IHT and Probate - correct order of activities

chile_paul2

Hi all,

I've been named as executor on my Dad's will and I wanted to check that I've understood the order of activities that I should be completing correctly, at times it feels like I'm going round in a big circle.

My Dad's affairs are relatively straight forward (I think), he has left a small bequest to a charity and then to each of his grandchildren, following that the rest of his estate will pass to his wife.

I have received the death certificate and have started to inform the various financial institutions, but I'm getting a bit lost about what I can and can't do before the grant of probate is requested / issued. If it helps at this point, I don't think IHT will be payable on Dad's estate, given that most of it is going directly to my Mum.

In particular I'm getting confused that I can't apply for probate until I've valued Dad's estate and sent through to IHT - but I won't know the full value of his estate until probate has been granted as some financial institutions want to see this before they confirm the value of the estate?

So I think the steps I need to now follow are:

- Get original copy of the will from the solicitor (we only have a copy currently)
- Set up separate bank account to deal with the estate (my understanding from reading the forum is that this doesn't have to be specific executors account? This will allow some banks and institutions to pay balances into this and will also allow us to sell his car for example?)
- Get up to date valuations for all other assets
- Fill in relevant IHT form (IHT205)
- Then apply for probate
- Have all other assets paid into separate bank account
- Distribute gifts as per the will
- Remaining assets after gifts have been distributed get paid to Mum 
 
Does all of this sound like the right order, thanks in advance for the help!

p00hsticks

chile_paul2 said:

some financial institutions want to see this before they confirm the value of the estate?

I've not come across this - they may not release the funds without probate, the value of the funds (e.g. if in stocks and shares) may change between the date of death and when you are actually able to sell them, and they may not communicate fully with you without proof that you are the executor (e.g. a copy of the will and some id) but it doesn't make sense to me for them not to even tell you the amount involved. As you say, you really need those values (or a good approximation) in order to obtain probate.

The rest of your list makes sense and matches what I did recently. We didnt need to pay any IHT as it was below the threshold

When I asked a few months back , someone kindly posted links to the relevant forms and background info - I'll try to find them now.

[Edit - here you go] https://www.gov.uk/government/publications/inheritance-tax-return-of-estate-information-iht205-2011 

(One word of warning - I found it helpful to print off and use the paper form to gather all the info before I actually both reported the estate value and did the probate application online, but be aware that the questions asked aren;t necessarily al lthe same and in the same order olnie as on the paper form).

I recommend using these boards - it's really helped me through the process.  

sassyblue

Are you getting a little confused about the banks? If the balance in them is over a certain amount they won’t TRANSFER the money to you until probate is granted.

the correct way is to value the estate and then apply for probate, after all, how do you know no IHT is payable if you don't know the finance amounts?

if not then can you specify what financial institution involved and specifically what they are telling you

YBR

As I recall from my Dad's death, we had to write to various institutions and ask for the value of shares/funds at the time he died. Mostly they needed a copy of the death certificate.
Once we had the values, we could apply for probate, and write again to get the funds transferred into my mum's name or paid over.

Devongardener

One word of warning about opening a new bank account to receive funds when liquidating assets. It’s advisable to have an actual executors account, otherwise if you were to die before all funds were distributed, an ordinary account in your name would become part of your estate.   I’ve just had to open one with my brother as our Mum recently died and we are executors.  Mum had various investments and some financial institutions have stated that they will only pay into an executors or solicitors account.  Unfortunately as we discovered, executor accounts don’t allow any online or phone access, so to keep track of payments going in we will have to visit a branch with ID!

 You are right that it’s very difficult to get an accurate valuation of investments where stocks and shares are involved.  Mum had 3 S&S ISAs and none of them will crystallise the value at the time of death but will only act to sell them once Probate has been granted.  We are going to try to get an estimate of the value at date of death and hope this will be enough to apply for probate.  

Just one other thought,  were any of your Dad’s investments in joint names with your Mum?  If so you shouldn’t need to sell them.

