In some states in America (Alaska, Ohio, Arkansas, and North Dakota) it is possible to request ‘living probate’ to be carried out. It isn’t something that many people think about doing, and it isn’t absolutely necessary in most cases, but when it is done it ensures that the will is valid and correct before the testator dies.
The testator will be able to prove that they are in sound mind and body, and wrote the will by themselves, without any outside influences. This is useful if they believe there might be those who would choose to challenge the will after they die. By proving that the will was written exactly as the testator wanted it to be, there is then little chance that any kind of challenge can be made.
This is, however, an expensive option, and one that is not needed in the majority of cases. If there is a chance that someone will contest the will, and if doing so would create a lot of problems for many people, or hold time sensitive funds up for too long, then it could be something that some people would consider doing. And it’s not just about money either – contesting or challenging a will can cause huge family feuds and upsets. It could be that the testator wishes to avoid anything like that, and so organises a pre-death (or antemortem) probate review.
If you were to go down this route and then change your mind regarding who should benefit after you die, it is possible to change your will, or revoke it entirely. However, there will be a validated version on file, and therefore you must go to court in order to have that will destroyed to avoid any confusion. And, if you wish to go through the antemortem probate procedure for your second or subsequent wills, you would need to pay.
An executor is always expected to act reasonably when it comes to dealing with someone’s will and estate. They must act in the best interests of the estate, and the beneficiaries named in the will. This involves a number of things including getting the best possible price for any property or assets that are sold. It also means that they should ensure that the death is registered correctly. If this is not done, there could be serious implications that affect many people, and their inheritances.
The estate must be calculated correctly as well. This is to make sure that, if any inheritance tax is due, it is paid on time, and at the correct figure. This needs to be done before any of the money and assets are distributed.
The death should also be ‘advertised’, for example it could be announced in a national newspaper. This is so that anyone who is not mentioned in the will but who is owed money by the estate can contact the executor to arrange for payment. These debts must be paid off before any beneficiaries can inherit. If this is not done, and someone makes a claim after the money has been distributed, the executor may be liable for the debt.
If someone disputes the will (ie, if they question whether the will is valid, or if they have evidence that there is a newer will, for example) then there could be further claims. Being executor is an important job with huge responsibility, and it is always worth getting independent legal advice if you take the job on, to prepare you.
Applying for probate can be a complicated process, particularly if you have never had to do it before. If you don’t seek expert advice, there are some common mistakes that are often made. These mistakes can cause probate to take much longer than it needs to, making it more costly, and more stressful.
The first mistake that often occurs is that people apply for probate in the wrong country. The only place to apply for probate is in the country where the person was living before they died. Many people applying for probate apply in the country where the person was when they died, rather than their country of residence. This is not always the same place, and if you are unsure it is best to check.
The forms required can also be confusing and lead to mistakes. The forms can be found online, but although they are easy to find, they are not always that easy to fill in. Every part of the form needs to be completed, and that might require some research because all the names of the person need to be entered. Those names much match the ones on the will. This might relate to middle names, or perhaps maiden names. All the information much be correct and the same on all the forms.
Estate fees are the last area where big errors can be made. There is a special formula that needs to be used to calculate the fees and taxes due. Mistakes here can mean big problems further on, which is why hiring an expert to help at this point can save you a lot of trouble in the long term.
Sometimes organising a probate trust can be the perfect way to keep your estate simple, to avoid any protracted probate delays, and even to enable everyone to stop worrying about inheritance tax implications. A trust is a great way to give grieving families a bit of time and space to get things organised without too many – if any – complications getting in the way. It is often much more manageable this way.
There are a number of different types of trust. One of these is known as the discretionary probate trust.
A discretionary probate trust is perhaps not as simple as other trusts, but it does still allow for an easier transition that some other options. It offers a degree of flexibility after the policyholder passes away because it is the trustees who are given the discretion (hence the name) to choose who to pay from a beneficiary list. No inheritance tax will be due on this kind of inheritance because it is classed as a chargeable lifetime transfer.
However, be careful. There are some actions which can still lead to a large tax bill. For example, any gifts made within seven years of your death will be taken into account. There are many other potential pitfalls as well, and so it is always a good idea to speak to a professional about how you can bypass as many issues as possible.
There are thousands of empty homes in the UK, and, according to recent research, around 90 percent of those homes are empty due to poorly managed or complicated probate. This has held the process up, meaning that although the previous owner of the property is now deceased, it cannot be sold until probate is completed. It is therefore left empty, and at the mercy of thieves and squatters. This in turn reduces the potential value of the house or flat, and causes my possible issues regarding the estate.
The main reason for homes being empty is that those dealing with the will of the deceased – the executors – have no understanding of the probate process. And why should they? Being an executor is not something that people are called upon to do every day. It is extremely important that, if you are an executor for someone’s estate, you ask for expert advice.
Another problem is that the home owner dies intestate – that is, without a will. With no final direction from the deceased, it can be difficult to arrange probate in a sufficiently quick time.
And what if beneficiaries can’t be found? This holds up proceedings as well. As can missing paperwork and family disputes around what should or should not happen.
