Tony Crocker

Tony Crocker is Director of IWC Estate Planning & Management Ltd. With over 15 years’ experience, he is knowledgeable and proficient in all matters regarding Probate, Will writing, Estate Planning and Inheritance tax avoidance. In addition, he has a wealth of experience in dealing with estate settlements and issues with the capital taxes office in the event of bereavement. As a member of the Society of Will Writers & Estate Planning Practitioners, he is widely respected within the field, having helped many people at difficult points in their lives through complex probate and tax issues. Tony Crocker

Letters of Administration in Scotland

We post an awful lot on our blog about applications for letters of administration in England, Wales and Northern Ireland and would like to offer the same help and information for our Scottish readers.
 
Scotland has a separate judicial system to the rest of the UK, this means there are substantial differences between probate in Scotland and in the rest of the UK. Probate is upheld by the Scottish Courts; laws, terminology and processes are very different.
 
While the process of applying for probate (confirmation) when there is a valid will may be quite similar to that of England and Wales, this is not so for cases of intestacy. 
 
Who should apply for Letters of Administration?
 
The Succession (Scotland) Act 1964 determines, who can apply to administer the estate, who will inherit and how much they are entitled to inherit. A personal representative for the deceased will be appointed by the Sheriff Court in the following order of priority;
a person who is entitled to inherit
deceased’s next of kin
estate creditors
the procurator fiscal
 
How to Apply
 
First you must make an inventory of assets and value the estate. Estates valued at less than £36,000 can go through a simplified version of the confirmation process. You must contact the Sheriff Court nearest to where the deceased was domiciled at the date of death and arrange an interview.
 
For estates that exceed £36,000, an inventory form C1 and relative form C5 must be completed, and sent with the relevant documentation to the Sheriff Court. If inheritance tax will be due, a complete tax return must be prepared (form IHT400) and sent to HMRC.
 
Before obtaining confirmation, the representative must obtain a Bond of Caution. This is a guarantee made by an insurance company that the executor will distribute the estate in accordance with Scottish intestacy laws.
 
What Happens Next?
 
Provided there are no complications, you will be granted letters of administration. The document can be used to obtain access to funds, act on behalf of the deceased and wind up the estate. This involves informing relevant persons, maintaining a set of accounts, collecting monies owed, paying creditors, correspondence with beneficiaries, the sale of assets and ultimately distributing assets in accordance with intestacy law.

Who will Inherit and How Much?
 
Scottish Succession law sets out how intestate estates should be divided. Inheritance law states that certain beneficiaries have `rights` to claim; these are known as the Rights of Succession. These are briefly summarised as –
 
Prior Rights – The entitlement of the surviving spouse or civil partner.
Legal Rights – After the satisfaction of prior rights, the surviving spouse and children of the deceased are entitled to claim legal rights to the moveable estate.
The Free Estate – Is the remainder, after legal rights and expenses which is divided between close relatives.

Scottish Probate Fees

There are statutory Court fees for issuing confirmation in Scotland. If the value of the estate is £5001 or more a fee of £200 is payable to the Sheriff Court, for estates with a value of £5000 or less, there is no fee. You must calculate how many official copies of the certificate you are likely to require. Certificates of confirmation are £5 each.  The statutory probate fees will need to be enclosed with your application.
 
If you decide that you don’t want to go it alone, you’ll need to employ the services of a probate practitioner and will incur legal fees. Legal fees for probate services vary considerably. Banks and solicitors charge between 1-4% of the estate value. This can work out very costly and is not always a fair way of calculating a price for probate. This is because the size of the estate doesn’t necessarily reflect the amount of work that must be carried out to administer it. For example, more work is required to wind up 2 separate bank accounts rather than 1 single account, regardless of the amounts that are involved.
 
