Let’s Make Sense of Probate
When someone passes away, their estate—everything they owned—needs to be managed and passed on. That’s where probate comes in.Probate is the legal process that gives someone the authority to access bank accounts, sell property, and distribute assets according to the will (or the law if there isn’t one). In England and Wales, if the estate is worth more than £5,000, probate is usually required.
Getting familiar with how probate works can save you time, stress, and confusion during an already emotional time. Let’s break it down step by step so you know exactly what to expect.
What Is Probate and Why Does It Matter?
When a deceased person's estate needs to be managed, sorting out their money, property, and belongings can feel overwhelming. Probate is the legal process that gives you the authority to deal with their estate and distribute assets according to the will or intestacy rules.
Not every estate needs to go through probate, however. The value of the estate plays a significant role in determining whether you’ll need to apply for this legal authority.
Understanding these thresholds can save you considerable time, money, and paperwork during an already difficult period of bereavement.
How Much Does an Estate Have to Be Worth to Go to Probate UK?
Surprisingly, there’s no single, fixed amount set in law that determines when probate is needed. Instead, most financial institutions establish their own probate thresholds based on their risk assessment and internal policies.
Generally, estates worth more than £5,000 might require probate, but in practice, many banks and building societies have much higher limits. Major banks like Barclays and HSBC often use £50,000 as their threshold, while NatWest and RBS typically set theirs at £25,000.
It’s important to understand that these thresholds apply to the amount held with each individual organisation – not the total value of the estate. For example, if the deceased had £30,000 with Barclays and £20,000 with NatWest, you might need probate for the NatWest account but not for the Barclays one.
When Can You Skip Probate Regardless of Value?
Jointly owned assets, such as a joint bank account, usually pass automatically to the surviving owner without needing probate. This includes joint bank accounts and property owned as ‘joint tenants’ where ownership transfers directly upon death.
Life insurance policies with named beneficiaries typically bypass probate too, as the money goes directly to those named individuals. Similarly, assets held in trust often don’t need probate either, as they’re managed by trustees rather than forming part of the estate.
Some pensions and small savings accounts might be released without probate if they fall under the provider’s threshold. This can significantly simplify the process for families dealing with modest estates.
How Do Different Banks Handle Their Probate Limits?
Each financial institution sets its own rules, which can vary widely across the sector. Nationwide Building Society typically uses a £50,000 threshold, while Santander often sets their limit around £25,000.
Lloyds Banking Group generally works with a £50,000 threshold for releasing money held without probate. Smaller banks and building societies might have much lower limits, sometimes as little as £5,000-£15,000 depending on their risk appetite.
These thresholds change periodically, so it’s always best to contact each institution directly when handling an estate. I discovered this firsthand when settling my grandmother’s estate last year – two banks that had previously published £30,000 thresholds had quietly raised them to £50,000, saving us considerable paperwork.
What Assets Count Towards the Probate Threshold?
When working out if probate is needed, you’ll need to consider several types of assets, including solely owned assets. Cash in bank and building society accounts forms the most obvious component, alongside shares, investments and premium bonds.
Property and land (unless jointly owned as ‘joint tenants’) also count toward the estate value. Valuable possessions like jewellery, art, and vehicles must be included, as well as any money owed to the person who died.
The total value of these assets, minus any debts, gives you the estate’s value for probate purposes. This net figure determines whether you’ll need to apply for probate.
Does Inheritance Tax Affect the Need for Probate?
If the estate needs to pay inheritance tax, you’ll almost certainly need to apply for probate, regardless of the estate’s value. Currently, inheritance tax is typically due on estates worth more than £325,000, though there are additional allowances for family homes passed to children or grandchildren.
You’ll usually need to determine how much inheritance tax is owed and pay at least some of it before probate is granted. This can sometimes create a catch-22 situation where you need funds to pay tax, but can’t access the estate’s money without probate.
Many people turn to specially designed inheritance tax loans to bridge this gap. These short-term facilities provide the funds needed to pay the initial tax bill, allowing the probate process to proceed.
What Happens With Smaller Estates?
For smaller estates, many financial institutions offer a simplified process called a ‘small estates procedure’. This usually involves filling out a declaration form, providing the death certificate, and sometimes obtaining a certified copy of the will, rather than going through the full probate process.
The definition of a ‘small estate’ varies between institutions but typically means anything under their probate threshold. This simpler approach can save beneficiaries both time and money when handling modest estates.
Many banks will release funds up to their threshold with just a death certificate and a copy of the will. This practical approach recognises that full probate would be disproportionately burdensome for smaller amounts.
What Special Circumstances Might Change the Rules?
Some situations might require probate regardless of the estate’s value. If there’s a dispute over the will or who should inherit, probate provides the legal clarity needed to resolve such conflicts.
When the estate includes shares or property held as ‘tenants in common’, probate is typically required. Similarly, if any financial institution insists on probate, even for amounts below their usual threshold, you’ll need to comply with their requirements.
Dealing with certain overseas assets or complex investments often necessitates probate. Business interests also typically require formal administration through the probate process, regardless of their value. In such complex situations, seeking advice from a legal professional is crucial to ensure compliance and accuracy throughout the probate process.
Timeframe for Probate
The timeframe for probate can vary depending on the complexity of the estate and the efficiency of the probate process. Typically, it takes around 8-16 weeks to obtain a grant of probate, but this can be longer if there are delays or issues with the application. The probate registry is responsible for approving grant of probate applications, and it is essential to submit the application as soon as possible to avoid delays.
The probate process can be completed online or by post, and it is recommended to seek the help of probate specialists or legal professionals if the estate is complex or if there are disputes among beneficiaries. Understanding the expected timeframe can help in planning and managing the estate administration process.
How Can You Make Things Easier for Your Executors?
Planning ahead can make a huge difference to those handling your estate after you’re gone. Keep a clear record of all your accounts and assets, perhaps storing this information securely with your will.
Consider placing some assets in joint names if appropriate, as this can simplify the transfer process. Make sure your will is up to date and clearly written to avoid ambiguity that might complicate matters for your named executors.
For larger or more complex estates, consider using trusts to manage the transfer of assets. Discussing your plans with those who’ll be responsible for your estate ensures they understand your wishes and know what to expect.
How Can You Get Help With Probate and Tax Matters?
Managing an estate while grieving can be challenging for anyone. Obtaining probate and getting proper advice often saves money and stress in the long run, particularly with complex estates or inheritance tax liabilities.
Pie is the UK’s first personal tax app designed to help individuals handle their tax burdens effectively. While focusing on self-assessment for the living, their expertise in tax matters can be invaluable when dealing with inheritance tax questions.
Unlike traditional accountants who might charge hefty fees for estate administration, modern solutions offer more accessible support. Remember that probate and inheritance tax rules change periodically, so getting up-to-date advice is essential.
Whether you’re planning your own estate or handling someone else’s, understanding when probate is needed will help you navigate the process with confidence and minimal stress during a difficult time.
