Does having a Will mean I won’t need Probate?

Does having a Will mean I won’t need Probate?

by | Jul 13, 2018 | Estate Planning, Wills

Actually, the statement I hear is “I have a Will so I won’t need probate”.  Let’s clear this up now, THE TWO ARE NOT LINKED. Yes, they are both relevant to death but one does not negate the need for the other.

A Will is a legal document drawn up in your lifetime.  It enables you to specify the beneficiaries of your estate and how it is distributed.  Your estate may comprise of possessions, money, property and land.  A Will also enables you to state who you wish to administer your estate at your death i.e. your Executors.  Lastly, it also means you can control who are the guardians of your children under the age of 18.

If you don’t have a Will, at your death you are said to have died ‘intestate’.  For more information, see our intestacy blog.

However, PROBATE (from the Latin word meaning ‘to prove’) is the legal process that happens when you die.  The main purpose of Probate is to give a person (or people) the legal authority to administer your estate. These people are called Personal Representatives (PRs).

Probate enables the PRs to access your assets at your death, such as your bank accounts, property and pensions. It means they can do things such as:

  • Finalise utility bills
  • Sell or transfer property
  • Gather in assets, including pensions, stocks, shares and savings
  • Liquidate (sell) all the assets in your estate
  • Pay any outstanding debts using funds from the estate
  • Calculate and pay any income tax or inheritance tax due
  • Distribute the estate to beneficiaries (as set out either in your Will or via the Law of Intestacy).

I think the reason people often get confused regarding Probate is because Probate is not always required at death. There are two main reasons why Probate may not be required at your death:

  • You own all your assets JOINTLY usually with your partner or spouse who is still alive. In this case, at your death, all your assets would pass automatically to the other joint owner according to the Law of Survivorship; therefore no administration is required.  This is why I often hear “we didn’t need probate at my dad’s death so why do we need it now that my mum has died?”.  At the father’s death, all the assets were owned jointly between mum and dad so passed automatically at his death to the mother.
  • There is very little in your estate i.e. it’s a small estate. Financial institutions such as banks and building societies all have their own individual Probate threshold.  So if, at your death, you have a certain value of savings in a bank and that amount exceeds the bank’s Probate threshold, the bank will need a ‘grant of probate’. Without this, the bank won’t release those funds to your executors or PRs so they may be distributed to the beneficiaries.  To make life a little trickier for your PRs, every establishment has a different threshold.  So, the same amount may trigger the requirement for a ‘grant of probate’ at one bank but not at another!!  So, it could happen that if the value of your estate is held in several banks and the level of funds in each is under that bank’s threshold, no Probate will be required.

Importantly, do bear in mind that if a property is not owned jointly (i.e. as joint tenants) but it is owned as ‘tenants in common’ then a ‘grant of probate’ is ALWAYS required.  This is why a ‘grant of probate’ is often required at the second death of a couple – the property passed to the joint owner at first death but is now owned solely by the remaining spouse; at their subsequent death, a ‘grant of probate’ is required.

So, you see that a Will and Probate are totally separate concepts; the Will enables you to say how your estate is to pass at your death; Probate is the legal authority for your PRs to carry out the wishes in your Will.  It is not the Will that dictates whether Probate is required but instead what your estate is comprised of.

Do you really know what happens if you die without a Will?

Do you really know what happens if you die without a Will?

by | Jul 5, 2018 | Estate Planning, Inheritance, Wills

I think we all know that dying without a Will is not a good idea but do we really know why?  Most people think of the potential financial hardships but there are more emotional and emotive reasons also.

Let’s start with what happens if you die without a Will and who gets what.  Dying without a Will is called dying INTESTATE.  There are statutory laws – called the Law of Intestacy – that govern how your estate will pass if you die without a Will.

Remember that any assets owned jointly will NOT be governed by your Will or the Law of Intestacy.  Instead, those joint assets pass by the Law of Survivorship, i.e. the remaining joint owner(s) get the lot. So, if you and your partner/spouse own everything ‘jointly’, should you die, your partner/spouse gets everything. However, anything not owned jointly (i.e. any assets solely owned by you) will fall according to the Law of Intestacy.

So, now it depends on whether you are married or not?  If ‘yes’, then the next question is ‘do you have children’?  If ‘no’, then your spouse inherits the lot but don’t forget that is also the case if you are separated but not yet divorced.

However, if you do have children, it gets a little trickier. Your spouse will receive the first £270,000 of your estate.  So, if you do not solely own more than £270,000 your spouse receives your entire estate.  However, if your estate is in excess of £270,000 that excess balance will be split 50% to your spouse and 50% to your children (held in trust until they are aged 18).  Your personal chattels go to your spouse.

If you are not married, it gets even trickier.  If you have children, they receive your entire estate, NOT your partner – even if your partner is the parent of your children!  If you don’t have any children, your parents will receive your entire estate – these monies may end up going on their care fees.  If your parents are not alive, your estate falls to your siblings and of course down to their children (your nieces and nephews) should your siblings die before you.  Do you really want your nieces and nephews to inherit rather than your partner to whom you aren’t married?

If all that fails, the next level down is to your half-siblings, then grandparents and then aunts/uncles and of course their children should they die before you. If all that fails… then your estate passes to The Crown!!

So, you can see why the Law of Intestacy is often called a ‘blunt instrument’!

There are other aspects that are often not thought about.  If you haven’t got a Will then you haven’t nominated your own Executors and Trustees.  The former are the people to whom you give the responsibility of administering your estate and body.  The latter, often the same people, are those who manage monies and trusts on an ongoing basis. If you haven’t nominated your own Executors and Trustees then it will be down to those closest to you to act as your Administrator.

There are strict rules as to who can apply to be your Administrator. The order is as follows: the surviving spouse where the deceased was married or in a civil partnership; children of the deceased; grandchildren; surviving parents; surviving brothers or sisters; nephews or nieces; another relative.

Let’s take a look at that list.  What if you don’t like or trust or get on with any of those people?  They are now in charge of disposing of your body, organising your funeral, distributing your money, liaising with the family and the ongoing management of money and trusts.  Are there any people on this list within your family who you would not like to act in such a way on your behalf?

What about all the aspects of your life that won’t be reflected in the Law of Intestacy?: gifts to family and friends; gifts to stepchildren; care of pets; gifts to charity; guardianship of children; ongoing management of your business; excluding estranged beneficiaries; tax planning… to name but a few.

Heartache, family disputes and financial hardships may all occur at what is already a very difficult time.  Do you want that for your loved ones?  No, of course you don’t, so go to the effort and expense of having a well-crafted Will to make sure your wishes are adhered to.