Some solicitors offer their services for an hourly rate or a rate per task. This can be risky. As the fee isn’t fixed, you really have no guarantee how much the final bill will be which can lead to problems later on. As an executor you are responsible for mistakes and can be made liable by beneficiaries for anything that can be deemed as an unjustified expense. This includes excessive legal costs. When probate fees are fixed in advance there can be no arguments. Plus, you don’t want to feel like you’re on a meter if there’s a problem or you need extra help and advice. Some solicitors will charge extra for every phone-call, email and letter they must send.
 
Last week, IWC announced that our services now extend to Scottish probate. We offer a low-cost, fixed fee probate service. Our rates are calculated based on the amount of work that must be carried out, rather than as a percentage of the estate. Fees are agreed in advance and payment can normally be settled from the estate later. Practitioners are highly qualified and our inclusive service includes help and advice when you need it, without extra charges.
 
You can find full details about our Scottish Probate Service or call our helpline for more information on 0800 612 6105.

Swain family forced to pay high Inheritance Tax bill

After wealthy Christopher Swain died in Thailand following a heart operation, a messy probate battle ensued, as his daughters fought with his solicitors.
 
Shortly before his death, the girls claimed that Mr Swain’s solicitors allegedly failed to advise him not to sell his shares of the business after a management buyout.
 
This transaction meant that after his death, his children were faced with a £1m Inheritance Tax bill based on the value of these shares, which would have been avoided, if he had retained, rather than sold them on the basis of business property relief.
 
The subsequent court case however, found that the solicitors had not acted negligently and Mr Swain’s daughters now not only have to pay the £1m Inheritance Tax bill, but the high legal costs, too.
 
None of us know when our time is up but we can learn a lesson from this story. If you have dependents and are in business, remember that every legal transaction you undertake could well have a significant impact on your children when you’re gone. Make sure that you see appropriate probate advice so you can find out the best way to minimise any Inheritance Tax liability.

Why Are Letters of Administration Needed?

Letters of Administration are needed when a loved one dies intestate. They are letters which give the person administering the deceased’s estate permission to access their finances.

Does Everyone Need Letters of Administration When a Loved One Dies?
 
There are certain circumstances where Letters of Administration are not needed to access the deceased’s finances. For example, if your loved one has less than £5000 left in the bank after paying funeral expenses, you may not need the document to access their money. Some banks have increased this sum to £10,000 so you will need to check with the deceased’s bank.
 
Also, if you are married to a deceased and all their assets were held in joint names with you, you may not need to apply for a grant, as the financial institutions concerned should be able to transfer the assets into your name.

What If These Cases Don’t Apply to You?
 
If neither of these cases are relevant to you, and your loved one didn’t leave a will, you will need to find out who is legally entitled to apply for the letters. Then before they actually apply they will need to find out where all the deceased assets are held and work out who is entitled to receive them. The law has clear guidelines on who will benefit when someone dies intestate and in what order. But it may become complicated if someone appeals. For example, a common law wife, or another family member may appeal if she was financially dependent on the deceased.
 
An intestate death can be far more complicated than dealing with the estate when a will was left, and it could take years. Once you have received a grant of letters of administration you will need to pay any money owed by the deceased, and collect in any money owing to them, as well as liquidising their assets, calculating taxes and ensuring the estate is distributed correctly to those who are entitled to benefit.
 
Because this can be such a long, time consuming and drawn out process, you may want to appoint an expert probate service to deal with it on your behalf. Your best bet is to use a probate service that can offer you a fixed fee, that way the proceeds of the estate will not be eaten up by a huge legal bill.

British expats can now be cremated in UAE

Islamic religious law states that any Muslim who has died in the UAE must be buried. However, religious leaders have for the first time acknowledged residents who are not Muslim, by permitting the construction of the first UAE crematorium, with a non-Muslim graveyard beside it.
 
The crematorium and graveyard, run by Al Foah Funeral Services, will accommodate a percentage of what is estimated to be over 4000 expat deaths each year in the areas of Abu Dhabi and Dubai.
 
Over $12m is thought to have been invested in the facilities, by the Abu Dhabi government – an investment which shows clearly how important expats are deemed to be throughout the UAE.
 
