Estate Administration, Probate & Taxation
John Kerr were the first North West of England accountancy firm to be licensed to carry out probate work by their regulator the Institute of Chartered Accountants in England and Wales.
When someone dies, they may leave behind assets such as property, bank accounts, life policies, shares, cars and other possessions. In these circumstances someone will need to make arrangements to collect and distribute their estate (their property and possessions) and settle any debts or liabilities, including Inheritance Tax that may arise.
If there is a valid Will then the estate must be distributed according to the wishes of the deceased. Individuals named as Executors in the Will are responsible for administering the property and possessions of the deceased in line with their wishes.
Where there is no Will, the deceased has not made any decision on how the estate should be distributed. In this case the Intestacy Rules apply and the next of kin is required to administer the estate. This person is called the Administrator. The distribution of any estate will also be determined by the Intestacy Rules.
If someone close to you has died recently, you may have been named as an Executor in their Will or be required to act as their Administrator where there is no Will in place.
But what does that mean and what is involved? Unless you’ve experienced bereavement before, you will probably be unsure what you have to do.
Acting as an Executor or Administrator can be a very daunting prospect, especially once you realise that the role carries with it considerable responsibilities.
If you find yourself in this situation, don’t worry. We are here to help with practical advice and support.
You can appoint us to assist you with your responsibilities. Remember, you do not need to use the solicitor or organisation who drew up the Will of the deceased.
If you prefer, you can appoint us to carry out all of the complexities in obtaining Probate and carrying out the Estate Administration tasks. Our service can assist you to complete all of the legal, tax and administrative processes involved and provide you with peace of mind and the added reassurance of dealing with a trusted and professional organisation.
Remember, whether there is a Will or not, administration of the estate will need to be carried out.
This typically involves obtaining valuations and dealing with the collection and distribution of the assets of the estate of the deceased. There is often a large amount of paperwork to be dealt with, numerous forms to be completed and letters written. Many of these tasks apply regardless of whether there is a Will or whether Probate is required.
In many circumstances the Executor or Administrator must apply to the Courts to obtain the right to deal with the estate of the deceased. This application process is called Probate.
Typically Probate is required in the following situations:
- When property is held in the sole name of the deceased
- When the deceased held assets typically worth £5,000 or more with financial institutions
- When banks or insurance companies holding assets in the sole name of the deceased require a Grant of Probate before they will release funds or pay out on policies
Probate – What does the work entail?
How can we help?
The amount of work involved will depend on the assets owned by the person who has died, and the terms of their Will and our service can be tailored to meet your needs.
- Send notifications of death to the relevant Government departments.
- Finalise the Income Tax and Capital Gains Tax position of the person who has died.
- Ensure the validity of the Will and codicils, if any, and the various legacies.
- Consider opportunities for post death variations, commonly effected via a Deed of Variation.
- Identify the person’s assets and liabilities.
- Notify and obtain confirmation of value of assets/amount outstanding from asset holders/creditors or value assets as necessary.
- Prepare the Inheritance Tax return and calculate the amount of tax due.
- Prepare the application to obtain the Grant of Probate / Letters of Administration.
- Collect in all the assets of the estate, which may involve selling them, transferring title to the personal representatives or physically securing them.
- Settle any debts that need to be paid.
- Place statutory notices in The Gazette and local newspapers to allow potential creditors to come forward.
- Agree the amount of Income Tax and Capital Gains Tax payable by the estate preparing Tax Returns as necessary.
- Distribute the estate to the beneficiaries of the Will or those entitled under the intestacy rules.
- Prepare the estate accounts for approval by the personal representatives.
- Provide ongoing Inheritance Tax, Income Tax and Capital Gains Tax planning advice. One of our probate professionals will discuss your needs with you so that we can provide you with an estimate for our services.
How does the process work?
What can the work entail?
