What is a grant of probate?

A grant of probate is the word used to describe the process of confirming the right of named individuals to deal lawfully with the estate of a person who has died.

If a person has died leaving a will, then the people who are named as executors are those people entitled to take out the grant of probate. The authority of an executor to act stems from the will itself, and is confirmed by the grant of probate.

If the person has died without leaving a will, or has died leaving a will, but the executors have predeceased, then there is a statutory order of who is entitled to take out the grant of letters of administration. The authority of the administrators stems from the grant of letters of administration itself.

In order to pass through the process of the court, the executors, or prospective administrators must complete an oath, whereby they swear the extent of the estate, the full name and address of the person who has died, details of the deceased’s birth and death and age at death, together with any other names by which the deceased was known. The Personal Representatives also swear that the deceased was domiciled in England and Wales and that the will attached was the last known will of the deceased.

In addition to citing the basic facts, the PRs also state that the estate was of a certain value. They then go on to promise that they will deliver up to the court accounts of the estate if requested, will gather in and distribute the assets and pay the liabilities lawfully.

If the assets are relatively few, and Inheritance Tax does not need to be paid (and there are no complicating features of the estate), then the probate registry will accept a short Inland Revenue form citing the values of the items in the estate. If the value of the estate is high (or if there are complicating features) then the longer form needs to be filled in. This long form asks more detailed questions, but both documents need to be completed with a care for the detail that is appropriate – it is not enough to make an estimate of value if you are not making an effort – if in doubt, employ someone who can tell you how much that Meissen china or that Georgian silverware is worth. If your dad was into antiques, then get a valuation – if it is all reproduction, then perhaps it might not be a high value after all. If you are claiming a transferrable tax band, then you will also need to be able to show this on the relevant form – whether it is a short form that is appropriate or a long form.

So – you tell the Inland Revenue what the estate is worth, and pay the tax (or a proportion of the tax). You take the oath and swear (on the Bible, Koran, other religious text, or solemnly affirm) the oath saying you will do the right thing. And then submit the documents to the probate registry, who, in due course, send a grant of probate. Congratulations – the will has been proved, is now a document of public record, against which you can be held to account. You may now collect in the assets, pay debts, and deal with the estate according to the law. In the case of there being no will – your authority starts now, and you may collect in assets and enter into contracts on behalf of the estate (as opposed to in your own name).

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Essential Principles for Executors when completing an IHT400 return

When applying for a grant of probate, Executors generally complete two declarations.  One is on oath, when the probate application is sworn.  One is the statement to the Inland Revenue of the financial value of the estate for taxation purposes.

 

When completing the IHT400 in a taxable estate, the executors need to be aware that they are making official statements to the Inland Revenue.  These are listed at page 12 (box 119) of the form.  The executors, when signing the form state (in brief) that:

 

a)      They have made the fullest enquiries reasonably practicable in the circumstances and that should any values be estimated, they will inform the Inland Revenue of these as soon as they know it.

b)      That where spousal relief is being claimed, the executors have done their best to ascertain that the deceased was legally married to the surviving spouse

c)      That they understand that they may be liable to prosecution if they deliberately conceal any information that affects the liability to Inheritance Tax arising on the deceased’s death or if they deliberately include information in the account that they know to be false

d)      That they understand that they will have to pay penalties if the account is delivered late or contains false information that they fail to remedy within a reasonable time.

e)      That they understand that the submission of the form does not guarantee that the Inland Revenue has accepted the facts are as stated

f)       That the Inland Revenue may investigate the estate in detail after the Grant of Administration.

 

The executors should also be aware that the new rules on penalties apply to Inheritance Tax, just as much as to Income Tax and any other tax.  Inheritance tax can face penalties of up to 100% of the tax due, depending on the severity of the error in the account  (whether it was deliberate or careless, concealed or without concealment )and what assistance the taxpayer has given to the Inland Revenue to put matters right, and how speedily any error was noticed and rectified.

 

For more information on the penalty regime, please see http://www.hmrc.gov.uk/about/new-penalties/faqs.htm#39