Some expats consider the UAE to be their home and are happy to have their final resting place here. Until now, this has principally been in an existing non-Muslim cemetery close to the new site. For others who wish to have their body returned to the UK however, relatives can expect to have to pay around £6000 to transport the body back to British soil – a service carried out by airline Ethihad.

Fixed Fee Probate in Scotland

IWC are pleased to announce that we are now able to offer fixed fee services for probate in Scotland. Our partners are able to provide a complete service for confirmation and estate administration. This includes –
 
Making an inventory of assets
Valuation of the Estate
Completing the application for confirmation
Completing the Inheritance tax return
Correspondence with beneficiaries
Informing all Relevant Persons – banks and financial institutions, passport office, local authorities, the Inland Revenue, utility and service providers etc.
Distributing the copies of the grant of confirmation
Collecting monies owed to the estate
Paying creditors
Distributing assets to the beneficiaries
 
Scotland has a separate judicial system to the rest of the UK and probate law is upheld by the Scottish Courts. This means there are considerable differences between applying for probate or letters of administration in Scotland and applying in England, Wales and Northern Ireland. 
Probate terminology and processes are different, for example, in Scotland probate is called confirmation and the personal representative applies for a grant of confirmation.  Different forms are required too. Here’s a brief overview.
 
Small Estates
 
If the deceased's assets are valued at £36000 or less, this is classed as a small estate. The Small Estates Act allows you to obtain probate in a simplified way through The Sheriff Court. It is not necessary to have legal assistance, you must contact the office local to where the deceased was domiciled to make an appointment. However, once confirmation has been issued, you will have to wind up the estate so may prefer to have a professional undertake this on your behalf. 

Large Estates
 
If the estate is valued over £36000 the executor must go through the full application process for a grant of confirmation. When there is no will, the next of kin must apply to the Sheriff Court to be appointed as Executor-dative. A bond of caution from an insurance company will normally be required. This guarantees you will administer the estate in accordance with The Succession Act 1964. In cases of intestacy, professional legal advice is strongly recommended. 
 
The first step is to make a complete inventory of the deceased’s assets. This will enable you to fill out the probate application form C1. If the estate is excepted (no inheritance tax is owed), you must also fill out form C5, along with required documentation and forward to the Courts. If the estate exceeds the nil rate band of £325,000, you will need to complete an inheritance tax return. You must complete form IHT400 where you will give HMRC a full account of the estate.

What is a caveat probate?

When a person dies, it is the duty of the executor to apply to the Probate Registry for a grant of representation, so that the probate process can begin.
 
If someone would like to contest the Will however – if perhaps they feel they should have been left something but weren’t or they suspect that the testator was perhaps coerced into writing specific content within their Will; it is in their best interests to halt the progress of probate.
 
A caveat probate will therefore prevent the Registry from issuing the grant of representation.
 
To present a caveat probate, the specific form must be given to the Probate Registry by the person wishing to contest the Will. This gives them time to discuss the matter with the executor or take relevant legal advice. Should the executor object to the caveat probate, then the person contesting the document will receive a warning from the Registry and must complete and present another form within 8 days. If nothing is received in this time, the caveat probate is removed.
 
The caveat probate is valid for a period of 6 months, although an extension of another 6 months can be requested towards the end of this initial period. If no agreement can be reached, both parties will likely be forced to enter into court proceedings.

What is a Precatory Trust?

Put simply, a Precatory Trust is a way in which you can leave a sum of money to an individual (usually your child or grandchild), but specify exactly how you want that money to be spent.
 
This is a great way of leaving money to someone so that it has a valuable purpose, whether that purpose is to fund the deposit on a house or to pay university fees.
 
A Precatory Trust doesn’t just apply to money, however. You can also use it to dictate who should receive what particular items, using a letter of wishes to say what you’re leaving to whom and why. This can be changed regularly, without actually changing the content of your Will.
 
