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

Do You Need to Apply for a Grant of Letters of Administration?

six Do You Need to Apply for a Grant of Letters of Administration?If a close relative has died intestate, meaning that they did not make a will, you may need to apply for a grant of letters of administration. This will enable you to gain access to your deceased relative’s assets, so that you can deal with their estate.

In certain circumstances, letters of administration are not necessary. If your relative left assets of under £5000 after the funeral fees were paid, you may not need to apply for a grant. Or if the only assets are shared property, or money in joint bank accounts it may not be required.

Relatives entitled to apply for a grant of letters of administration include the spouse of the deceased, their parents, or their children, and they must send the application to the probate registry. This can be a daunting experience; in addition to grieving the death of a loved one, you will need to deal with the complications that dying without a will can cause. 

When someone dies intestate, it is often far more difficult to deal with the distribution of their estate. Some situations complicate the procedure even further. For example, if children under the age of 18 are entitled to benefit from the inheritance, more than one person must apply.  

Tax can cause additional complications when someone dies intestate, there could be a hefty bill to pay, without any plan in place to lessen liability.  It is possible to alter intestacy to mitigate tax, provided that everyone affected agrees.  As inheritance tax can be complicated and confusing, it is advisable to instruct a legal practitioner to work on your behalf.  They can apply for a grant of letters of administration and help you to deal with the distribution of the estate.

If the assets of your deceased relative have a large financial value, the laws of intestacy set particular rules on how you must distribute the assets. For example, if a spouse dies intestate and the inheritance exceeds a certain sum, other close relatives may be entitled to a portion of the deceased’s estate.

It may be possible to appeal against the way the assets are to be distributed.  For example, you may be a close relative of the deceased and you do not believe that you are getting your fair share of the estate. Also, if you are a common law partner, that was financially reliant on the deceased, you may be entitled to appeal.

Appeals can be complicated and you must make an application within 6 months. If you intend to appeal, it would be wise to seek advice from a legal practitioner before the letters of administration are issued.

What are Letters of Administration?

As executor of a will, it is your responsibility, if it is deemed that the Estate in question is valued at more than just a few thousand pounds (usually over £5000), to apply for a Grant of Probate or Letters of Administration, as part of the probate process.

This means that if the person died having prepared a Will, you must apply to the Probate Office for a Grant of Probate in order to begin the probate process.  If no will had been made, this then changes from an application for a Grant of Probate to an application for Letters of Administration.

These documents are legally required before you will be able to deal with any financial matters, such as closing bank accounts or cancelling trust holdings and pensions.  This of course also means that you will be unable to receive any money from the Estate until you have these documents in place.  Bear in mind that you are likely to be charged a fee for receiving either a Grant of Probate or Letters of Administration.

How a Fixed Fee Probate Service can Save you Money

five How a Fixed Fee Probate Service can Save you MoneyA fixed fee probate service has the potential to save you thousands of pounds in fees. When considering different companies to handle your probate case it’s always best to select a company who offers a fixed price, agreed with you in advance. This way, there can be no arguments later on. After all, as an executor, it is your duty to ensure fees are kept to a minimum so beneficiaries receive their full entitlement. 
 
Hourly Rates
Some companies will charge £200 to £300 per hour, without committing to how many hours. In effect, you’re writing them a blank cheque to charge whatever they see fit. This is extremely risky; once other expenses, disbursements and 20% VAT have been added on, you could end up with an extortionate final bill.
 
How Long’s a Piece of String?
You may find some firms will simply refuse to give a quote, arguing that they can’t tell you how long a piece of string is. This is unfair, providing the case is straight forward; it’s pretty easy to calculate probate fees. The amount of work depends on factors such as how many beneficiaries, whether inheritance tax is owed, how assets are spread out. Don’t just accept they can’t give you a price.
 
