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The processes behind Wills, probate and inheritance

When a family member dies, you may need to get the legal right to deal with their property, money and possessions – known as their estate. To do this in England and Wales you may be able to apply for a Grant of Representation – known as ‘probate’.

In most circumstances, applying for ‘probate’ follows a common series of steps:

Check if there’s a Will – this normally states who sorts out the estate. If there’s no Will, you can apply to be the ‘administrator’ – the person who deals with the estate if there’s no Will in place.

  • You can usually apply for a grant of representation to be the administrator of the estate if you’re the person’s next of kin, eg their spouse (or civil partner) or child.
  • You can apply if you’d separated from the person but you were still married or in a civil partnership when they died.
  • You can’t apply for a grant of representation if you’re the partner of the person but weren’t their husband, wife or civil partner when they died. You’re also not automatically entitled to any of your partner’s estate.

The law decides who inherits the estate if there is no Will.

Firstly, if this is the case, apply to get a Grant of Representation which gives you the legal right to access things like the person’s bank account. A grant of representation can sometimes be known as a ‘grant of probate’, ‘letters of administration’ or ‘letters of administration with a will.’ You can apply for a grant of representation yourself or use a solicitor or another person licensed to provide probate services. There are 4 steps to follow.

  1. Complete a probate application form.
  2. Complete an Inheritance Tax form.
  3. Send your application.
  4. Swear an oath.

You will then need to:

  1. Pay any Inheritance Tax that’s due.
  2. Collect the estate’s assets, eg. money from the sale of the person’s property.
  3. Pay any debts, eg. unpaid utilities bills.
  4. Distribute the estate – this means giving any property, money or possessions to the people entitled to it – the ‘beneficiaries.’

You don’t normally need a grant of representation if the estate either:

  • Passes to the surviving spouse or civil partner because it was held in joint names, eg. a savings account.
  • Doesn’t include land, property or shares.

You should contact any organisation holding the money and assets of the estate, eg. the bank or building society. They may ask for proof of death, such as the death certificate, after the death has been registered. Each financial institution has its own rules but it is likely that you will need to apply for a grant of representation.

In Scotland and Northern Ireland, gaining the legal right to deal with the estate is called ‘Confirmation’ in Scotland and a ‘Grant of Probate’ in Northern Ireland.


Sources: www.gov.uk/probate (Information: April 2015)

 

building your financial future

New Tax Year Resolutions

As the new tax year is upon us, why not take time to re-appraise your financial position. By making some simple changes your financial position could be significantly enhanced. With the new higher rate of income tax and low interest rates, it is time to take action to make sure your financial planning meets your objectives.

Our top 10 tips are listed below;

1) Make use of your ISA allowances

If you are fortunate enough to have savings it is important to make sure that you do not pay unnecessary tax on the interest. The Cash ISA allowance has now been increased to £5,100.

2) Make full use of personal allowances

Your personal allowance will depend on your age and income but if you are not using all of your personal allowance consider whether income producing assets can be transferred from your spouse.

3) Consider ownership of income producing assets

If your spouse pays tax at lower rate than you it might be worth moving income producing assets into their name.

4) Protect your personal allowance

If you have taxable income over £100,000 your personal allowance will be reduced by £1 for every £2 in excess of £100,000 until it is completely eroded. The personal allowance could be reinstated by making pension contributions or by sacrificing salary in favour of other benefits.

5) Look at your protection arrangements

Life cover is one of the few things that have got cheaper over the years. If you have old life policies it may be worth seeing if these can be replaced with cheaper cover. This would not be advisable though if your health has deteriorated. It is also important to also make sure that your cover is sufficient and the term remains appropriate.

6) Put life cover in trust

If your life cover is not written under a trust it will form part of your estate and may therefore be taxable on death. Furthermore your beneficiaries will not get the proceeds until probate has been granted.

7) Claim gift aid

If you are a higher rate taxpayer and have made gifts to charities you can claim tax relief at the rate of 20%

8 ) Set mortgage interest against rental income

If you have a buy to let mortgage interest can be offset against your rental income for tax purposes. It is therefore best to secure debt against your rental property rather than your main residence although what matters is the purpose of the borrowing.

9) Consider repaying Mortgage Debt

With savings rates at all time lows it might make more sense to use savings to repay mortgage debt, particularly if you are on an uncompetitive fixed rate. Watch out for early repayment charges.

10) Make a Will

The laws of intestacy are complex and are unlikely to result in the best outcome for those you would want to benefit on your death. Having a valid and appropriate will in place is vital.

By David Anderson – Chartered Financial Planner @ Concept Financial Planning Ltd

The NO Wedding Planner

Recent figures show a significant decrease in the marriage rate. From a peak in 1940 when, spurred on by an impending war, 426,1000 young couples married, in total just 228,204 marriages took place during 2008 in England and Wales.

The falling marriage rate is partly attributable to a rise in the number of people choosing to remain single but is mostly down to the fact that more and more couples are choosing not to marry and this has ramifications for their financial planning.

