Why would I need a Grant?
When someone dies, it may be necessary to obtain a Grant to deal with their estate. This will generally depend on what type of assets they have and the value of the whole of their estate, so all their personal belongings, property, savings, bank accounts, etc.
The Grant allows a personal representative (an executor or administrator) to ‘administer’ or deal with the affairs and the estate, of the person who has died.
There are many different types of Grant, depending on the different situations that can arise when someone dies, but the two main types are:
• A Grant of Probate, where the person who died left a Will appointing executors or;
• A Grant of Letters of Administration, where someone died without leaving a Will, which is called an intestacy.
Sometimes, a person may have left a valid Will but, they either did not name executors or the executors are unable or unwilling to act. In these circumstances, an application for a ‘Grant of Letters of Administration with Will annexed’ would be made.
So when would I need a Grant?
Generally, if the deceased had assets worth less than £5,000 or their property and assets were held jointly then a Grant may not be necessary.
Jointly held property, whether a home or bank accounts for example, will pass automatically to the surviving person named on the joint asset. The value of the half share of the joint asset will still need to be taken into consideration when calculating whether inheritance tax is payable. If there is no tax to be paid, then a Grant may not be necessary.
However, if a person had stocks and shares, owned their own property or land (not with someone else as a joint tenant), or had certain insurance policies, then a Grant will have to be obtained to deal with their estate. This will be necessary whether there is a Will or not.
What if there is no Will, is it different then?
There is no difference where there is no Will, a Grant may still be required. The difference will come in how the estate is dealt with and distributed once a Grant is obtained.
Where there is no will, then the division of the estate must follow the Intestacy Rules. The intestacy rules are the rules that govern who will receive a share of an estate when no Will has been prepared by the person who died. The Intestacy Rules are very strict and cannot be altered by the person dealing with the estate, the Administrator.
The Government has a useful on-line tool dealing with intestacy rules and who would be entitled to a share of an estate, where someone dies without a Will but we will explain more about how the Rules work in the Guide Intestacy Rules (link)
Do all banks insist on a Grant?
Each bank or building society have their own rules so it isn’t always clear. The personal representatives (executors or administrators) will have to write to each financial institution to find out the exact amounts the person who died, held with them.
Although the general rule is, if assets are valued over £5,000 a Grant may be required, it is important to know that different Banks and Building Societies have different figures, above which they insist on seeing a Grant.
If a Grant is needed to deal with a property or land, or a Grant is needed to deal with other assets and the estate value is over £5,000, the Banks will most likely insist on seeing the Grant, irrespective of the amount in the account(s) the person had with them.
Technically any financial institution could insist on a Grant being obtained for even a small amount, which could be less than £5,000, or it may be considerably higher, possibly even £30,000, depending on the financial institution’s policy. It will be necessary for the personal representatives (Executor or Administrator) to contact the person’s bank or other financial institutions to find out whether they require sight of a Grant.
What will the Bank or Building Society help with if, a Grant is needed?
What is useful to know for the person dealing with the estate is that most banks will agree to pay the funeral directors. An invoice would be needed and the bank would pay the fee directly to the relevant funeral directors. They may be willing to refund any deposit paid by an individual provided an invoice and proof of payment has been presented to them.
In addition, any Inheritance tax must be paid before a Grant will be issued by the Probate Registry. This can cause anxiety for Personal Representatives who may think they have to pay the sum themselves and claw it back from the estate, once the Grant has been obtained.
There are now many banks and building societies that are part of the Direct Payment Scheme who will pay the Inheritance Tax due, once they have had sight of the appropriate form confirming the figure to pay. They would then transfer the amount directly to HMRC. Even if the financial institution is not part of the scheme, there are many that will pay cheques to HMRC directly, on the personal representative’s behalf, provided there are sufficient funds in the account(s) held at that institution. It is not possible to pay some of the tax due from one financial institution and the rest from another. There would have to be sufficient funds held by the one institution, although this may be over several accounts.
Inheritance tax can also be paid from Premium Bonds and National Savings if there are sufficient sums available. Again, if there are several accounts, bonds or investments held by a particular institution, these can be amalgamated to pay the full amount of tax due.
As a personal representative (executor or administrator) you need consider whether one type of account is better than another type of account to pay any inheritance tax bill or funeral payment. If interest is payable on an account and there is another account that does not pay interest or there is an alternative to using premium bonds or national savings, then it would be sensible to consider the alternative options. You would be losing potential interest or prizes, from the point the money leaves the account, which may not be the best option.
As the personal representative, you are expected to safeguard any assets and ensure the best returns on any assets held until the estate is distributed. Currently with interest rates so low on personal savings this is probably not an issue but for a larger estate or other investment vehicles think about the best option and if needs be take advice.
As you can see it may not be so clear cut whether a Grant is needed or not but if you use the starting point of a Grant will be needed for estates valued over £5,000, or that have property or land and certain types of investment, this is a good rule of thumb.
If you are unsure seek advice. There are Government on-line tools to help you.
If you have recently lost someone and believe that you are the person who needs to deal with their estate, these guides may help you. The guides will assist you in all the steps necessary to deal with a simple estate, that is below the threshold to pay any Inheritance Tax, from registering the death to distributing the estate.Citizens Advice or National Debtline. Or for informal help and support you can visit the Forum
We now feature a number of specialist Probate solicitors on our sister site, JustBeagle.com