Often, a Precatory Trust will offer benefits in relation to Inheritance Tax liability and Gift Aid tax.
 
Care must be taken when preparing a letter of wishes, so that the wording is in no way ambiguous and your express wishes are clear. You should indicate that you definitely want to create a trust, name the asset you want to distribute and state who to and why.

Who Is Entitled To Apply For Letters of Administration?

If a loved one has died intestate, you may have learned that you will need to apply for Letters of Administration to administer your loved ones estate. Letters of Administration are similar to Grants of Probate. Both are applications for permission to access the deceased’s finances and deal with the estate.
 
The difference is, the executors of the will would apply for Grants of Probate. But when someone dies intestate there is no will, so an Administrator would deal with the estate as opposed to an Executor and the law has specific rules on who is eligible to administer the will of the deceased.
 
Depending on the relatives left behind, the deceased’s estate will be dealt with by one of the following family members, in this exact order: Husband, wife or civil partner, but not common law partner, adult children including adopted children but not step-children, parents, brothers and sisters or their children, grandparents, aunts and uncles but not their spouses.
 
Once you have established which relative is entitled to apply for Letters of Administration, you will need to decide whether they are going to deal with the estate themselves at this terrible time of grief, or if they are going to use a specialist probate service to act on their behalf.
 
Although applying for the initial Letters of Administration is quite straightforward, you will need to gather a lot of information about the deceased’s finances, before you fill out the application. Because there is no will to guide you on this, it can be a complicated affair in itself. So if your loved one has left significant assets it may be better to appoint a specialist service to administer the estate on your behalf from the outset.
 
It is difficult to focus on financial matters when you are grieving, and if children under the age of 18 have been left behind, or the deceased owns shares, businesses, land or property, dealing with an intestate will can become extremely complicated. Plus it can drag on for years, so it makes sense to use a specialist probate service to speed things up, especially if relatives left behind were financially independent on the deceased.
 
Another good reason for using a specialist service to apply for Letters of Administration on your behalf is taxes. The law requires that taxes are paid after death, not once the estate has been dealt with but a specialist service will know ways to get around this.
 
It is important that the relative responsible for administering the estate is aware of all these issues before they apply for decide whether to administer the estate themselves.

What Factors Increase Probate Fees?

Probate fees can vary greatly depending on the state the deceased has left their finances in. If you are trying to plan ahead so that you don’t leave loved ones facing massive probate fees there are a few precautions you can take.
 
Make a Will
 
Your first step is to make a will. It may seem like a morbid thing to think about, especially if you are still quite young. But one of the biggest factors that increase probate fees is having no will at all, because whoever is dealing with probate will have to find all your assets, debts, money owing to you etc, which may take considerable time. They will also have to work out who is entitled to the proceeds of your estate, according the law.
 
If you die intestate, it is the law that decides who is entitled to what, not you. Do you really want to give the government total control over your finances after you’ve gone? Also, if you don’t make a will, it is not just huge probate fees you will need to worry about, but also higher inheritance taxes.
 
So do make a will but get it drawn up by an expert. You can buy DIY kits at a stationery shop but you put yourself at risk of making mistakes. For example, if you miss assets off your will, you will be deemed to have died partially intestate and your will could take years to sort out. And the longer it takes, the higher the probate fees will be. An expert doesn’t charge a huge amount to help you make your will and they will make sure that nothing is left out.

Take Expert Advice
 
Proper planning can reduce probate fees and inheritance taxes. So make sure you take expert advice on matters such as how to ensure that your partner, spouse or children do not end up paying inheritance tax on your personal property.
 
Make Sure Your Will States How to Contact Your Benefactors
 
If your surviving relatives do not live with you, it is important to state in your will how they can be contacted. If you don’t do this, it will take far longer for a probate service to track the down the benefactors and this will increase probate fees considerably. Complications like this are all the more reason to use an expert to help you write your will. They already know the things that may cause complications and they can ensure that you don’t make any serious mistakes.

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