The probate process explained
This section includes an overview of the key steps to the probate process, a glossary of legal terms and a summary of information your accountant may need at the start of the process.
What is probate?
Probate is the financial and legal process of dealing with a deceased’s estate.
It is a reserved legal activity, which until recently could only be carried out by banks or solicitors.
ICAEW became the first approved probate regulator and licensing authority outside the legal profession in 2014. Since then more than 300 of its member firms have become accredited for probate services.
Can I carry out the probate process myself?
Yes, it is possible to carry out the process yourself, which is especially worth considering if the estate is of low value.
However probate can be a very detailed procedure and many people choose to look for professional help to deal with the accounting and tax side of probate. They sometimes also want help with practical aspects of identifying, selling and distributing assets and identifying and settling liabilities.
‘Probate can be a complex process and it’s difficult to go through that when you’ve just been bereaved. Not only is there plenty to do but it all needs to be done properly.’ - Sam Crossby
What are the advantages of choosing an accountant to help me with probate?
Whether the accountant already has a strong knowledge of the deceased's financial affairs or if you have not worked with the practitioner before, the combination of accounting, tax, law and administration skills required means they are often well placed to carry out this kind of work.
"It seemed more sensible to use the people who knew all the aspects of my mother’s portfolio and tax affairs and who would be dealing directly with HMRC rather than having to reinvent the wheel." - Clare Francis
There may also be a cost saving…
"Banks and solicitors traditionally charge a percentage of the estate whereas we would normally work on an hourly basis. I think it's just offering an alternative for the client and there may also be a cost saving there as well." - Mark Speed, Probate Adviser, Ward Williams
Is there any type of probate work my ICAEW accredited accountant can't help me with?
ICAEW regulated probate practitioners are not allowed to conduct contentious probate. If there is a dispute then a specialist probate lawyer needs to continue the process. Once the point of contention is settled then the probate application can revert to your accountant.
What are the different ways firms usually charge for probate services?
When choosing your probate practitioner, you are likely to come across a few different pricing models.
Pricing models are the way in which a firm has decided they are going to charge for their work.
You should expect a firm to be transparent about their costs and ideally display which pricing model they use on their website. You should also expect to be given regular updates on the final price if you aren’t being charged on a fixed fee basis.
The most common pricing models you will see are:
% value of estateThis model was historically used by banks and although no longer widespread, is still used by some banks and solicitors. Simply, they charge you based on a percentage of the estate’s total value. The rate charged is usually between 1-5%. This could be an expensive option if, for example, you have a simple but large estate.
Fixed feeThis means that a certain scope of services will be included for a set price. You should double check if your fixed fee arrangement includes VAT in the final price and if there are any disbursements that will be charged at an extra cost. Opting for a fixed fee package can be a good option if you want a higher degree of certainty on the final cost.
Hourly rateThis pricing model charges you based on exactly how much time is spent. The rate you are charged will depend on who is undertaking the work, for example an experienced manager of a firm will have a higher rate. This option means you will only ever pay for the work that has been done. Therefore this can be a good option if you have an uncomplicated case.
When you are comparing fees, you should look carefully at the scope of services that the offer includes. Some packages are designed to help you with obtaining the grant of probate only, meaning that valuing the estate and distributing the assets will be left to you. However other packages offer to complete the full estate administration process for you. This means they will undertake the whole process from start to finish.
Even if you have been offered a fixed fee arrangement, or the package you have opted for offers the full estate administration service, there may be aspects of the process that the firm charges extra for, these are sometimes called disbursements.
When comparing probate firms, it is therefore really important that you are clear about exactly what is included in your price and what is costed as extra to avoid any surprises. You must be clear if the pricing includes VAT or not. You should expect your accountant to be very direct and transparent about this and confirm it with you before the engagement starts.
How might the payment process work?
The normal process is that the fee is payable at the end of the assignment within a reasonable period of time. The practitioner may specify for example within 14 days of the date of the invoice. Should you not pay the invoice on time the practitioner may reserve the right to charge interest or a default charge for late payment.
Where the work may stretch over a long period of time the practitioner might ask for payments on account. These may for example be monthly payments or at agreed points in the work schedule. The practitioner should make clear to you the basis upon which they are made and a likely timescale. Then at each point an interim bill is raised, it should make clear the progress on the engagement, how much you have paid to date and how much will remain outstanding, including any additional costs that might have been incurred with your consent. Under tax law VAT at 20% has to be levied on each interim invoice if the practitioner is VAT registered.
