Applying for probate is a bit of a faff. However, it’s necessary to ensure that the right people inherit their fair share of the estate.
Even if a will hasn’t been left, there’s a good chance you’ll still have to go through the formal process. If they didn't leave a will, a grant of letters of administration is used instead, as opposed to a grant of probate.
Different names, but both documents work in much the same way, i.e. by giving a named person legal authority to deal with the estate of the person who died. For more detail on how the probate process works, take a look here.
However, there are circumstances where a grant of probate (or letters of administration) isn’t needed. Let’s take a look at some of them:
1. Joint assets
The most common and straightforward situation where a grant of probate will not be needed is where the deceased owned assets in joint names. This may be property, bank accounts, or life policies, that continue in the name of the survivor.
If an asset is jointly owned, then it is likely to pass to the remaining joint owner by operation of law known as survivorship, regardless of any contrary intention in a will.
This should be food for thought if you have a partner. You can make it easier for you both by taking out joint agreements – it can be cheaper too.
2. Assets held in trust
If the deceased person had set up a trust, the assets held in the trust will be managed by the trustees, and probate may not be necessary.
Placing assets in trust is often a smart move, for reasons of lifetime tax planning or for asset preservation. However, it doesn’t always make for easy reading when the savvy loved one has passed on.
The estate might still have an inheritance tax liability that you need to get your head around. In which case, it’s best to seek legal advice where the deceased was a beneficiary of a trust or created a trust during their lifetime.
3. Assets of lower value
If the deceased didn’t amass a fortune while they were alive and they only left a reasonably modest estate, the upside (if you can call it that) is that probate might not be required.
Forgive us whilst we bring out the legislation… but the Administration of Estates (Small Payments) Act 1965 (as amended) sets out that a grant of probate isn't required for assets below the value of £5,000.
However, the value of the asset can be even greater and still clear probate. Financial institutions, such as banks, building societies and investment companies will set their own level of risk in terms of the sums that they will release without a grant of probate. Some thresholds can be £50,000 or higher, so you’ll have to check with each institution.
As you’re quickly learning, even if you don’t have to apply for probate, there’s still plenty of admin to get through. Each institution will have its own requirements and forms to complete, including signing indemnities to protect the organisation against any future claims.
The person(s) claiming the funds will have to prove their entitlement, either by producing a copy of the will confirming their appointment as executors or confirming their relationship to the deceased.
If there is any dispute about entitlement to the funds, financial institutions reserve the right to request a grant of probate.
4. Assets with named beneficiaries
Some assets, such as life insurance policies and pensions, have named beneficiaries who will receive the proceeds directly without the need for probate.
The named beneficiary of a life insurance policy is typically entitled to receive the death benefit directly from the insurance company, without the need for the probate court to oversee the distribution of the funds.
This can provide a quick and convenient way for the beneficiaries to access the funds, and can help to avoid the time, expense, and uncertainty of the probate process. Yet another reason to take out life cover if you’re contemplating it, perhaps?
However, it is important to keep the policy updated with the current and correct beneficiary information, as this will determine who will receive the death benefit.
The same note of caution applies to pensions. The trustees of a pension scheme may not have received instructions from the deceased during their lifetime about who should benefit from the pension fund, or there may be no obvious beneficiary, as per inheritance rules.
In cases like this, the pension company can decide to make payment to the personal representatives of an estate and will request a grant of probate.
5. Insolvent estates
Sometimes, when you’re doing the sums on the value of the deceased’s estate, it comes to light that the debts accrued exceed the assets and the estate is potentially insolvent.
While probate might not be necessary, personal representatives have to tread carefully as they could find themselves personally liable to creditors if debts are not settled in the correct order. Therefore, if dealing with an estate that appears insolvent, it is important to seek legal advice as soon as possible.
If you find yourself in this position, or any of those listed above, QuoteSearch can help you make sense of what you’re up against and provide a clear route forward.
We work with a dedicated team of legal experts with regulatory control to give you even greater peace of mind that your probate case will be handled accurately, leaving you with no surprises after the case has closed.