Wills, Trusts & Probate Newsletter – November 2014

Wills Trusts and Probate at Davis Blank Furniss

Welcome to our latest departmental newsletter.  The focus this month is on our Wills, Trusts and Probate team.


Laura Johnson – a solicitor in our Private Client department answers the often asked question: What Does Probate Mean?

1. What is Probate?
Probate is the legal term given to the process of sorting out someone’s property and other assets when they die. As part of the Probate process, a suitable personal representative will need to take responsibility of sorting out the assets.

2. Who Is The Personal Representative?
A Will appoints people to act as “executors”. The appointed executors will be the person responsible for collecting the assets and distributing them in accordance with the Will. If there is no Will, the law says that the next of kin will be responsible for distributing the assets in accordance with the law and they will be referred to as “administrators”. Executors and Administrators are collectively referred to as Personal Representatives (PRs).

3. Inheritance Tax – IHT205 or IHT400?
The PR will need to identify all of the deceased’s assets, property and finances. The PR should obtain valuations of assets and ascertain whether there are any outstanding debts. Inheritance Tax will only be payable if the deceased’s estate exceeds £325,000 (or £650,000 if the deceased was entitled to use their previously deceased’s partner’s unused inheritance tax threshold). There may not be any inheritance tax to pay even if the estate exceeds £325,000 if it is all passing to the surviving spouse or civil partner, or to charities. Your solicitor will be able to assist with any Inheritance Tax queries. If Inheritance Tax is payable then the PR will need to complete the more detailed IHT400 and submit it to HMRC for approval. If there is no Inheritance Tax payable then the representative will need to complete IHT205 and submit it to the Court.

4. Grant of Probate or Letters of Administration?
The executors or administrations may need to apply to the Court for a formal document, which gives them the legal authority to deal with the assets. If there is a Will then the executors need to apply for a “Grant of Probate”. If there is no Will then the administrators need to apply for the “Letters of Administration”. The executor or administrator will need to swear a legal oath and provide an inheritance tax account when applying for the Grant of Probate or Letters of Administration. Your solicitor will help you prepare these documents. There is also a Court fee to pay.

5. Do you need a Grant or Letters of Administration?
Some assets, such as bank accounts, can be closed without a Grant or Letters of Administration if the money in it is less than £5,000. If any bank account exceeds this then the bank will insist on seeing a Grant of Probate or Letters of Administration before they deal with the account. Shares and property can only be transferred if the PR has a Grant of Probate or Letters of Administration, which give the PR the legal authority to deal with such assets.

6. How Long Does Probate Take?
A typical case may take around six to nine months. The length it takes depends on the how long it takes to gather the relevant information about the assets, whether there are complicated assets including business interests or shareholdings and whether the IHT205 or IHT400 is required. Once the application is submitted to the Court then it takes around a month for the Grant of Probate or Letters of Administration to be issued and then it will take another few months to collect in all of the assets either by closing bank accounts, transferring shares or selling property.

7. Why Choose a Solicitor to Help or Act as Executor?
Acting as an executor or administrator can be complex and time-consuming. It involves liaising with banks, share companies, HMRC and other financial institutions, which takes time that most people do have to spare. Having a solicitor involved can help to relieve family tensions. Using a solicitor can be helpful if the estate is valuable, if Inheritance Tax is due, if the estate includes complicated assets or businesses, and if there will be money held on trust or for many other practical reasons.


Joshua Bragg – a trainee solicitor in our Dispute Resolution team – discusses a recent case update: Marley v Rawlings and Another

In this case, Mr and Mrs Rawlings instructed a solicitor to prepare mirror wills for each of them. Mirror wills are where two spouses or civil partners make almost identical wills leaving everything to each other or, if they both die, to another person. In this case, in the event of both their deaths, the couple had decided to give the estate to an unrelated lodger, Mr Marley, rather than their children.

Whilst supervising the signing of the wills, the solicitor negligently gave each spouse the wrong will, so that each spouse signed the will prepared in the name of the other. On the death of Mr Rawlings (who had been pre-deceased by his wife), their children claimed that the wills should not be valid as they were not signed by the correct person. If the children succeeded in their argument then the estate would have passed under the intestacy rules and the children would have inherited the whole estate.

Mr Marley sought to have the wills rectified by the Court so that the names written on the wills were amended to match the signatures on each respective will.

The Supreme Court considered that each spouse signing the wrong will was a clerical error and that the wills could be rectified. As a result the wills remained valid and Mr and Mrs Rawlings’ estate passed to Mr Marley.