Some practitioners may ask for a payment on account in advance of the work as a form of mobilisation fee to fund for example initial external charges. Provided the basis for the charge and how it fits in the overall fee structure is made clear to you, this may be an appropriate part of your arrangements with the practitioner.
The practitioner’s payment policy should be set out in your engagement letter.
What information will I need to give my ICAEW probate accredited accountant at the start of the process?
In order to help your accountant give you the most accurate cost estimation, and to help the probate process go as easily and smoothly as possible, you should provide them with as much information on the deceased as you can. Take to your first meeting as many of the original, relevant documents as possible from the following list:
- Personal information
- Death certificate
- Divorce certificate (if applicable)
- Original will
- National insurance number
- Details of the estate
- Assets and liabilities such as;
- Bank and building society accounts
- Savings accounts
- Personal belongings
- Stocks and shares
- Property valuations
- Tax records
- Pension details
- Details of the executors
- Valid ID
- Proof of address
- Details of the funeral, including costs, if it has already taken place.
What legal terms am I likely to hear during the process and what do they mean?
The person legally appointed by the court to execute the probate process when there is not a valid will, there are no named executors in the will, or if the named executor does not want to carry out the process.
Generally refers to things owned by someone that hold value, such as; a car, property, cash, land, investments, etc.
A person or organisation that benefits from the will of the deceased, or by the rules of intestacy (see below) by being left a part of the estate (see below).
A legal document that can make changes to a current will. It is used to make minor amendments and additions to avoid having to re-write an entire will.
Refers to any disputes relating to the will, its validity or the distribution of the estate. If a probate case becomes contentious, it requires litigation and therefore an accountant licenced for probate by ICAEW cannot carry out the work for you.
A person, company or organisation to whom the deceased owes money to.
A person, company or organisation who owes money to the deceased.
Deed of variation
A legal document that can make changes to a will after the executor/executrix has passed away. This can be done by the beneficiaries.
Payments made to a third party.
The assets (see above) a person owns when they pass away become known as their estate.
A stage in the overall probate process in which the deceased’s estate is distributed and managed according to the will or intestacy rules.
A person or persons named in a valid will who become responsible for administering the deceased’s estate.
Grant of probate
This term is often used to describe the whole probate process. Specifically and definitively however, it describes the document issued by the court that gives legal confirmation and authority to the executors to carry out the wishes of the deceased’s will.
Grant of representation
The umbrella term used for issuing legal authority to a person (either an executor, or administrator) to administer the deceased’s estate. If there is a valid and un-contested will, this will be in the form of a Grant of Probate. In the cases where there is no will or willing executors the grant of representation will take the form of a Letter of Administration.
Inheritance tax (IHT)
The tax payable on the deceased’s estate. In the UK, this only applies when the estate value is over a certain threshold (the current inheritance tax threshold is £325,000).
Intestate / intestacy
When a person dies without leaving a valid will it is referred to as dying intestate. The whole probate and estate administration process has then got to be carried around under the statutory Rules of Intestacy.
A gift, not including property, left in a will. This is also sometimes known as a bequest.
Letters of administration
An official court letter issued to a person, appointing them to administer the deceased’s estate when there is no valid will or willing executor.
Any payments that need to be made by the estate. These are often debts that were held by the deceased before passing away. An estate’s value will be calculated by deducting the value of the liabilities from the value of the assets.
The absence of any disputes against the will. In the case of non-contentious probate, your ICAEW licenced accountant is accredited to carry out this work for you.
A legal statement made by the executor or administrator. It confirms the validity of the will, that the estate will be administered according to the will and the right of that individual to carry out the process.
A section of Her Majesty’s Courts and Tribunals Service that deals with wills, probate and estates. The application for a Grant of Probate goes to this court and is currently costed at a £215 one off fee for estates worth over £5000.
The net value of the estate after expenses such as debts, liabilities and funeral costs have been taken away and gifts and legacies etc. have been given.
The person (man/woman) who has made the will.
A formal arrangement that passes assets from the testator/testatrix to a trustee who holds and looks after the assets for the benefit of a third party. The assets will be transferred to the third party beneficiaries according to the wishes and conditions laid out by the testator/testatrix, such as the beneficiaries reaching a certain age.
The person who is responsible for looking after and administering the trust.
A legal document that sets out how the testator/testatrix wants their estate to be administered after their death.