Probates can be challenging processes.
There are administrative and legal matters to handle.
And there are costs, too.
Understanding when these expenses can be paid from estate funds is essential.
What are the legal processes involved with probate?
Probate refers to the process of handling a deceased person’s estate.
Only after it is complete can assets be distributed to beneficiaries.
So, for example, selling probate property must wait until probate finishes.
The whole process usually takes between 6 – 12 months, and involves:
- Locating the will
- Applying for a grant of probate
- Valuing assets (the largest of which is often probate property)
- Paying outstanding taxes or debts
- Distributing what remains to beneficiaries.
Inheritance laws around the UK
Inheritance laws slightly vary between England and Wales, Northern Ireland, and Scotland.
But the core activities are similar.
In this article, we’ll focus 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
Deceased often leave a will naming one or more executors, who must obtain a grant of probate.
This is provided by for their local probate registry. It gives executors legal authority to access and distribute the deceased’s assets.
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. 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.
And more.
Tax fees
Estates above a specific value may owe Inheritance Tax (IHT). This is currently 40% at above the tax-free threshold (£325,000).
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.
Fees or costs incurred during probate are payable from estate funds once available.
The executor or administrator handles affairs. But 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, limited funds are often released from the deceased’s bank account.
These are for paying urgent invoices, like funeral fees.
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 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 recorded.
Do I always need legal support when dealing with probate?
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 refuse applications if critical documents or tax forms are incorrect. This may cause added stress for executors and beneficiaries.
Protect against disputes
Expert guidance reduces the likelihood of beneficiaries contesting administration later on.
And professional fees are recoverable from estate funds.
So, you can handle basic administrative estates alone. But 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 quickly
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 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 (include the mortgage) are essential.
Minimise interest charges
Close credit cards and loans with outstanding balances quickly to avoid interest accruing.
Claim all available tax reliefs
Ensure correct forms are filed on time. This will ensure available inheritance tax reliefs and exemptions are factored in.
Missing relief claims can mean more significant taxes than strictly necessary.
Acting as executor or administrator involves essential duties and pressures. You should not have to pay out personally when working on behalf of others.
Costs related to estate administration should always be reclaimable directly from estate funds. These might include:
- Legitimate probate fees
- Tax bills
- Reasonable professional.
Engaging specialists makes the process smoother and less liable to errors or disputes. This might include probate lawyers or estate administrators. So these may be costs worth spent.
