Avoid a Probate final rip off
Article sourced from http://www.theguardian.com/money/2013/sep/21/probate-avoid-rip-off-comparing
Outside executors can cream off thousands – don’t make an already testing time worse by not comparing probate services
A bereavement is bad enough; finding out later that you have been ripped off by your bank or solicitor when dealing with the estate just piles on the misery.
Fees for what is known as “probate” – the process by which you obtain the rights to deal with a deceased person’s affairs – can run into many thousands of pounds, and take months to complete. Yet unless a person’s estate is large and complex, probate cases can be completed for as little as a few hundred pounds.
Where do I start? By finding the will – but only three in 10 people in the UK bother to have one, and there is no legal requirement to subsequently have them registered. Search through the deceased’s paperwork at home, or ask their solicitor, bank, or the Principal Registry of the Family Division or do a paid-for search on websites such as certainty.co.uk (£40).
The will should name one or more executors who can collect the money, pay debts and distribute the rest. But to do so, the executor needs to apply for a “grant of representation”. If there is no will, the next of kin should apply for “letters of administration”, also known as a “grant of administration”.
Is probate compulsory? Not always. If the estate is worth less than £5,000 then it is possible the bank may only need to see the death certificate.
Who starts the process? Only one person needs to do it, normally the executor named in the will, or two if there are beneficiaries below the age of 18. Steve Pett of the Probate Department Ltd, which offers a low-cost probate service, encourages the children of the deceased to be executors, as it is a burden for someone in their 70s or 80s who has just lost their husband or wife.
Do I have to use a solicitor? No. And don’t automatically let a bank or solicitor named as executor in the will carry out probate. “You are normally under no obligation to use the probate services of the firm which stored the will. You may well find their fees are considerably more,” Pett says. “Watch out for fees where you pay an hourly rate and a percentage – this can triple the cost. Where firms have appointed themselves as executors they will normally stand down without charge if asked, though some less honorable ones may still try to charge their full fee.”
In one example seen by Guardian Money, a high street bank charged the estate £40,000 simply for distributing £1m held as cash in a deposit account. Solicitors frequently charge what is called a “responsibility fee” of 1.8% of the total estate on top of their basic charge for probate, and as much as £50 for every letter sent out.
What is the cheapest solution? Adam Walker set up a probate “brokerage” called Final Duties after being charged £25,850 in legal fees on his father’s estate, which he later found could have been done for £6,300 at another solicitors. His firm offers a fixed fee service charging £787 on an estate worth £65,000, rising to £2,135 on an estate in excess of £400,000.
Saga and Co-operative Legal Services both offer fixed-fee services, but do not publish their rates. Executors have to call the company, obtain a quote, and be aware that during probate there may be additional fees as things arise.
A better value option may be to do some of the basic legwork yourself, but with help and guidance from a probate specialist.
The Probate Department Ltd offers low-cost semi-DIY plans for people in England and Wales starting at £249, plus a useful free guide, for those who want to try to do the process entirely by themselves.
Note that whatever route you choose you will be required to attend an interview at your local Probate Registry before probate is finally granted. It should take no more than 15 minutes and is where you promise that the information you have given is true to the best of your knowledge.
What are the main steps if I do it myself? There are several steps that must be followed:
• Value the estate, digging out all the deceased’s bank accounts and insurance policies.
• Fill in Probate Application form PA1, as well as IHT205 for HMRC, regardless of whether or not the estate owes inheritance tax (IHT). Send the forms in and pay whatever tax is due.
• Attend a probate interview to swear an oath.
• Wait for the grant of representation to arrive – banks and other organisations will ask to see this before they allow access to the deceased’s assets.
• Pay any debts owed and distribute the estate.
How long will it all take? It varies enormously. In a simple estate, Pett says he has seen the paperwork wrapped up in a matter of days, but HMRC says more typically that once you’ve paid any IHT and sent off the forms to the Probate Registry, the process takes about eight weeks if there are no problems. But reports of probate dragging on for six months or longer are not uncommon.
The executor: a clear, simple, error free will is important
Jill Papworth spoke to someone with wide experience of being executor of a will.
Having been executor for the wills of three family members over the past decade – my sister, my father and my aunt – I have learnt that getting probate is a tiny part of the process of dealing with a death.
What really takes up your time and energy is physically sorting out the deceased’s possessions, going through all their paperwork and selling their property.
The process itself isn’t difficult, but grief makes it harder to deal with. I found that technical help from a solicitor is good if you, or the deceased’s estate, can afford it.
The quickest estate to complete was my sister’s because she had left everything to charity, which makes things very simple as far as HMRC is concerned – I got probate within three weeks of her death.
With my father’s estate, which was relatively straightforward, it took four months to get probate and a year to finalise the administration.
My aunt’s took well over two years. Fortunately, all three of them had written wills and their wishes were clear. Their estates would have been so much more complex to deal with if they had died intestate.
A useful lesson I learned early on was that you should get plenty of copies of the death certificate and certified copies (witnessed by a solicitor) of the will, both of which you will have to pay for, because every bank and financial institution will ask you to send one, even if they later send them back.
The other thing I would suggest is not to worry if things take time – you will get there in the end. You should resist any pressures to rush the process because, as executor, it is more important to get things right (which is a good reason to use a solicitor if you can afford it), especially if you are also a beneficiary of the will.
The experience has also made me realise how important it is make a will, using a solicitor to make sure it is simple, clear and error free.
I have learnt that if you are leaving your main residential property in your will it is important to make clear what should happen to it, or to the proceeds if it is sold, in the event that you go into residential care and are no longer living in it when you die.
My aim is to keep my own financial affairs and papers in good order as my aunt did, so that things are straightforward and manageable for whoever ends up having to deal with my death.
I also intend, as she did, to give someone power of attorney to act for me in financial matters in plenty of time before all the technical stuff gets too much for me to bother with.