Langtang

Having just gone through this with both of my In-Laws, I found there's a difference between asking for figures and actually realizing the assets. A death cert was enough proof to get a figure from the larger financial institutions (SL, Aviva, Scottish Widows etc.) I am in Scotland, so it may be different if you live outwith.

Langtang

Devongardener said:

 You are right that it’s very difficult to get an accurate valuation of investments where stocks and shares are involved.  Mum had 3 S&S ISAs and none of them will crystallise the value at the time of death but will only act to sell them once Probate has been granted.  We are going to try to get an estimate of the value at date of death and hope this will be enough to apply for probate. 

We used the share price on the date of death, but we didn't realise the shares until almost 12 months later where there had been an increase in the value.

sassyblue

Devongardener said:

One word of warning about opening a new bank account to receive funds when liquidating assets. It’s advisable to have an actual executors account, otherwise if you were to die before all funds were distributed, an ordinary account in your name would become part of your estate.   I’ve just had to open one with my brother as our Mum recently died and we are executors.  Mum had various investments and some financial institutions have stated that they will only pay into an executors or solicitors account.  Unfortunately as we discovered, executor accounts don’t allow any online or phone access, so to keep track of payments going in we will have to visit a branch with ID!

 You are right that it’s very difficult to get an accurate valuation of investments where stocks and shares are involved.  Mum had 3 S&S ISAs and none of them will crystallise the value at the time of death but will only act to sell them once Probate has been granted.  We are going to try to get an estimate of the value at date of death and hope this will be enough to apply for probate.  

Just one other thought,  were any of your Dad’s investments in joint names with your Mum?  If so you shouldn’t need to sell them.

Not many banks have 'executors accounts'. We used Barclays when father in law died and it wasn’t an executors account as they didn’t do them. It was simply a bank account in hubby and his brother's name as the two executors.

even if one of the executors dies only what they are due to inherit will be part of their estate as you can prove it’s an account to hold and distribute the estate of a deceased person, you will have a death certificate, a will and information of where those funds have come from and where they are to be distributed.  Nobody is going to say the funds in that account now form the estate of another.

usually the money in executors accounts (the type that the average person like you and I are arranging) are not there long anyway, unless you have funds from bank accounts and you are waiting for a property to sell.

p00hsticks

Devongardener said:

One word of warning about opening a new bank account to receive funds when liquidating assets. It’s advisable to have an actual executors account, otherwise if you were to die before all funds were distributed, an ordinary account in your name would become part of your estate. 

I've been guilty of thinking (and warning) the same in the past - but as someone on this board rightly pointed out, if the money in your account is considered to be an asset of your estate, then equally you owe the same amount as a debt to the estate of the dead person to whom you are executor. So the account being in your own name rather than as an executor neither effectively increases the size of your own estate or reduces that of the deceased if you in turn were to die before the first estate was fully distributed.

I've been using a ring-fenced account in my own name to pay bills and collect smaller amounts, but have now set up an executors account as I suspect I may need one to receive the proceeds of a house sale, as the executoris and beneficiaries are not the same.

cookay

I didn't have to set up a separate bank account, but I understand previous post saying what if I'd died in the meantime...  
Regarding my mum's BT shares I could get a value at death on production of a death certificate, but the value had gone down by the time they were sold.  I wish I had sold them when I had power of attorney before she died as it would have been easier. 
Also Lloyds allow up the £50k or something to be paid out without grant of probate.  

p00hsticks

cookay said:

I didn't have to set up a separate bank account, but I understand previous post saying what if I'd died in the meantime...  
Regarding my mum's BT shares I could get a value at death on production of a death certificate, but the value had gone down by the time they were sold.  I wish I had sold them when I had power of attorney before she died as it would have been easier. 
Also Lloyds allow up the £50k or something to be paid out without grant of probate.  

To get the value of shares or funds listed on a regular stock exchange on the date of death you don't even need to produce a death certificate if you know the number of shares held - a simple google will do it

e.g

https://www.hl.co.uk/shares/shares-search-results/b/bt-group-plc-ordinary-5p