It’s not just legal or tangible problems either. Sometimes an emotional attachment to a property can mean that it isn’t sold as quickly as it should be. Although completely understandable, and although of course emotions will come into the events that need to happen after someone dies, it is still important to think logically, and sell the home in a timely manner – even if it is a well-loved childhood home.
The answer to the question about whether or not you would still owe money on your mortgage if you were to die is a personal one, but one that should be considered. If the answer is that your mortgage isn’t just about to be paid off, then you may have to assume that there will be money left to pay – because, as uncomfortable as it may be to think about, anyone could die at any time. And a mortgage is most likely the biggest debt you’ll ever have – amounting to hundreds of thousands of pounds. It can feel quite overwhelming when you think about it.
So what would happen to your outstanding mortgage if you were to die before it was paid in full?
The answer lies firstly in whether it is a joint or single mortgage. If it is a joint mortgage, then whoever is named along with the deceased on the deeds and mortgage details is the person who will be responsible for paying the balance of the mortgage. They won’t have to do this all at once (unless they choose to), but instead can take over the monthly repayments and continue to pay the mortgage as usual. Of course, if that person has no income, or cannot make the repayments on a single income now that their partner or spouse has died, it can prove problematic. This is why having adequate life insurance which would cover the balance of your mortgage is so important.
If the mortgage was only in the name of the deceased, then the terms will most likely say that the balance must be repaid upon that person’s death. Most estates aren’t rich enough to cover that mortgage repayment, and this is why the house will, in this situation, need to be sold. Any profit made from the house sale can be put back into the deceased’s estate. If there is a shortfall most mortgage lenders will close down the account with whatever can be made from the house – although this is not always the case and should be checked out before assumptions are made.
Every will must have an executor. That’s the law. Or is it? Well, although it is true that there must be an executor for each will, the truth is that there must be at least one executor. In reality, it is perfectly valid and possible to have more than one should the testator require it. But why would more than one executor ever be needed?
In law, as many as four executors can be named in a single will and, if necessary, all four (or up to four) can apply jointly for probate. Once probate has been applied for, whomever is named as executor must continue in that role – but before this happens they can step down in need be. If this happens, and more than one executor has been named, then probate can still go ahead as there will be one, two or three other executors to take on the work. Executors should be told that they are being named as such in a will before the testator dies, but sometimes this isn’t the case and therefore it could well be that some of them may wish to walk away from the position. Having more than one executor makes this much easier.
Once probate has been granted, the executors must work together to make the process run smoothly. This can be difficult with more than one executor, and the concern is that some jobs won’t be done at all as everyone thinks someone else is doing them, and some jobs will be done more than once as everyone thinks it is their job to do. The best way that multiple executors can deal with the estate of the deceased is to work together, discussing all decisions before acting. It is fair, although it is time consuming and can sometimes be difficult to get in touch with everyone.
In this case, one person should be named as ‘lead executor’. How this person is chosen is not particularly important, although if someone has experience or knowledge of probate then they may well be the best person to choose. Alternatively, the executors can apply jointly to appoint a solicitor to carry out the work for them.
Many of the UK’s biggest banks have limits on the amount of money that is allowed to be released from deceased customer’s accounts without the need to apply for probate first. However, these limits are set to increase for some banks.
Normally a bank or building society will freeze the accounts of someone who has died. This is in order to give the executor the time to apply for the grant of probate. However, this process can take a long time – sometimes months, and, in the case of incredibly complicated estates, years. The executor will be able to access money required to pay for any funeral expenses and inheritance tax that might be owed.
Some banks also allow small amounts of money to be withdrawn to give to bereaved relatives as long as a death certificate can be produced. Each bank is different, but in general, the amounts that were allowed to be withdrawn without probate would be between £15,000 and £20,000.
Recently, however, some high street banks and building societies have agreed to raise this limit. This will help those who are trying to wrap up their deceased relative’s estate and ease the burden at a difficult time. The Royal Bank of Scotland, for example, has raised its limit from £15,000 to £25,000. Lloyds Bank has raised its limit from £25,000 to £50,000. HSBC has removed its upper limit and has said that it will assess each case individually. Nationwide are looking at doing the same thing.
The raising – or removal – of these limits will mean that the estate can be dealt with much more quickly, and although probate will still be required for other assets, at least those left behind will be able to continue their lives without money being too much of an issue.
Inheritance tax can, at first, be an inexact science. Although it may seem as though it is something that can be calculated exactly, there are various factors that mean it is sometimes overpaid. Equally, your inheritance tax payment can be underpaid too. Why is this?
When someone dies the estate will often have to pay inheritance tax (IHT), assuming the estate is worth enough for the government to charge IHT on it. The executor will need to fill in a tax return and pay the money calculated to HMRC. Only after this will they be able to obtain probate and distribute the assets.
The difference in the figures comes when an asset – for example a property – is sold for more or less than the valuation. With properties this is very common, and they do often sell for less than the asking price. However, the tax returns and the payment will already have been made at this point, and therefore the overpayment will need to be recovered. Equally, if the property (or other asset) sold for more, an additional payment will have to be made.
If an overpayment has been made then you will need to contact the Capital Taxes Office (CTO) which is part of HMRC. Unfortunately the process of recovering money like this can take many months, even in the most straight forward of cases. This can cause a major impact on the distribution of the rest of the estate, as everyone has to wait until the money is returned.