PRs are either the executors named in the will, or the next of kin following the rules of intestacy if there is no will.
There are different types of grant depending on the circumstances and who is to deal with the estate.
The process
1. Is there a will? Firstly, your clients will need to check if there is a will. If there is, it will give an indication of who is to administer the estate. If there is no will, usually the estate will be passed to the next of kin following the HM Revenue & Customs intestacy rules, which are fully explained on the HMRC website. Only direct family will inherit in this circumstance and this can be very complicated if there were multiple marriages.
2. Probate: Next, they will need to apply for a grant of probate.
Probate is generally required in the following situations:
- When property is held in the sole name of the deceased or as tenants in common.
- When the deceased held assets typically worth £5,000* or more with financial institutions.
- When the financial institutions holding assets* in the sole name of the deceased require a grant of probate for the funds to be released.
- When the deceased benefited from a trust during their lifetime.
*Banks and other financial institutions may use a higher threshold than £5,000 before they require evidence of the grant of probate to release the funds, so it is worth checking with each organisation exactly what they require.
Once probate is acquired, the executors can start the process of closing accounts, transferring money and cashing in investments.
3. Inheritance tax: When applying for grant of probate, the executors need to ensure that any inheritance tax due is paid. An IHT form will need to be completed and submitted at the same time as the probate application, and can be completed online through the HMRC website, or via a paper application for (IHT205).
4. Debts: Once all of the estate’s assets have been collected (e.g. funds from a bank account, pension funds, life insurance and sale of any relevant property) the debts then need to be settled – credit cards, loans and unpaid utility bills.
5. Distributing the estate: The final estate can then be distributed amongst the beneficiaries.
The beneficiaries at this stage should not rush into any decisions, and, as usual, will benefit from solid and trusted financial advice.
They should avoid entering into any financial or legal arrangements unless they fully understand them.
The Bereavement Office will also advise not to make major changes to your life while you are still grieving.
The funeral
According to the Money Advice Service, the average cost of a burial is £4,267 and the average cost of a cremation is £3,247.
In my recent experience, this will likely provide for a basic coffin, a hearse, flowers and a service.
For burials, you need to factor in the cost of the funeral plot, and also how long you want to rent the plot for.
The best advice for your clients is to not to rush into a decision. They should shop around and try to stick to local funeral directors.