Let us consider the example of Paul and Sarah. They own a property valued at £600,000. The property is owned 60% by Paul and 40% by Sarah, reflecting their differing initial deposits. They have an outstanding mortgage of £100,000. The mortgage is covered by a life assurance policy which will pay out on the first death. They also have a joint savings account with a balance of £50,000. They have wills which leave assets to each other on the first death.

Sadly Paul suffers a fatal heart attack. His estate is valued as follows:

Property £300,000 (60% share less mortgage)
Life assurance benefit £100,000
Savings Account £25,000
Total £425,000

Assets passing between UK domiciled spouses are exempt from Inheritance Tax but the same exemption is not afforded to cohabiting couples and therefore the value of the estate above the nil rate band (currently £325,000) will attract Inheritance Tax at 40%. This means Sarah will need to settle a tax bill of £40,000 before probate can be granted.

The tax bill could have been easily avoided simply by writing the life assurance policy in trust so that it did not form part of Paul’s taxable estate. This would also mean that the proceeds would be available immediately without the need to wait for probate to be granted which can take many months.

The position could have been considerably worse had Paul and Sarah not written Wills. Under the laws of intestacy, where there are no children, cohabiting partners do not receive anything and Sarah could have found herself co-owning the house with Paul’s parents.

David Anderson is a Chartered Financial Planner with Concept Financial Planning

Concept Financial Planning Website

Is there anyone there? – Alliance and Leicester?

I thought I would write my story … to enlighten people and in the hope, that no one goes through what I have been through … so far.

My father passed away in May and since then I have had experienced the most stressful time dealing with Alliance & Leicester trying to get joint accounts changed to my mum sole name and any other accounts held in my dad’s name.

From the start Alliance and Leciester has shown that they have no idea how to deal with such a sensitive matter and at a difficult time for families. Their processes, if they have any? and inability to deal with them if they do, just cause unnecessary stress, grief and anxiety to those left to sort it out.

My poor mum is under enough stress dealing with her grief and as an older lady, with all due respect to her, really would not know where to start when it comes to dealing with the banks, and thankfully working within Financial Services and Customer Services for over 20 years, I have a huge amount of experience which meant I could take some of the pressure off of my mum. Unfortunately I had no idea what I was going to experience…..

In order to deal with the account on my mum’s behalf I had to complete some security forms which I had to request 3 times from Alliance & Leicester before I actually got them.

Trying to find someone to help in the first instance was my first battle and getting passed around to different departments and getting told different things was a regular occurrence.

I was told to make an appointment to see my local branch in Croydon to hand over the death certificate so it could be copied and sent to head office. The assistance I received at the branch was extremely worrying as the girl I saw did not have a clue what she was doing and I eventually spent the morning speaking to head office myself and relaying back the information to the branch.

Result I thought, however, the branch managed to lose the copy of the death certificate and to this day it has still not appeared within Alliance & Leicester. I even spoke to their credit card team the day I went into the branch to pay my mum’s outstanding bill which was due, and it only came to light some 2 months later that whoever I spoke to in head office was not in a position to take payment, so not only did we then get charged overpayment fees, I then I had to speak to a completely separate arm of the company to pay the bill, as no money had been taken from the current account!!!.

I eventually got through to the Probate & Trust team in Bootle who have been dealing with the accounts department……..even having a specific team to deal with I am now 5 months down the line and some of the accounts have still not been transferred.

My solicitor has sent over the probate to Alliance & Leicester and after me chasing – they said they did not receive the documents, but after my Solicitor phoned to complain they miraculously found them. They have however not passed this onto the Probate & Trust team and when I call the team I was told it is my responsibility to contact the team who received the probate in the first instance…but oh what do you know, no telephone number on the correspondence, so you have to type up a letter and fax it to them….to which I have had zero response.

I would like to add at this point, that at the same time as sending the documents to Alliance & Leicester we sent them to Nationwide and within less than a week the accounts were closed and transferred into my mum’s name. The service I have received from Nationwide has been superb. Just what you would expect – and I thank them.

Some of the other problems I have experienced are: Accounts being cancelled in error, Direct Debit Mandates cancelled, Debit and Credit Cards cancelled that were in joint names, losing legal documents, correspondence still being sent in my fathers name.

I cannot begin to tell you how much time I have spent speaking to this bank and I am still no further forward and have no faith whatsoever in their ability to get this resolved. As soon as I the accounts are transferred, whenever that may be, I will be closing them and transferring the money to a bank that does want to offer good Customer Service.

I have been told that I should be going through the grieving process for my dad, but this is impossible until such time as I have been able to sort out what should be a simple process.

I would like to add that at no point has anyone with Alliance & Leicester offered their condolences or shown one bit of understanding as to what families have to go through during what is the most emotional time in anyone’s lives.

Is this how they treat their customers fairly? – Thank goodness I am not a customer !

Written by Sarah Johnson

Sarah’s Profile

Concept Financial Planning Ltd