All relevant Government departments, banks, and financial institutions need to be made aware of the death so the assets can be frozen and protected. Importantly, to protect any property, insurers need to be informed and chattels need to be secured. Utility companies, pension providers and phone providers also need to be informed. Passports and driving licenses need to be cancelled
We will help you to establish values for the assets of the estate including all property, savings and possessions, taking into account any debts that need to be paid. Any gifts made within the seven years before death will need to be established and accounted for.
We will help you ensure that all appropriate reliefs and exemptions are claimed, and advise of any opportunities for beneficial post death variations. We will calculate the amount of any Inheritance Tax payable and ensure the correct forms and payment are sent to HMRC on time.
If a valid Will is in place the executors will apply for a Grant of Probate. Where the deceased left no Will (they died ‘intestate’), or the executors named in the Will cannot or do not wish to apply, the next of kin must apply for a Grant of Letters of Administration. Our probate team will be able to guide you through either process.
Where appropriate, the assets of the estate are collected in and turned into cash. All debts and expenses of the estate are then paid, including any Income Tax and/or Capital Gains Tax owed to HMRC. The executors can choose to open an executors’ bank account for this purpose or we can use a designated client bank account to assist.
A final net amount is calculated on preparation of the estate accounts and agreed by the executors. Specific legacies are paid, before dividing the remaining value in accordance with the Will either by payment of money or transfer of assets in kind. Where the deceased did not leave a Will the assets are divided up between specific relatives in accordance with the rules of intestacy.
How long can this take:
It is difficult to provide definitive timescales for probate services as there are so many things that can affect the process and each case is different. We work closely with the personal representatives and keep them regularly informed of progress in each case.
As a guide we have set out below approximate timescales for each stage of the process:
- It can take two to three months to identify and value assets/liabilities and prepare the Inheritance Tax forms necessary to apply for probate.
- Probate applications can take up to three months to be processed by HM Courts and Tribunal Service (HMCTS).
- Selling assets and collecting in the proceeds can take a further three to six months or longer depending on the market for those assets.
- Settling tax liabilities, preparing estate accounts and making final payments to beneficiaries may take a further two months.
How our work is priced:
Each estate and probate case is different and the time taken to undertake the work necessary will vary significantly depending on a number of factors. As such it is not possible to provide a general price for this type of work. However, our fees are based on the complexity of the work and the time which it is necessary for us to spend rather than on the value of the estate in question.
We can either agree and work to a fixed fee or charge on a time basis. If the latter, we will provide you with an estimate up front before we start our work and keep you updated as things progress. Should we identify anything that is likely to significantly alter the fee for the work we will bring this to your attention as soon as possible. For an idea of the scope of work involved, based on various different scenarios, and the potential costs associated with each scenario, we would expect fees to be:
Scenario 1 - Obtaining a grant of probate (easily identifiable assets, no Inheritance Tax)
The person who has died has a simple Will and assets which are well understood and easy to value, such as bank accounts and/or quoted shares held with investment managers. The estate is not subject to Inheritance Tax and is not one for which a full IHT account is required to be submitted because the assets are either passing to a surviving spouse or civil partner or the total value is within the relevant thresholds. Valuations are easily obtained and there are no complicating factors. The relevant Inheritance Tax form IHT205 is able to be completed and the probate application made on behalf of the executors. The executors deal with the administration of the estate themselves. Total expected fees of between £1,600 and £2,200 plus VAT.
Scenario 2 - Calculating Inheritance Tax and obtaining a grant of probate (simple Will, high value assets but easily identifiable)
The person who has died has a simple Will with one or more beneficiaries and assets which are well understood and easy to value. Valuations are reasonably easily obtained and there are no complicating factors. The relevant Inheritance Tax form IHT400 and supplementary pages are prepared and the probate application made on behalf of the executors. The executors deal with the administration of the estate themselves though require some support along the way. Total expected fees between £2,500 and £4,000 plus VAT
Scenario 3 - Acting on behalf of executors to administer estate (good information provided, assets not complex)
We are asked to undertake the full process of identifying the estate’s assets from the information provided, notifying all relevant parties, valuing the estate and calculating, declaring and arranging payment of Inheritance Tax. The person has a reasonably straightforward Will. Valuations are reasonably easily obtained and there are no complicating factors. The probate application is made on behalf of the executors. We collect in the estate’s assets, pay any debts and distribute the remaining assets/funds to the beneficiaries after having placed the necessary death notices advertising for creditors. We prepare accounts for the estate and complete the necessary returns to HMRC in respect of Income Tax and/or Capital Gains Tax. Total expected fees between £9,000 and £12,500 plus VAT.
