In our previous blog post we explained how to apply for probate. The first time you do it, it may feel like there’s a never-ending list of tasks to complete. Once you’ve done it several times, though, it’s a fairly straightforward legal and financial process. However, it’s not the type of thing you usually get a lot of practice in – nor do you want it. Since none of us has much free time these days, you may consider asking for help from a probate professional to carry out final wishes of a loved one.
Sometimes going it alone and performing DIY probate is a good idea, if the estate is simple. But you do have three options, so we’d like to share the pros and cons of each. That way you can decide the best approach for yourself.
A quick reminder of the steps involved in probate
There are six necessary steps when dealing with probate:
You need to assess the value of the estate by calculating the assets and liabilities of the deceased.
You must pay any inheritance tax due to HMRC (within six months of the death).
You must pay the final estate administration expenses and advise HMRC if any further taxes i.e. inheritance tax, income tax or capital gains tax, are due.
You must prepare the final estate accounts and administer the estate.
Finally, you may distribute the estate to the beneficiaries.
What are your options when applying for probate?
If an executor needs to apply for probate, there are three choices:
Apply for probate yourself – DIY probate
Appoint a solicitor
Use an accountant who is licensed to provide probate services
Choosing between DIY probate, using a solicitor or an accountant
Here’s our summary of the pros and cons for each option:
Apply for probate yourself
The cost is likely to amount to a few hundred pounds, assuming it’s a small straightforward estate.
Allows you to stay in control of the decision-making process.
If you’re resourceful, there are plenty of online resources available to guide you.
It’s a legal responsibility that should not be taken lightly. HMRC imposes penalties if personal representatives haven’t applied due diligence when ascertaining assets and liabilities. If the estate is distributed incorrectly or over distributed, you risk being sued.
You may not have previous experience of the process, so legal procedures and language may be daunting.
It can be a time-consuming process, so may be overwhelming, especially when you’re grieving.
For larger estates, the process may not be so straightforward.
Use a probate professional, such as an accountant who is licensed to provide probate services
You have the reassurance that comes from dealing with a seasoned professional. Accountants are experienced in the relevant financial processes i.e. recording assets and liabilities, preparing accounts and advising on inheritance tax.
Accountants typically charge a lower hourly rate than solicitors.
If the deceased owned a business and used a business accountant or had their accountant prepare their tax return, their accountant is already familiar with the business’s finances, so they should be able to deal with affairs more efficiently than an unknown party.
Small accountancy businesses can be flexible, handling as much or little of the probate process as you need. So, you still retain a fair amount of control.
Fees are payable, so the cost will be higher than DIY probate.
A good accountant will provide an estimate of the time required to deal with the probate process, but in extenuating circumstances fees may be higher if there are unexpected contentious issues.
Appoint a solicitor
You have the peace of mind that comes from dealing with a seasoned professional. Solicitors are highly familiar with the legal processes involved in probate.
Typically, a solicitor will charge fees between 2.5 to 4.5 per cent of the total estate worth plus VAT (Source: The London Economic*). The cost is likely to amount to several thousand for larger estates. This means less money from the estate passes to a surviving spouse, children or beneficiaries.
When you appoint a solicitor, you lose the majority of control of the decision-making process.
Depending on the size of the organisation, solicitors may not be as available to you as a local accountant.
On average, solicitors take longer to complete this process.
Everyone’s situation is different, but sometimes there are clues that help guide you towards a particular decision. The most common are:
Situation 1: A simple estate? Choose DIY probate
If it’s a very simple estate and not liable for inheritance tax, and providing that you’re organised and time-rich, we encourage you to do it yourself. Given the amount of information available online to support you, it’s no surprise that private DIY applications are increasing.
Situation 2: A more complex estate? Choose an Accountant
For a more complex estate, use a probate specialist, such as an accountant. What makes the situation more complex? The usual indicators are when inheritance tax is due, or the deceased owned a property or business. We’d recommend using an accountant for this – ideally your business accountant (if they are probate accredited like us) or another accountant that comes recommended.
Situation 3: A highly complex estate? Appoint a solicitor
Of course, for a highly complex estate or a contentious one, we would also suggest using a solicitor. What makes an estate especially complex?
The estate is insolvent
A complicated trust is involved
The will has been challenged or/and there is a family/friend dispute
If you contact us with a probate case that’s outside of our usual remit, we will refer you to a solicitor if necessary.
Our wish is simply for you to be #ProbatePrepared, whatever approach and support you choose.
If you begin the process and find it’s too much, then please call us on (01491) 845575 or email Jefferies Accountancy Services. We don’t have to do everything for you, if that’s not what you want, but we can relieve you of some of the more cumbersome tasks involved.
If you have any questions about probate, tax or getting organised financially, please get in touch. Our door is always open in Henley. Please call us on (01491) 845575 to arrange an introductory meeting.
We hope you found this article useful and look forward to answering your probate questions.