Be Wary of Fixed Percentages
You’ll find many firms offering fixed fee probate but be wary of how they calculate their fixed price. Some firms will charge you a percentage based on the value of the estate. This too is unfair. The value of the estate bears little relevance as to the amount of work that the company must undertake. This allows them to make a hefty bonus, at your expense. 
 
Will Writers as Executors
You may feel obliged to allow a certain company to manage probate on your behalf. Maybe they are a family solicitor, or sometimes professional will writers include themselves as executors. You are not obligated to use a company you don’t want to use, if you’re concerned about this, contact our probate helpline on 0800 612 6105, we're open until 10pm, 7 days a week.
 
IWC offer a true fixed fee probate service with no hidden extras. After an initial chat, we’ll prepare a quote which will detail the total cost. Our fees are calculated on the amount of work we carry out and we don’t ask for any advance payment.

What is Deputyship?

Everyone who prepares a will is encouraged to also think about an LPA (Lasting Power of Attorney). In the event that you become mentally incapable of making sound decisions about money, property or your welfare, an Attorney, chosen specifically by you, can then take over this responsibility and ensure your bills are paid, your house maintained and that you’re well taken care of.
 
With an ageing population and extended lifespan expectations, for many of us this has become a sad reality, although the situation is made worse for those who have not prepared in advance.
 
If you have no Attorney in place, then a deputyship is ordered by the Court of Protection. Applications are invited for those who would like to be considered for the role, but bear in mind that these may not include the individual you would have liked to have chosen.
 
Although the court will of course supervise the activities being carried out on your behalf, the thought of someone taking over and running your life for you, whether you like it or not is not a happy one if that person wasn’t chosen by you in the first instance. It is therefore recommended that regardless of your age, you should have an LPA prepared in advance, in case the worst ever happens.

What is Partial Intestacy?

With an increase in the popularity of DIY wills, the industry is also seeing an increase in the number of incorrectly prepared documents which often unfortunately means that distribution of only a portion of the deceased’s assets are covered within their Will.
 
In these instances where a number of assets are not disposed of, the executors are forced to declare partial intestacy to the Probate Office.
 
This simply means that the Probate Office will of course insist that the remaining assets must be disposed of, following the normal English rules of intestacy which will dictate who will benefit and how much they will receive. Far from simply being bequeathed to the next of kin automatically however, this is unlikely to be a straightforward, quick process.
 
Partial intestacy can be easily avoided from the outset by not trying to complete the legal document yourself. It is instead recommended that you use the services of a professional will writer who will avoid ambiguous phrases such as “all my worldly goods” and “all my possessions” which can cause confusion and delay as part of the probate process.

How much are Probate Fees?

fees2 How much are Probate Fees?If you’re looking for a company to handle your executor’s duties and take care of the estate administration process on your behalf, be very careful when considering quotes. Probate fees vary substantially. In 2010, Which? surveyed 4 high street banks and found that on a £350,000 estate, the difference in fees was a shocking £8750.
 
Here are some things to look out for to make sure that you get a fair price when it comes to probate. After all, the onus falls on you, as the executor to preserve the inheritance for the beneficiaries. Make sure you get it right.
 
Compare Equivalent Services
 
You may be considering using a company because they seem significantly cheaper than others. Before you do anything find out exactly what the service includes. You may find that it costs less because it will include a lot less. Some companies will offer a full estate administration package, others an inexpensive application only service. You need to make sure you know what you’re getting before it’s too late.
 
Avoid Probate Fees Calculated on Estate Value
 
These are normally calculated as a percentage and vary from 1-5%. This is an unfair way to price probate simply because it bears no relevance to the amount of work that the company must do. This depends on how many beneficiaries, whether inheritance tax is due and how many financial institutions assets are spread over. For example, an estate valued at £100,000 consisting of 4 bank/building society accounts with 6 beneficiaries is more involved than an estate valued at £200,000 in 2 bank accounts with a single beneficiary. 
 
