The difference between Probate & Estate Administration

The difference between Probate & Estate Administration

Both Probate and Estate Administration are associated with handling an individual’s estate after they’ve died, but they are defined differently and often misunderstood.

‘Probate’ is a widely used term but there’s a lot of confusion about what it means and what is included in the probate process.  ‘Estate administration’ is much less commonly known and referred to, even though the term more accurately describes the process of dealing with a deceased person’s estate.

What is probate?
Probate actually just refers to obtaining the ‘Grant of Probate’ – or ‘Letters of Administration’ if there is no Will – which is required by law when the deceased owns a property, or if a financial institution requires a ‘Grant of Probate’ to release funds.

Probate is not required if the estate is less than £5,000 in value, or if the assets were held jointly so will pass automatically to a surviving joint owner (though there may still be inheritance tax implications in some circumstances).  If probate is required, the ‘Grant of Probate’ must be obtained before an Executor (if there’s a Will) or an Administrator (if there’s no Will) can start to gather in the assets associated with an estate.

When probate is required and a Will is in existence, there are 5 different stages that need to be followed before estate administration can begin:

  1. Obtaining the Will which appoints the Executor
  2. Assessing the estate including:
  • Valuing property, savings, investments and any other assets
  • Calculating debts and liabilities
  • Assessing the details of accounts including stocks and shares
  • Valuing any other significant items

This assessment must be carried out based on ‘the date of death’, meaning it must be the value of the assets at the date of death or the outstanding debt value at the time of death.

  1. Completing the probate application, and submitting Inheritance Tax forms to HMRC if necessary
  2. Sending all details of the application including death certificate to the Probate Registry
  3. Swearing an oath and receiving the “Grant of Probate” or “Letters of Administration”

What is Estate Administration?
Estate Administration is the process of dealing with a person’s legal and tax affairs after their death. This includes dealing with the deceased’s financial assets, personal belongings and property, in addition to their debts, pensions and Inheritance Tax. It can sometimes be extremely complex depending on the size of the estate, type of assets, and the wishes left in the Will.

Surprisingly, ~60% of the UK population don’t have a valid Will.  If there’s no Will, the assets will be distributed according to the Government’s ‘Rules of Intestacy’ rather than the family wishes, which is likely to make the estate administration process more complicated.

Estate Administration could involve:

  • Applying for ‘Probate’ – which is often mistaken for the entire estate administration process, whereas it’s only a small part of what’s involved
  • Completing all Inheritance Tax forms
  • Income Tax work for the year of death
  • Valuing assets
  • Property valuation and sale
  • Specialist building insurance
  • Setting up Trusts in a Will
  • Postal redirection
  • Registering unregistered properties
  • Arranging for a pet to be re-homed
  • Cancelling or transferring utilities
  • Settling all liabilities
  • Distributing funds to beneficiaries
  • Producing estate accounts

Heir Tight Wills work with Estate Administration specialists to provide all the services listed above, while many estate administrator providers only provide assistance in some of these areas.  It is vitally important to be clear on what is – and is not – included when getting a quote.  For a FREE Consultation to discuss estate planning or estate administration, contact Rachael Rodgers on 0845 519 7585, or CONTACT US via email.

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