Probate can be a daunting subject for many, particularly when it comes to dealing with property. Understanding the probate process is crucial if you are handling the estate of a loved one. This article aims to provide an overview of probate, specifically focusing on how it pertains to property, to help you navigate this complex area with confidence.
What is Probate?
Probate is the legal process of administering the estate of a deceased person. This involves proving that the deceased’s will is valid (if there is one), identifying and inventorying the deceased’s property, having the property appraised, paying debts and taxes and distributing the remaining property as the will (or state law, if there is no will) directs.
When is Probate Required?
Not all estates need to go through probate. Generally, probate is necessary if the deceased owned property solely in their name. Jointly owned property typically passes to the surviving owner without the need for probate. However, if the property was solely owned by the deceased or held as tenants in common, probate will likely be required to transfer the ownership legally.
The Probate Process
1. Applying for Probate
The first step in the probate process is to apply for a grant of probate if there is a will, or letters of administration if there isn’t. This involves completing a probate application form (PA1P if there is a will, PA1A if there isn’t) and sending it to the probate registry along with the original will and the death certificate.
2. Assessing the Estate
Once the application is submitted, the next step is to assess the value of the deceased’s estate. This includes all property, possessions and financial assets. For property, this means getting a professional valuation.
3. Paying Inheritance Tax
Inheritance tax (IHT) must be considered during probate. If the estate’s value exceeds the IHT threshold (£325,000 as of 2024/25), tax will need to be paid on the amount over this threshold. IHT must be paid before probate is granted, which can require careful financial planning.
4. Collecting and Distributing Assets
After probate is granted, the executor or administrator can collect the estate’s assets. For property, this might involve selling it or transferring it to beneficiaries. Once all debts and taxes are paid, the remaining estate is distributed according to the will or, if there is no will, the rules of intestacy.
Property and Probate
Property is often the most valuable asset in an estate and requires careful handling during probate. Here’s a closer look at some of the key considerations.
Selling the Property
If the property needs to be sold, the executor will need to ensure it is maintained and insured during the probate process. The sale cannot be completed until probate is granted, though marketing the property can begin earlier. Once sold, the proceeds will form part of the estate and be used to pay off any debts, with the remainder distributed to beneficiaries.
Transferring the Property
If the property is being transferred to a beneficiary rather than sold, the executor will need to update the Land Registry to reflect the new ownership. This involves submitting a completed form AP1 to the Land Registry along with a copy of the grant of probate and the will.
Dealing with Mortgages
If the property is mortgaged, the outstanding mortgage will need to be paid off. This can be done from the estate’s assets or from the sale of the property. If the property is transferred to a beneficiary, they may need to take over the mortgage or arrange new financing.
Property Valuation
An accurate valuation of the property is essential for calculating inheritance tax and for ensuring the correct distribution of the estate. It’s advisable to get a professional valuation, which can be submitted to HMRC as part of the IHT process.
Common Challenges in Property Probate
Probate can be complicated by several factors, including disputes among beneficiaries, locating all the deceased’s assets and ensuring all debts and taxes are paid. Professional advice can help navigate these challenges, ensuring the probate process is handled efficiently and legally.
Navigating probate, particularly when it involves property, can be a complex and stressful task. At Northwood, we understand the intricacies involved and are here to help. Whether you need assistance with property valuation or selling a probate property, our experienced team is here to support you every step of the way. Contact us today to learn more about how we can assist you with probate and property.