If you feel that your solicitor may have been negligent in the preparation of your will or that you have not been adequately provided for under a will, then give our Dispute Resolution team a call to see how they can help you.


Laura Johnson – a solicitor in our Private Client team – discusses Inheritance and Trustees’ Powers Act 2014

Compared to other areas of law, where the law can change on a monthly basis, the laws governing inheritance have changed little in the last century. This may be one of the reasons why the language that you may see in Wills, Trusts or during the Probate process sounds old and archaic. On 1stOctober 2014, however, a brand new law came into force that specifically deals with inheritance. The law seeks to modernise some of the old legal terms and attempts to make the system more relevant to today’s society. Below is a summary of some of the important changes, which may prompt you to revisit your existing Wills or encourage you to get around to making one!

Intestacy Laws – What happens if you die without a Will?
The law used to say that if a married person with no children died without a Will, the surviving spouse or civil partner would receive the first £450,000 and half of the rest of the estate, with the other half passing to other family members. The law also used to say that if a married person with children died without a Will, the surviving spouse or civil partner would receive the first £250,000, half of the rest would be held on the trust for the spouse or civil partner and the other half of the rest would be held on trust for the children. This caused significant complications and difficulties if someone died leaving children and an estate worth more than £250,000. Considering that the average UK house price is £250,000, the old law could result in the surviving spouse or civil partner not owning all of the house or other assets they need to maintain their lifestyle outright.

The law has changed to reflect the increase in house prices and also to simplify what happens when a married person dies without a Will.

The law now says that for married couples with no children, the surviving spouse or civil partner will inherit everything. For those married couples with children, the surviving spouse or civil partner will still get the first £250,000, but they will also get half of the rest automatically (not on trust) and the other half will be held on trust for the children. This could still cause difficulties if the house is the main asset in the estate and the deceased’s share of the house exceeds the value of £250,000 or if all of the savings exceeded the crucial figures and were in the deceased’s sole name.

Most people do think that they will automatically inherit everything from the husband, wife or civil partner if there is no Will, but this is not the case if there are children and if the deceased’s estate exceeds £250,000. With increasing house prices and the new options for individuals to receive lump sums from pension pots, you might be surprised at the value of your estate and it is important to ensure that your Wills leave your assets to the people you would like them to go to rather than being divided by up by law potentially leaving your surviving spouse or civil partner without enough assets to meet their needs or causing tensions between family members.

Even if you feel the new laws achieve what you would want to achieve in your Wills, it is still important to have a Will in place to deal with guardianship, personal possessions and ensuring that your loved ones receive the money in an appropriate way. For example, you might wish to preserve certain assets from the risk of the surviving partner paying care home fees in the future.

Inheritance Tax Threshold
There has been much talk in the news about plans to increase the Inheritance Tax threshold to £1million. The personal threshold remains £325,000 (doubling to £650,000 if everything passes between spouses or civil partners on the first death) and this is fixed until 2018 regardless of what promises are made in the run up to the next general election. It is, therefore, still as important to review your financial position on a regular basis and ensure your Will is up to date to help minimise Inheritance Tax payable on death. There are, of course, things you can do during your lifetime to help reduce any Inheritance Tax liability and we can provide you with advice about this even if you are happy with the Wills that you have in place.

Personal Possessions
The new law also changes the legal definition of “personal possessions” from a somewhat out-of-date definition that includes your carriages, horses, stable furniture and so on, to a much more modern definition that includes all tangible moveable property except money, business property or investments. This may be a small change, but if your current Wills specifically refers to “personal possessions” or the old definition then it would be well worth you asking a solicitor to review your Will to check whether you should be amending it to bring it in line with the new law.

Adopted Children
Under the old law, minor cannot inherit money until they are at least 18 (Wills may vary this to 21 or older). If a parent’s Will left part of the estate to their child and the person died before the child reached 18, there used to be a little-known trap in the old law that meant if the child was then adopted (perhaps by the surviving parent’s new partner) then the child would not be able to inherit from the deceased’s parent’s estate because the child had not reached the age of 18 to become automatically entitled to the inheritance. This was of course very unfair and it did cause difficulties or family tensions. The new law clearly provides that any child who is adopted after the death of a parent will not lose their entitlement to their share of the deceased’s parent’s estate.

However, the law does not apply if the child is adopted during a parent’s lifetime or if there is some other condition upon the child receiving the share of the deceased’s estate. It is still really important for you to seek some legal advice about the implications of adoption where a parent has died.

Contact us

If you have any queries or require any further information, please do not hesitate to contact our team of specialist solicitors on 0161 832 3304.

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