Scenario 4 - Acting on behalf of executors to administer estate (research required to identify estate, complex assets/affairs/Will)
We are asked to undertake the full process of identifying the estate’s assets including ascertaining what those assets are from such records that exist, notifying all relevant parties, valuing the estate and calculating, declaring and arranging payment of Inheritance Tax. The person has a Will with complex provisions or perhaps no Will at all or executors who require tracking down. Certain assets require professional valuations to be obtained and/or careful consideration as to the amount of any Inheritance Tax reliefs for which they may qualify. There are also beneficial post death tax and/or estate planning opportunities of which it is necessary to advise the beneficiaries. The probate application is made on behalf of the executors. Grants may also be required in other foreign jurisdictions. We collect in the estate’s assets, pay any debts and distribute the remaining assets/funds to the beneficiaries after having placed the necessary death notices advertising for creditors. We prepare accounts for the estate and complete the necessary returns to HMRC in respect of Income Tax and/or Capital Gains Tax, identifying any beneficial claims to the executors. Total expected fees between £15,000 and £25,000 plus VAT
Hourly rates of charge
Our current hourly rates of charge (excluding VAT) are as follows:
David Glover – Director in charge of Probate matters - £150
Gill Harvey - Senior Manager - £90
In addition to our fees, the following estimated costs are also normally incurred:
Probate application fee £155
Additional copy Grants of Representation £1.50
Section 27 Statutory Notice £73.20
Local newspaper notice £215
HM Land Registry – copy documents (per document) £3 (for most documents)
Probate – Regulatory Information, Compensation Scheme and Complaints
We are licensed to carry out the reserved activity of non-contentious probate in England and Wales by the Institute of Chartered Accountants in England and Wales (ICAEW).
Details of our probate accreditation can be viewed at icaew.com/probate under reference number C005010202
ICAEW Probate Compensation Scheme
In the unlikely event that we cannot meet our liabilities to you, you may be able to seek a grant from ICAEW’s Probate Compensation Scheme. Generally, applications for a grant must be made to ICAEW within 12 months of the time you became aware, or reasonably ought to have become aware, of the loss.
Our professional indemnity insurance (PII) complies with the ICAEW’s PII regulations having a minimum level of indemnity of£500,000 per claim. Further information about the scheme and the circumstances in which grants may be made is available on ICAEW’s website www.icaew.com/probate.
Probate – Regulatory Information, Compensation Scheme and Complaints
We always look to provide our clients with a high level of service but if you would like to talk to us about how we could improve our service to you, or if you are unhappy with the service you are receiving, please let us know by contacting David Glover. We will consider carefully any complaint that you may make about our probate and/or estate administration services as soon as we receive it and will and do all we can to resolve it. Any complaint should be submitted to us in writing. We will acknowledge your complaint within five business days of its receipt and endeavour to deal with it within eight weeks.
If we do not deal with your complaint in this time, or if you are unhappy with our response, you may of course take up the matter with the Legal Ombudsman. Complaints to the Legal Ombudsman should be made within six years of the act or omission in question or within three years of you becoming aware of the issue, and in either case within six months of our written response to your complaint to us. The contact details for the Legal Ombudsman are:
Letter: Legal Ombudsman, PO Box 6806, Wolverhampton WV1 9WJ
Email: firstname.lastname@example.org or Telephone: 0300 555 0333
More information can also be found on the website of our professional body the ICAEW at icaew.com/complaints
John Kerr - Chartered Accountants
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