There are three stages to probate:

  • Stage 1: Completing the Inheritance Tax (‘IHT’) account
  • Stage 2: Collecting in the assets and settling liabilities
  • Stage 3: Distributing the estate.

How do they work? Here’s our simple guide…

Stage 1: Completing the Inheritance Tax (‘IHT’) account

The first step is to complete the inheritance tax (‘IHT’) account. Personal representatives must report the deceased’s estate to Her Majesty’s Revenue and Customs (HMRC) by completing an IHT account within 12 months of the deceased’s death. If there is any inheritance tax owed on the estate, this must be paid within six months to avoid any interest. After the IHT account has been settled (if monies are owed or not) then personal representatives can apply for a grant of probate.

At this stage, personal representatives determine the value of the estate, and work out if there are any available IHT exemptions or reliefs.

This means collecting all the information on the deceased’s assets (bank accounts, digital assets, chattels, pensions and life insurance policies, tax affairs, property, investments, and/or trust interests) and the liabilities, which will help reduce the amount of IHT owed (if applicable).

The personal representative also needs to identify any gifts or transfers to a trust made during the previous seven years of the deceased’s life, as these can be subject to inheritance tax.

It may be necessary to obtain open market valuations for the deceased’s properties and chattels. There are two types of IHT accounts (‘IHT205’ and ‘IHT400’). The one you use depends on the estate’s value and other factors.

The completion of the IHT account, including (if applicable) calculating the IHT due, is arguably the most complicated part of the probate process, so seeking advice from an experienced professional will help ensure you do it correctly.

Stage 2: Collecting the assets and settling liabilities

Once the grant is issued, copies must be sent to each of the deceased’s asset holders, along with a request that the accounts be closed, and the proceeds paid to the personal representatives or the personal representative’s solicitor’s account.

Heirs must also provide instructions on whether they prefer to have an asset (such as a property or shareholding) transferred into their own name rather than sold. At this point, the personal representatives need to settle any estate liabilities and consider paying any cash legacies.

Stage 3: Estate distribution

Once all liabilities, taxes, administration expenses and legacies have been paid (and it has been confirmed that no further IHT is due), the estate’s remaining assets can be distributed before winding it up.

To protect from liability against claims from unknown beneficiaries or creditors, personal representatives may want to consider missing beneficiary insurance and/or missing will indemnity insurance policies.


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