Ensure that the Practitioners hold the Appropriate Qualifications
 
Choose a reputable, well established company and ensure that practitioners are qualified to assist you. You will need to put an awful lot of trust in your probate advisor so it’s important to be wary. Find a company or individual that is a STEP member (Society of Trust and Estate Practitioners). STEP are the worldwide professional body for matters concerning probate, estate administration and inheritance law. Selecting a company purely because their probate fees are the cheapest is not worth the risk.
 
Don’t Use a Company that Won’t Agree a Price in Advance
 
Probate can last months and it will get pretty uncomfortable if you’re constantly worried about fees, especially if there are any problems. The last thing you want to do is end up feeling like you’re on a meter. Besides, it’s never a smart move to give someone carte blanches to charge you as and what they see fit. If you’ve agreed probate fees from the get go, you won’t get any nasty surprises later on.

Guernsey Inheritance Law Changing

As from 2 April 2012, the Guernsey inheritance law is set to change.
 
Currently, residents on the island are forced to leave a percentage of their property and remaining assets to their surviving spouse and children in the event of their death. However, with the modern family structure having altered irretrievably, many individuals now have children from other relationships and more than one spouse throughout their lifetime.
 
The new Guernsey probate laws will state that the wishes laid out in a Will, should override the original forced heirship, if they differ.
 
This will only affect Wills made after 2 April 2012, so if you or own a property on the island of Guernsey, and have already made a Will, you should consult a probate specialist to create a new Will, if the wishes in your original document differ.

Inheritance Tax and gifts of property

If you are in the enviable position of owning and living in a property which is now mortgage-free, you may be thinking of gifting it to your next of kin as a way of reducing your Inheritance Tax liability.
 
You can of course gift your property if you are no longer living in it and in this instance, it will be formally classed as a gift and so will not be taken into consideration when your Inheritance Tax liability is calculated.
 
However, if you have already gifted your home yet continue to live in it without paying rent at the current market rate, you will be considered to be still benefitting from the property – called a “gift with reservation”. In cases such as this, the property although no longer technically yours, will still be classed as part of your Estate in the event of your death and so will be included in Inheritance Tax calculations.
 
It is therefore, more advisable to simply leave your home to your loved ones in your Will, rather than trying to minimise your Inheritance Tax liability by providing it as a gift.

Inheritance Tax Planning for Family Businesses

Although a recent report called for the removal of Business Property Relief for family businesses, the government has refused to alter the way in which Inheritance tax liability is calculated.

Currently, those benefiting from probate by way of a stake in the family business are exempt from paying inheritance tax under BPR rules.

The UK’s Department of Business, Innovation and Skills has argued that by removing BPR, business owners will therefore be encouraged to restructure the business and bring in more revenue for the government.

The government disagrees however, believing that BPR is vital in supporting the sustainability of small, family-run businesses and that it must remain.

Are you the head of a family business?  Have you thought about inheritance tax planning and do you agree with the government’s decision?

Why have a Lasting Power of Attorney?

Power of Attorney ensures that someone you trust can take over your day to day finances and decision making if you should be left mentally unable to make decisions because of accident or illness.

Whether or not you have made a Will, if you become unable to make rational decisions and do not have Power of Attorney in place, then your case will be passed to the Court of Protection and it could take some time for arrangements to be made.

The Court of Protection was formed in 2007 as part of the Mental Capacity Act 2005 and was put in place to safeguard the assets of vulnerable individuals. However, since that time, there have been a high number of complaints about how cases are being handled.

To avoid the necessary action of dealing with the Court of Protection, ensure that you grant Lasting Power of Attorney to a trustworthy person, who can take over your affairs for you, should you become unable to carry them out yourself. Provided this individual is over 18 and has not been declared bankrupt, you can choose anyone yo like.

It is worth noting that the Lasting Power of Attorney must be registered before it is legally recognised. This means that the sooner you have it in place, the better. Even if you are in sound mental health, you can have peace of mind from knowing that the document is in place should you ever need it.

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