Probate is a process that occurs after the death of a loved one.
It confirms the validity of your will and gives specific people the authority to handle your assets.
However, dealing with the property/finances of a deceased family member can be a complex and tedious process.
Families may discover problems with a probate many years later, or when the surviving spouse or partner dies.
It is always recommended that you seek advice from a private client solicitor when applying for a probate.
Here are some common mistakes or problems that may occur when doing your own probate:
1) It may be more complicated than expected
Any will needs to be correctly understood and interpreted. For example, certain wills may require payments to be made in a specific manner, such as distributing some property before other possessions.
In addition, a beneficiary under the will may challenge if he or she expects to benefit from an estate.
2) Inheritance Tax (IHT) must be calculated
Valuations are important for estates that are approaching the IHT threshold. They are also important for Capital Gains Tax (CGT) purposes, especially if you sell the assets later.
3) Marriage allowance must be re-assessed
When the first person in a marriage dies, it is important that the estate is administered correctly. If not, when the second person dies, there could be tax implications.
For example, lifetime gifts must be declared correctly and allowances have to be applied when necessary.
4) Discretionary trusts may be in a will
Trusts may be used to save IHT, protect the property or deal with the idiosyncrasies of the testator’s relationships and property.
However, many people may not realise that a trust is in a will. This can have significant IHT implications, especially if there is a nil rate band discretionary trust.
It may not be until much later that an opportunity has passed to protect property from IHT, or other costs, such as nursing home fees.
Trustees can decide that they do not want to have a trust at all. It is best to deal with this within two years of the death in order to protect inheritance tax allowances. (see DOV below)
5) Deed of Variation (DOV) must be made within two years of death date
A DOV allows beneficiaries to pass on gifts, or parts of gifts (of property) to others.
It writes the gift back to the deceased, so the original beneficiary does not have to wait seven years before it is no longer considered a personal estate which they have to pay IHT on.
A DOV can be used to ensure that a beneficiary’s own estate remains under the IHT threshold, or to reduce their IHT liability.
Go straight to a professional
At Kingswell Watts, we offer a free 30-minute consultation to assess your matter. We can advise at any stage of the will-making process.
It is always better and less costly to begin the process on the right track, rather than trying to unpick what has already been done.