted? When applying for probate, executors need to (literally) put a value on the net and gross value of the estate of the deceased as at the day they die. This is often called ‘establishing the estate’. To do this, the executors will write to everyone, enclose a copy of the death certificate, and ask for ‘date of death values’.
If there is a house, they will probably get 3 estate agent valuations and take the average of the 3 (for probate valuation purposes.
At this stage, the executors will also notify people such as Pensions, HMRC, Passport agency, any clubs or memberships the deceased had, and so on.
2) Pay Inheritance Tax (IHT)
If the estate is liable to Inheritance Tax (IHT), this must be paid before the Grant of Probate can be granted. Any IHT attributable to the value of any property (houses) can be delayed. But, dependant upon timings, ALL IHT attributable to cash assets (and perhaps some of the tax payable on the value of houses) must be paid upfront.
This can present a challenge for executors as cash is normally only released by banks after the Grant of Probate has been issued! However, many banks will release funds for payment of IHT, normally subject to some sort of indemnity from the executors.
3) Probate Application
With the estate established, and any IHT paid (if applicable), the executors can apply to the Probate Registry for the ‘Grant of Probate’. This can now all be done online.
With the application, the executors will surrender the Will to the Court who will retain the original document.
At the time of writing, how long the application is with the Probate Registry is difficult to predict. It can be weeks, or even months. And, there is nothing that the executors can do to expedite the process.
4) Realise assets/pay liabilities
However long it takes, once Probate is granted, the executors can then start to collect in all cash from banks accounts, shares, investments and so on. And, with that cash available to them, they can then also pay any bills.
If there is a house to sell, you would ordinarily expect to place this with the chosen agent to market before the actual grant of probate is issued.
If all IHT was no paid upfront, then with cash released any balances can be paid.
5) Loose ends
This can be a frustrating period for all concerned – executors, beneficiaries, and solicitors (if they are involved).
Typically, the issues that are likely to run on will include:-
- Selling any house(s)
- Income Tax – see below
- IHT – see below
- Foreign or business assets
Until all loose ends are tied up, the estate is considered still within the period of administration, and so final payments can not be made to beneficiaries.
What is a Cash Legacy?
Cash legacies are fixed money gifts left in your Will. They are usually used as token gestures rather than being a large percentage of your estate (known as your residuary estate).
When are Cash Legacies paid?
These are generally paid by the executors as soon as possible after funds are released. Not all wills have fixed cash legacies. Oddly, they take precedence over residuary gifts, and this is why they should generally only ever be used as token gestures.
The ‘executors year’ means there is no obligation for executors to pay anything out for 12 months after the date of death.
What is Residuary Estate?
The residuary estate is the balance of the estate after payment of all IHT, legacies, and so on. It is usually disposed of in percentage terms to the residuary beneficiaries.
When do Residuary Beneficiaries receive their Inheritance?
Residuary beneficiaries will often be paid in two (or more) stages.
With probate granted, funds in, and any legacies paid, the executors will often make what is known as an ‘interim distribution’. This must include a healthy amount held back by the executors to cover any and all anticipated further expenses eg income tax, inheritance tax, and so on.
It is only once all final expenses are 100% finalised that the residuary beneficiaries can receive the final balances of their inheritances.
How long does Probate take?
This will differ from one estate to the next, and it really is impossible to predict accurately. This is because so much of what executors have to do is out of their control – eg sell houses, deal with the Probate Registry, and finalise income tax and IHT. But, as a very rough guide in a ‘normal’ estate the following perhaps gives you an idea of typical timeframes:-
- 8-12 weeks (establish estate)
- 4-8 weeks (arrange finance and pay IHT)
- 2-12 weeks (probate application – at time of writing delays are considerable)
- 8-12 weeks (realise assets and pay liabilities)
- 12 weeks plus (to deal with loose ends)
In short, even for a simple estate, and with everything running smoothly you can typically expect at least a year for things to draw to a close. In reality, the ‘loose ends’ will often drag on for many months leaving the administration open for well into a second year.
What is the ‘Executors Year’
Given the likely timeframes, there is something known as the ‘executors year’ which in short allows executors 12 months from the date of death to ready themselves to start to distribute money/assets of the estate. The law in this regard means that nobody can compel the executors to distribute anything should they not think it right or appropriate.
Equally, the executors year does not mean that the executors must distribute immediately after 12 months. If houses have not been sold, or there are queries with HMRC (as just 2 examples) money may not be available to distribute. And, executors can not be bound to distribute money that is not available to them, or that is ‘safe’ to release (eg if there are possible liabilities outstanding say for IHT).
What can delay Probate?
So, we’ve noted that executors will be dealing with lots of organisations throughout the period of administration and so will be very much ‘in the hands of others’. That in itself will cause the passage of time (ie waiting to hear back from everyone).
That aside, the sorts of things that can cause delays might include:-
- Foreign assets
- Business (or otherwise unusual) assets
- Income tax queries from HMRC
- Inheritance Tax issues
- Delayed sale of house(s)
- Inexperienced or insufficiently qualified executors
- Executors failing to deal with things in their control promptly
- Beneficiaries in dispute with each other or with the executors
- Someone challenging the Will
- An ‘insolvent estate’
What is an Insolvent Estate?
An insolvent estate is an estate where there is less money available in assets than there are liabilities. In this instance, executors will look to get the agreement of those owed money to take a proportional share of what funds are available as against what money is owed.
Any funeral costs and legal fees will be taken as a matter of priority.
Need help with Probate?
If you are an executor of an estate and would like expert help from probate solicitors, or perhaps a beneficiary and have a query about how long probate is taking – do reach out to us. You can leave a comment below, email email@example.com or call 03300 020 365.