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17 February 2020

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When is Probate Not Required?

Posted by: Chris Burrows

Before going through the probate process, you need to consider whether it is required in the first place.

The main elements to consider before going through with the process are: how much the estate is worth and how it will be divided between the beneficiaries.

Determining whether you need probate varies depending on the financial institutions your assets are tied to. Therefore, it can be difficult to reach a suitable conclusion without first knowing the value of your estate.

The best way to reach a decision on whether probate is required is by conducting the necessary research. In this article, we will discuss what probate is and how to determine if it is needed.

What Is Probate?

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Probate is the process of taking legal control of someone’s estate when they have died. The estate can then be distributed to the deceased’s beneficiaries, as determined by the will or by the rules of intestacy.

Regardless of the connection to the deceased, it is not possible to deal with an estate without the correct paperwork. A valid death certificate is required, and evidence that you have been authorised to administer the estate via a Grant of Probate or Letters of Administration are also necessary.

The grant can be used to demonstrate to institutions — such as banks — that assets owned by the deceased are now under the care of the executor.

However, the value of the assets held can be a determining factor in whether an institution requires probate to release it. For example, one bank may choose to release less than £10,000 without evidence of probate. Another may only release less than £5,000.

Depending on the bank and the amount of money in the account, you may not need probate. This, however, is assuming that your monetary wealth is the only asset of your estate. 

Probate will be required if there is a house or shares in the sole name of the deceased. A grant is not normally required for personal belongings such as jewellery or cars. If the house is owned with someone else a grant may be required depending on the way ownership is recorded at the Land Registry or in the property deeds. 

Do You Need Probate?

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When considering whether you need to go through the probate application process, there are two main factors that you need to think about in regards to property.

Property owned only by the deceased or with another individual as tenants in common will form part of the estate.

But, if they own property with another person as a joint tenant, this will not form part of your estate. Instead, the property will pass directly to the other owner. Commonly, this will be your spouse.

Below is a brief description outlining the difference between a joint tenant and tenant in common:

  • Joint tenant: Regardless of how much money either party contributed, both owners have a legal right to own the whole of the house. Therefore, if one passes away, the property automatically goes to the surviving owner. 
  • Tenants in common: Rather than buying the whole house, tenants in common hold its value to be shared between them. The shares can be equal or unequal depending on what has been agreed. These form part of the deceased’s estate and so can be distributed.

Once you have determined whether your property will form part of the estate, the executor will need knowledge of the full value of all assets, taking into account any debts or taxes that may need to be paid.

If the house is held as joint tenants a grant will not be required to pass it to the surviving owner, but a grant might be needed for other assets. 

The Thresholds for Releasing Assets Without Probate

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As we mentioned before, each financial institution’s threshold is different. This can also impact whether probate is required. To help explain here’s an example of how the same amount of money can be treated differently. 

One bank has a threshold of £10,000. That means if you have £9,000 in an account with that bank, your executor should be able to access that asset without applying for probate.

However, another bank may have a threshold of £10,000 for the entire value of the estate. Therefore, if you have £9,000 in your account and a car that was worth £2,000, you’d need probate to access the £9,000.

Whether a financial institution will release assets without probate is entirely at their discretion. That means a bank is well within its rights to require probate even if the asset is worth less than the threshold. They also have the right to release assets that are over their threshold.

An executor is best asking in person at the institution what their normal procedure is. The bank staff can only guide you on that bank’s procedure, but a solicitor can help you deal with all aspects of an estate to make sure they are administered correctly. 

Difficulties in Determining Whether You Need Probate

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Distributing an estate without probate can come with its own difficulties, even if there are only a few assets to divide between beneficiaries. Some of these difficulties can include:

  • Not knowing the true value of the estate
  • Not knowing what the estate owes in tax and debts
  • Gaining permission to release assets from multiple institutions

If you are an executor distributing an estate and you are unsure how the points above will affect the process, it is likely that the estate is more complex than you originally believed. 

It is always advised to speak with a solicitor so they can help you determine whether you will require probate and what your next steps are.

If you have a pension, it is unlikely to pass under the will or intestacy and may be written under the form of a trust to be dealt with by the pension provider. It is valued separately from your estate. This means that the pension is not included in the valuation of probate or the calculation of Inheritance Tax on your assets.

To determine if your pension forms part of your estate, a solicitor can help you to go through the terms and conditions.

Conclusion

The answer to whether probate is required can only be answered with more details about your estate. If you have any doubts about whether or not you require probate, your first step should be to speak to a solicitor.

Get in touch with the Glaisyers team, and we can guide you through the process of distributing an estate with or without probate.

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Chris is head of the firm's Private Client department. He is a qualified Trust and Estate Practitioner who helps clients to face a variety of challenges, including managing their assets and estates.

Chris Burrows - Partner, Head of Private Client

To discuss how Glaisyers can assist you contact Chris Burrows on Chris.Burrows@glaisyers.com or via 0161 832 4666.

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