When someone dies, is probate always necessary?
Losing someone close to you is difficult enough without having to deal with unfamiliar legal processes and paperwork. Here we explain what probate is, and when you can manage a deceased person’s estate without it.
What is probate?
Probate is the legal process involved in dealing with a person’s estate after they have died.
An estate includes everything the person owned at the time of their death, such as property, money, savings, investments and personal belongings, as well as any debts that need to be dealt with.
Where probate is required, it gives the person responsible for administering the estate, the legal authority to deal with the deceased’s assets and carry out the wishes set out in their Will.
Is it always necessary?
The simple answer is ‘not always’.
Some people actually prefer to get probate. They feel it gives them explicit authority to administer the deceased’s estate. Where there is acrimony in families, the acknowledgement of probate can be helpful. And if an estate has high-value assets, probate is essential to unlock the estate’s assets and deal with inheritance tax.
But there are some circumstances, where probate is unnecessary, and families can manage the deceased’s estate without it.
What circumstances exist where probate isn’t needed?
- Smaller bank or building society accounts
Many banks or building societies release funds without probate, for low to medium balances. A death certificate is required. Each bank will have different rules. For instance, as this blog is written:
- Skipton Building Society will allow funds to be released below £50,000, but they have differing rules for accounts with less than £5,000, and between £5,000 and £50,000.
- Yorkshire Building Society also release funds under £50,000.
- Halifax Building Society, does not quote a value, but seem to also adhere to the £50,000 limit, albeit it does so at its own discretion.
Legal firms often experience a more understanding approach from the banks, than individuals. Financial institutions know that law firms will have undertaken thorough checks on executors, including photo ID and anti-money laundering assessments.
- Jointly owned property
Any property held as joint tenants passes automatically to the surviving owner on death. The terminology is important here. Joint tenancy is a legal term. Property can be held as tenants in common, and in those circumstances, probate will be necessary in most circumstances.
- Pensions and life policies
Some assets fall outside the deceased’s estate and can be claimed without probate. If there are named beneficiaries listed on life insurance policies, death-in-service policies, and pensions, depending on their rules, the policies pass automatically to those named.
- Trusts
Assets held in trust aren’t considered to be part of the deceased’s estate and therefore do not require probate.
Every estate is different. If an executor thinks that probate is not necessary, they should collect all the information about the deceased’s assets: names of banks, building societies, pension funds, life policies, title deeds on property, etc. and assess the rules for each. They should also consider inheritance tax (IHT). Probate and IHT are different, but they do ‘overlap’. A rule of thumb is that if IHT is to be paid, it is highly likely that probate is needed.
If you need further information, please contact Jenny Barron on 01756 692866 or email jenny.barron@awbclaw.co.uk
Solicitor and Director, Society of Trust and Estate Practitioners.
Further reading:
The Explainer: what is a deed of variation and when can it be used?
The Explainer: what kind of will or trust should I choose?
Wills: can you leave what you want, to who you want?
