Q. What is a Grant of Probate?
A. This is the legal document issued by the Probate Office in the High Court in Belfast on production of the following documents:-
- Original Will.
- Oath for Executor.
- Inheritance Tax Return.
It is the legal document which enables the assets to be encashed as it shows the official procedure has been followed and the Tax Man has been notified of the death and the original Will has been produced to the Probate Office.
Q. What are Letters of Administration?
A. When a person dies without a Will they die Intestate. Therefore to administer their estate their nearest next of kin needs to apply for Grant of Letters of Administration from the Probate Office in the High Court in Belfast on production of an Oath for Administrator and an Inheritance Tax Return. It is the legal document which enables the assets to be encashed as it shows the official procedure has been followed and the appropriate next of kin is administering the estate.
Q. What is the Inheritance Tax Threshold?
A. The first £325,000.00 (the Nil Rate Band) of any Tax Payers estate is Inheritance Tax free subject to the reduction of the Nil Rate Band for any lifetime gifts in seven years prior to date of death.
In addition a spouse who dies first can transfer their full Nil Rate Band to the surviving spouse by leaving all their estate to the surviving spouse. This in effect means the surviving spouse will have a double Nil Rate Band of £650,000.00 Inheritance Tax free in their estate.
Q. What is involved in the administration of an estate?
A. The starting point is to correlate the Schedule of Assets and Debts of the deceased person. This information is then declared to the Inland Revenue either in a shorter form IHT205 or in a longer Inheritance Tax Return in the form of IHT400. Generally if there is no Inheritance Tax to pay and the estate is under £325,000.00 then the shorter IHT205 Form is all that is required.
Once the Grant of Probate is extracted from the Probate Office the Grant is exhibited to all financial organisations and the Executors can then either close accounts or transfer the assets.
The Executors are obliged to make sure the assets are distributed as per the terms of the Will and all debts are paid off. Generally a Solicitor will carry out the administration of the estate but will always report to the Executors in respect of their actions.
Finally an Executors Account Statement is drawn up and approved by the Executors and given to each of the Residuary Beneficiaries to show all the details of the administration of the estate.
Q. How long does the process take?
A. Generally a small estate should be administered in three to four months. If Inheritance Tax is payable and Income Tax Returns are required then it may take twelve months or longer.
Q. What is the Deed of Variation and what is the time limit for signing one?
A. It is possible within two years of the date of death for a Beneficiary to re-direct their entitlement to the estate to another person by way of a Deed of Variation.
Q. What are the lifetime gift allowances for Inheritance Tax purposes?
A. The Tax Payer is allowed to make the following gifts during their lifetime without having to outlive it by seven years and therefore these gifts will not form a part of the estate of the Deceased on their Death:-
A. Small gift allowance - £250.00.
B. Annual allowance of £3,000.00.
C. Gift of £5,000.00 in contemplation of marriage of a child.
D. Expenditure out of income – gifting away excess income by way of a regular pattern of gifting e.g. a monthly direct debit.
Q. Why use a Solicitor to administer an estate?
A. Our Solicitors are used to regularly completing Administration of Estates and therefore due to their specialised knowledge they can quickly gather the information required to apply for the Grant of Probate and to guide the Executors through every step in the administration of the estate. They can also advise on Deeds of Variation and the best way for a surviving spouse to plan their finances for the future taking into account lifetime gifting and also potentially the use of Trusts.
Q. What is a Deed of Assent?
A. To transfer the dwelling house in the estate to the correct Beneficiary it is necessary for a legal Deed to be drafted up and signed by the Executors to transfer the property to the name of the Beneficiary. This Deed is known as a Deed of Assent.