Wills, Trusts & Probate

Why should I make a will?

It is vitally important that people make a Will to ensure that their assets pass to the people they want them to.

Without a Will the Law decides who gets what and this may not reflect your wishes.

A Will can be essential for many reasons;

• To appoint a guardian to look after any minor children you have in the event that you die before they attain the age of 18
• To pass your assets to your loved ones
• To stipulate how old any children should be when they inherit your assets – would you trust an 18 year old with your wealth?
• To set up trusts for family members or disabled beneficiaries
• To avoid disagreement over your estate by clearly specifying your wishes
• To avoid your assets going to the Crown if you have no family
• To cover all possible situations– for example who would inherit if your main beneficiary died before you?
• To minimise any Inheritance Tax liability
• To express your funeral wishes

Parker Rhodes Hickmotts’ Wills, Trusts & Probate team has a wealth of experience in writing Wills, from the simplest of Wills leaving everything to a spouse, to complex trusts incorporating Inheritance Tax planning.

Our Head of Department is a member of STEP (Society of Trusts & Estates Practitioners) and has a wealth of knowledge regarding asset protection and tax planning, as well as Wills and Lasting Powers of Attorney. STEP is the leading organisation in this area of Law.

Our highly experienced team can help give you advice on how best to write your Will to ensure your needs are met.

Please either telephone 01709 511100 to speak to our friendly Wills, Trusts & Probate specialists or contact us.

When someone dies it can be a very upsetting and confusing time. With a long list of things to do it is often difficult to know where to begin and can be useful to have someone there to guide you.

At Parker Rhodes Hickmotts our team have a wealth of experience to help you with everything from notifying people of the death, to assisting in arranging the funeral, to obtaining a Grant of Probate, cashing in the assets, paying any debts, completing any necessary tax returns and distributing the estate.

The process of the administration of an estate will vary depending on a number of factors, most importantly whether the deceased left a Will and what the deceased’s assets comprised.

When a person dies leaving a Will there will be named Executors who have the responsibility of ensuring that the deceased’s estate is administered correctly and the beneficiaries receive their inheritance.

When someone dies without having made a Will it is known as Intestacy. There is a strict legal order as to who may apply to be the Administrator (the equivalent of the Executor) in an intestate estate. Where there is no Will there is also a strict legal order as to who inherits what assets.

For these reasons it is essential that you seek professional advice to ensure that all legal requirements are followed.

To make an appointment, please either telephone 01709 511100 to speak to our friendly Wills, Trusts & Probate specialists or contact us.

Inheritance Tax (IHT) is currently charged on Estates worth more than £325,000 (current rate) – this value is called ‘the nil rate band’. If your Estate is worth more than this, then it may be that your Estate is liable for IHT on anything over this at a rate of 40%.

Married couples have an exemption for assets passing between them but cohabitees do not. For this reason, it is very important to ensure that you take advice on the most tax efficient way of writing your Will.

If you are a widow then you can benefit from your late spouse’s NRB and effectively have an exemption of up to £650,000 – this is known as the transferable nil rate band. However, this is a complex area of law and it is essential to take advice as benefits can be lost if the current rules are not followed.

Many people do not realise how much their Estates are worth, but after taking into account property, savings, investments, pensions, death in service benefits and life insurance, it isn’t long before your estate starts to mount up.

In order to ensure as much of your money as possible goes to your loved ones, it is essential you take professional advice to see what can be done to minimise any tax liability.

To make an appointment, please either telephone 01709 511100 to speak to our friendly Wills, Trusts & Probate specialists or contact us.

Lasting Powers of Attorney (LPA) are documents authorising someone else to deal with your affairs on your behalf. This can be a vital document should you be physically or mentally unable to deal with your affairs yourself, or if you prefer not to.

Without an LPA nobody else has any authority to deal with your affairs. If you lose capacity and are no longer able to deal with things, then the only option would be for a family member to apply to the Court of Protection for a Deputyship Order. This is a lengthy and expensive process which can be avoided with an LPA in place.

There are also two types of LPA, one relating to Health and Welfare and one relating to Property and Affairs. An LPA is a very useful document which everyone should consider making.

To make an appointment, please either telephone 01709 511100 to speak to our friendly Wills, Trusts & Probate specialists or contact us.

A trust can be created either during lifetime or by a Will which enables the owner of an asset (the Settlor) to transfer that asset to other people (the Trustees) to look after it for the benefit of someone else (the Beneficiaries).

Trusts are used for numerous reasons in order to ensure that your assets are given to certain people in the way you want.

An example of a simple Trust would be where monies are left to a child in a Will but they cannot have the money until they reach the age of 21. During this time, the Trustees have an obligation to look after the money for the benefit of the child. The Trustees would be able to allow any guardians access to the money for the benefit of the child whilst, at the same time, retaining control of the asset. However, trusts can be used for many more reasons, including asset protection and tax planning.

Sometimes people wish to have a Trust when they are in a second marriage. For example, you may want to ensure your spouse can live in the home but ultimately you want your children to inherit everything upon second death. A good solution would be to have a life interest trust either in a Will or lifetime. This provides you with the peace of mind in knowing your spouse is looked after but your children will still inherit what is yours.

To make an appointment, please either telephone 01709 511100 to speak to our friendly Wills, Trusts & Probate specialists or contact us.

Contentious Probate is when a dispute arises about an individual’s Estate after they pass away.

