Pre-Grant Procedure, Grants of Representation, and Inheritance Tax in Probate

Pre-Grant Procedure and Inheritance Tax in Probate

• Context and Conduct: Probate solicitors must be professional and compassionate during this time of grief. A checklist guides professional conduct and client service.

• Information Gathering for the Estate: Collect full details of the deceased's family, beneficiaries, assets, and liabilities. Immediately after death, register the death, make funeral arrangements, and notify institutions (banks, HMRC). Valuations are required for assets like land or unquoted shares.

• Beneficiaries and Intestacy: Identify potential beneficiaries early. If a will exists, name beneficiaries from it. If no will, follow intestacy rules. Assess will validity. Identify and notify possible claimants against the estate. If beneficiaries or creditors are hard to locate, use deceased’s papers or publish advertisements.

• The IHT (Inheritance Tax) Dilemma: To get a grant, PRs must pay IHT, but to pay tax, they need access to assets, which requires a grant. Practical solutions to pay IHT before a grant include:

  1. Bank release: Deceased’s bank may voluntarily release funds directly to HMRC.
  2. Loans: PRs can get loans from banks or beneficiaries, repaid first from estate proceeds.
  3. Life assurance: Insurer pays proceeds directly to HMRC.
  4. Assets salable without grant: Sell certain assets to raise IHT funds.

• Applying for the Grant of Representation: Two forms are used: "Probate" (with a will) and "Administration" (no will). Required documents:

  • Original will (plus copies), official death certificate, and an affidavit of due execution (if needed).
  • Appropriate tax form indicating IHT status (no tax or amount paid).
  • Probate fees.
    Once complete, the court seals and sends the grant with office copies.

• Additional SQE Considerations: Affidavits may be needed if:

  • Attestation clause is absent/incomplete.
  • Deceased’s name differs from will.
  • Attestation doesn't confirm knowledge/approval.
  • Witness/party issues (e.g., testator blind, illiterate, suspicious circumstances).
  • Affidavit needed to confirm unattested alterations existed at execution.
  • Affidavit of plight and condition for marks suggesting tampering.

• Caveats and Citations: A caveat prevents grant issuance, typically by someone challenging validity or executor fitness. Citations compel action:

  • Take Probate: Forces an executor who intermeddled to apply.
  • Accept or Refuse Grant: Clears the way for a grant if someone with prior right hasn't applied.
    Example: Elliot (executor) intermeddles; Priya (child) cites him to force action. If Elliot refuses, Priya can get administration with will annexed.

• Inheritance Tax (IHT) Basics and HMRC Process: PRs must deliver an IHT account to HMRC within 12 ext{ months} from the end of the month of death; interest accrues from six months after death. A grant won't issue until IHT is paid or arranged.

• Valuations and Open Market Value: Obtain valuations for assets and liabilities at open market value on the date of death, often requiring specialists.

• Accepted Estates: For estates likely owing no IHT or below certain thresholds, a full IHT account isn't required (e.g., IHT form IHT205).

• Transferable Nil Rate Band (NRB) and Spousal Transfers: An unused NRB from a predeceased spouse can transfer to the surviving spouse, increasing their NRB. Transfers between spouses are IHT exempt. The survivor's total NRB is their own NRB plus the unused portion from the first death.

  • Example 1 (Simon & Sharon): Simon's full NRB (e.g., £325{,}000) transfers to Sharon. Her NRB becomes £325{,}000 + £325{,}000 = £650{,}000. If her estate is £600{,}000, no IHT.
  • Example 2 (Susan & Jeremy): Jeremy uses 10% of his NRB (e.g., £250{,}000). Susan later benefits from the unused 90%; her total NRB could be £325{,}000 + (0.9 \times £325{,}000) = £617{,}500. This significantly increases her tax-free threshold.

• Quick Recap: NRB thresholds like £250{,}000, £325{,}000 (or combined £650{,}000, £617{,}500). Form IHT205. IHT accounts due within 12 ext{ months}; interest from six months after death.

• Practical Implications: Remember extra SQE requirements. Caveats/citations can delay but protect rights. The IHT dilemma highlights planning importance and payment mechanisms.

• Summary Takeaways: In pre-grant probate: gather complete info, assess will validity, identify claimants, and prepare for caveats/citations. Navigate the IHT cycle and payment options. Understand grant application, forms, and affidavits. Master transferable NRB. Know deadlines, valuations, and