Normally when someone dies, their executor or administrator needs to apply for a Grant of Probate or Letters of Administration. If the estate is small, however, it may not be necessary.
After a death, an executor or administrator is responsible for collecting in the deceased’s assets, valuing them, arranging for sale, preparing estate accounts, to include payment of any tax that may be due, then distributing the funds to the beneficiaries named in the Will or under the terms of the Rules of Intestacy.
The job usually includes application to the Probate Registry for Grant of Probate or Letters of Administration, unless the estate is small enough to be wound up without this document.
What constitutes a small estate?
There is no exact legal definition of a small estate and whether a grant is required depends on individual asset holders.
For example, each bank has its own probate threshold, which can vary widely, with limits usually ranging from £5,000 to £50,000.
The same applies to share registrars, life insurance companies and pension administrators. Some institutions take account of the amount held with them, while others look at the entire value of the estate when making their decision.
Where a property was jointly owned by the deceased with another person and it was held as joint tenants, then it will automatically become owned by the survivor, with no grant needed to transfer ownership.
If a property was owned in any other way, then a grant of representation is usually required.
How to decide whether to apply for a grant
By making enquiries of all of the individual asset holders, the deceased’s representative will be able to gauge whether a grant is needed. If it is not certain, then it is worth obtaining professional advice, as it can complicate matters to find out partway through an administration that a grant should have been applied for.
Winding up a small estate
Where it has been established that a grant of representation is not needed, then most financial institutions will need to see a certified copy of the death certificate and will require a Small Estates Declaration. This is a document executed by the executor or administrator, stating that the estate’s value is below the threshold of the financial institution.
The Declaration will include an indemnity whereby the representative agrees to indemnify the institution against any claims as well as an agreement to provide a grant of representation in the future if required.
If you would like to talk to one of our Wills and Probate experts, ring us on 01634 353 658 or email us at rob@pembrokewillwriters.com.