When someone passes away, their executor or administrator must handle the legal and financial affairs, including costs.
Understanding when and where fees and expenses can be paid directly from estate funds is essential.
What are the legal processes involved with probate?
Probate refers to the legal and financial processes surrounding a deceased person’s estate. It involves:
- Locating the Will
- Valuing assets
- Paying outstanding taxes or debts
- Distributing what remains to beneficiaries
Inheritance laws around the UK
Due to differences in inheritance laws, probate specifics can vary slightly between England and Wales, Northern Ireland, and Scotland.
However, the core activities are similar. In this article, we’ll focus mainly on the process for England and Wales.
The Grant of Representation
Some legal professionals refer to obtaining the ‘Grant of Representation.’
It refers to the two types of documents below, whichever applies to the particular estate.
Grant of Probate
Where the deceased left a legally valid will naming one or more executors, they must obtain a Grant of Probate for their local probate registry.
This document gives the executors legal authority to access the deceased’s assets (bank accounts, property, etc.) and sell the estate.
Letters of Administration
Passing away without leaving a will is known as intestate.
In that case, a close relative can apply to become the estate administrator.
They must obtain Letters of Administration before handling financial affairs or distributing inheritances.
How much do probate fees usually cost?
Different types of expenses can arise during probate and estate administration.
Some are mandatory fixed fees, while others depend primarily on the complexity and values of the assets involved.
Probate application fees
Applying for a Grant of Probate or Letters of Administration involves paying a fee of £300.
The exception is where the estate is valued below £5,000, in which case there is no charge to obtain probate.
Legal and professional support
Many executors or administrators hire professional assistance to complete probate paperwork, communicate with asset holders, file taxes, etc.
Legal fees often depend on timeframes. The average time for the probate process is between six months and a year. Costs can run into the thousands during this period.
Alternatives like fixed-fee probate services are available, they often start from around £500-£1000.
Tax fees
Estates above a specific value may owe Inheritance Tax (IHT) 40% above the tax-free thresholds.
Administrative fees are also involved with valuing assets and filing any necessary forms or returns related to IHT.
Other administration expenses
During probate, many administrative costs can arise, including:
- Property maintenance
- A probate valuation of a property
- Clearing costs
And more.
Keeping receipts is essential, as reasonable expenses can be reimbursed.
Can probate fees be paid from the estate?
The short answer is: Yes, any legitimate fees or costs incurred during probate should always be payable from estate funds once available.
The executor or administrator is responsible for handling affairs. However, they usually cannot be forced to cover costs personally.
There are a few options to access money from the estate itself:
Use the deceased’s bank account
Before probate grants access, there is usually a process for releasing limited funds from the deceased’s bank account.
These are specifically for paying urgent invoices like funeral fees, although other early costs may also qualify.
Open an ‘executor’s account’
Once probate is granted, the executor can open a specific bank account in the estate’s name.
Costs are then managed directly from estate funds, simplifying accounting later.
Reimbursement
Executors should keep records of any personally paid fees. These can be reimbursed from estate funds once available.
All income and costs to and from the estate must be adequately accounted for.
Do I always need legal support when dealing with probate?
Taking on an executorship role without professional assistance is challenging and risky. Let’s weigh up key factors influencing the decision:
Consider your confidence and ability
Handling large or complex estates alone can quickly become very difficult.
Before taking it on, consider how comfortable you are administering estates independently and whether or not you understand the following:
- Probate processes
- Inheritance tax returns
- Validating assets
- Managing property sales
Potential for errors and delays
DIY probate often leads to mistakes that then delay granting…
Probate registries will only accept applications if critical documents or tax forms are filled out correctly. Failure to do so may cause added stress for executors and beneficiaries.
Protect against disputes
Expert guidance reduces the potential for unhappy beneficiaries to contest the administration later if errors are suspected.
And professional fees are indeed recoverable from estate funds.
So, while you can theoretically handle basic administrative estates alone, specialist legal support is always advisable.
The protection, reduced workload and peace of mind are worthwhile benefits.
Other ways to keep costs down during the probate process
Value the estate promptly
Having assets valued early on gives an accurate picture of estate size and tax liability.
It ensures no late surprises that could incur penalties or interest on any unpaid inheritance tax, for example.
Avoid unnecessary property maintenance
Be wary of costly house repairs or storage fees if you can sell the property promptly after probate. Evaluate whether the maintenance bills are essential.
Minimise interest charges
Close credit cards and loans with outstanding balances quickly to avoid interest accruing against the estate.
Claim all available tax reliefs
Ensuring correct forms are filed on time will guarantee that all available inheritance tax reliefs and exemptions are factored in appropriately.
Missing relief claims can mean more significant taxes than strictly necessary.
While acting as executor or administrator involves essential duties and pressures, you should not have to pay out personally when working on behalf of others.
Legitimate probate fees, tax bills, and reasonable professional costs related to estate administration should always be reclaimable directly from estate funds.
Furthermore, sensibly engaging specialists like probate lawyers or estate administrators will make the process smoother and less liable to errors or disputes.
Taking proper financial, taxation, and legal advice is wise, and the costs will be well spent.
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