What Is Probate and When Is It Necessary?
What Is A Probate?
Probate is a document issued by a Court declaring that the Will of a deceased person has been proved and registered in the Court and that the executor named in the will has been given the authority to administer the estate.
Probate may be granted in either common form, which is usual, or solemn form which is when there is, or may be, a dispute as to the validity of the Will.
How Does An Executor Obtain A Grant Of Probate?
Probate is applied for by the executor swearing and filing in the Court the executor’s oath and an affidavit of assets and liabilities of the estate.
The executor’s oath gives details of the deceased and the executor, refers to the deceased’s last will and the executor swears that he or she will administer the estate properly.
The affidavit of assets and liabilities is exactly that, set out in an order strictly defined by rules. Its main purposes are to tell the court that there assets in the State so that the court can be satisfied that it has jurisdiction and to enable any interested person to obtain details of the deceased’s assets. It is not used to impose any probate duty or succession or death duty.
There is a fixed probate fee payable to the court for the probate application but it does not vary according to the value of the estate.
No death, estate, probate or succession taxes exist at present but Capital Gains Tax may be payable when there is a disposal of assets aquired from a deceased estate. The rules are very complex. The most important thing that can be done to help the executor deal with CGT problems is to maintain accurate records of the date and cost of various investments.
When Is Probate Necessary?
Probate is definitely necessary to deal with real estate solely (not jointly) owned by the deceased. It is usually required when the deceased owned shares or had other investments of a substantial nature.
The grant of probate is proof that the executor has power to deal with the deceased’s assets. The executor can then become registered as the legal owner of the assets. Although probate proves the executor’s title, the executor does not derive his or her title from the grant of probate but from the Will itself .That is why some organizations will allow an executor to deal with an asset of minimal value without having to obtain a grant of probate. Each organisation has different informal ideas about what is a minimal value. Some of them consider the value of the asset with their organisation while others make a judgement based on the total value of the estate. Either way the organisation will be concerned to be as helpful as possible while bearing in mind its own liability if it acts incorrectly as it would if it allowed the wrong person to deal with the deceased’s assets. To limit their liability most organisations would want some sort of indemnity,normally from the beneficiary, before allowing any asset to be dealt with informally.
Probate is also required if the executor wishes to institute an action in his representative character such as recovering a debt due to the deceased. Such proceedings cannot be issued until the executor’s title is proved by the grant of probate.
Letters of Administration
The court grants “probate” when the deceased leaves a will. If somebody dies without a will (intestate), the court grants “letters of administration” to one of the persons having a statutory entitlement to the deceased’s assets. This gives the administrator similar powers to administer or deal with the deceased’s assets.
In cases where a testator has made a Will but either failed to appoint an executor or the nominated executor has predeceased, then the Court will grant what is called “letters of administration with the Will annexed” to one of the beneficiaries named in the will. That person will have powers and duties similar to those of an executor.
Assets owned as “joint tenants” (but not as “tenants in common”) automatically pass to the survivor. Consequently they do not form part of the deceased estate and probate is not required to deal with that sort of property.
A superannuation benefit is usually owned by the trustee of the superannuation fund, not the person who has invested in it. Any payment is usually made at the trustee’s discretion but the trustee would normally give effect to the deceased’s expressed wishes. On the basis that “if you don’t own it, you can’t give it away” superannuation proceeds are not usually dealt with under a will and a grant of probate is usually not required to deal only with superannuation proceeds.
Assets held in a family trust are owned by the trustee of the trust and cannot be given away under a will. Probate is therefore not required to deal with those assets but it may be required to deal with the ownership of a shareholding in any company which acts as trustee of a family trust.
Insurance on the life of a deceased person could be owned by someone else, usually a spouse. Probate would not be needed to deal with that sort of life insurance but would be for most other types.
Do It Yourself?
Like most things, from building a house to repairing a motor car, it is certainly possible to obtain a grant of probate without professional help – but it is not a good idea. It is a complex and time consuming process where lack of knowledge can lead to lengthy delays, enormous frustration and place the executor at the risk of being sued by the beneficiaries. If an executor wishes to become more involved in the actual process, most solicitors will offer a service which guides them through the administration . However bear in mind the old adage that “you get what you pay for” and frequently this results in greater cost overall than if an expert in the field was entrusted to deal with the administration on behalf of the executor.
Contact Mouldens Solicitors to make an appointment for further information or to enable us to assist with an enquiry about Probate.