When making a will, you inevitably have to think about the people you’ll leave behind which...
Dealing With An Estate
When faced with the death of someone close to you, arrangements must be made to administer the estate. Andrew & Co can help you:-
- administer the estate
- deal with any tax implications
- sort out the practical aspects, such as registering a death and arranging a funeral
Those entitled to deal with the administration of an estate are the executors appointed by the will, if there is one, or if there is no will, certain close family members. We always try to be helpful but can only give very limited information until we have seen a death certificate and suitable identification from those consulting us.
The most common questions answered:-
Do I need a Grant? Generally speaking, if the value of the estate is over £5,000 it will be necessary to take out what is called a Grant of Representation. Many financial institutions nowadays will not require a grant for modest estates, but there is no hard and fast rule.
Is it necessary to use a Solicitor? It is possible to administer the estate yourself, but it is sensible to ask a solicitor for advice, in particular as there may be some aspects of administration of an estate that are often overlooked, for example, the income tax implications for beneficiaries. It can be less complicated if a solicitor acts for you, in particular, if there are a number of beneficiaries involved.
How long will it take? In a straightforward estate it normally takes us 4 to 6 weeks from the time you first provide the information required to prepare the papers for probate. Once you have signed the papers, it takes approximately 7 to 10 days to obtain the grant of probate. After that a simple estate will probably take 2 to 3 months to complete. In large or otherwise complicated estates, the timescales can be considerably longer.
Will I have to pay Inheritance Tax? The general rule is that you do not pay Inheritance Tax (IHT) until someone’s estate reaches £325,000. This figure is correct at April 2011. After that figure, you pay tax at the rate of 40%. However there are exceptions to this rule.
In 2008 the Government changed the inheritance tax regime for spouses. Each individual has a nil rate band of £325,000, although the extent of that available on death my be affected by lifetime gifts. If one of a married couple leaves their assets to the survivor, there is no tax payable on the first death, but on the second death, all the family assets have piled up in the name of the survivor. Prior to the change in the rules, unless couples entered into sometimes complex tax planning arrangements, one nil band was wasted.
Now, it is possible to transfer the nil rate band of the first spouse to the second with the effect that if the nil rate band was not used on the first death, it can be used on the second death so that potentially £650,000 worth of assets can pass before tax.
Many couple have made Wills containing nil rate band trusts on the first death, which have already achieved the same effect.
It is sensible on the death of the first spouse to maintain certain records if the transferable nil rate band is likely to be needed when the second spouse dies, and we can advise about this.
Are there any other tax implications? Yes, you will need legal advice on this because the tax aspect of administering an estate can be quite complicated, income tax and capital gains tax also have to be considered.
To speak to one of our trust law specialists, please contact us on 01522 512123 (Lincoln) or 01636 673743 (Newark).