Contentious Probate takes many forms, from people disputing the validity of a Will to making a claim on the Estate on the basis that they have not be adequately provided for  because it failed to provide sufficiently for the claimant, contentious probate arises.

Parker Rhodes Hickmotts Solicitors understands that these kinds of issues, often involving family members, requires a sensitive and holistic approach. Our contentious probate team can play a crucial role in resolving issues and negotiating a settlement without the need for going to Court which can be expensive and time consuming.

To make an appointment, please either telephone 01709 511100 to speak to our friendly Wills, Trusts & Probate specialists or contact us.

If somebody loses mental capacity, it may be necessary to apply to the Court to take over their affairs. This can be a very complex and time-consuming process which in most cases requires families obtaining advice and assistance with the initial applications to the Court of Protection, the administration of on-going deputyships and the creation of Statutory Wills for those without mental capacity.

At Parker Rhodes Hickmotts we can assist families through this difficult time, we can help guide them through the process and assist them with managing their loved ones affairs.

To make an appointment, please either telephone 01709 511100 to speak to our friendly Wills, Trusts & Probate specialists or contact us.

More and more people are looking at ways to protect and manage their financial Estates. People are more concerned than ever about maximising the inheritance that they leave for the next generation and we can assist.

There are various options available to clients depending on the level of protection that they require.

We can advise on matters of lifetime gifts, the use of Trusts during lifetime or on death. We can talk you through the administrative steps and advise on the tax consequences.

We understand that these matters can be daunting and the legislation a minefield. We offer clear practical advice and tailor our advice to each client’s individual circumstances. We aim to provide peace of mind for our clients by achieving their goals.

To make an appointment, please either telephone 01709 511100 to speak to our friendly Wills, Trusts & Probate specialists or contact us.

A GUIDE TO PRH PROBATE SERVICES & FEES FROM DECEMBER 2018

INTRODUCTION

PRH Solicitors are committed to providing a first-rate service when it comes to the Administration of Estates. Our team have many years’ experience in this field (see our ‘Meet the Team' section.) Essential to our commitment is providing up-front and transparent fees when administering an Estate. We understand that every Estate is different and Executors require different levels of assistance.

Some of our services are offered on a fixed fee basis, including obtaining the Grant of Probate and setting up a life-time trust within someone’s Will.

Our fees are flexible and based on the work that we undertake. We do not charge an hourly rate and a percentage of the Estate.

For full administration of Estates, our fees are calculated in one of two ways:
1. Fees calculated on an hourly rate (rates depend on the fee earner acting but range between £200-£250 per hour plus VAT);
2. Fixed fees where we will provide a breakdown of the work that we will undertake for the fees quoted. This provides the Executors/Personal Representatives of clear guidelines of the work we will undertake and the amount that this will cost the Estate.

VAT is charged on all fees at the prevailing rates, currently 20%.

ARRANGE A FREE INITIAL APPOINTMENT

To obtain a quote tailored to the circumstances of the Estate you are involved with, you should arrange an initial 30-minute FREE APPOINTMENT with one of our experienced team. We can arrange a face-to-face appointment or Zoom call to go through all the estate details – assets, liabilities, beneficiaries, income details, taxation matters etc. We will explain the legal and taxation obligations an Executor/Personal Representative has and explain how you can protect yourself from personal liability.

These appointments are invaluable and by far the best way for you to understand what administering an Estate involves. They also give you the chance to ask any questions you may have. Should you instruct us, you will have a dedicated member of the team as your point of contact and the person who will deal with the administration.

INSTRUCTING PRH – WHAT WE WILL DO (Estate where full IHT return not required)

• Identify solely and jointly held assets (including accrued interest/income/dividends), liabilities, lifetime gifts and ascertain their values for probate purposes;
• Preparation of the Legal Statement in order to apply for probate;
• Gather required documents and preparation of relevant HMRC IHT paperwork for Transferable Nil Rate Band (if required);
• Finalise income tax to the date of death and previous tax years as may be required by HMRC (this is a legal requirement an Executor/Personal Representative has). This will include:
• Correspondence with relevant sources of income such as private/work pensions, the DWP, employers, dividends etc
• Correspondence with HMRC
• Protect assets as required – e.g. arranging buildings insurance;
• Ascertain the entitlement of beneficiaries in a Will or those benefitting under the rules of intestacy;
• Correspondence with beneficiaries as required;
• On receipt of the Grant of Probate cash in or transfer assets as required;
• Settle estate liabilities;
• Settle estate expenses (these are not the same liabilities);
• Finalise income tax for the administration period of the estate. This is an essential role as an estate does not have a Personal Allowance. In most cases all income is received gross of tax though is taxable at either 20% or 8.75% (dividend rate).  It is the Executors/Personal Representatives responsibility to ensure the correct income tax ascertained and paid to HMRC;
• Consider Capital Gains Tax (CGT) position of the estate and complete returns as required;
• PRH are able to advise on and implement solutions to minimise the impact of income tax and CGT;
• Arrange interim distributions to beneficiaries in line with their entitlements and ensure the estate is not over-distributed;
• Provide beneficiaries with required HMRC R185 form(s) confirming the proportion of income received, and tax paid, to assist with their own income tax position (beneficiaries may be able to claim back income tax paid, or may have additional income tax to pay);
• All other associated advice as may be necessary as part of the administration of an estate;
• Prepare final estate accounts for approval by the Executors and Residuary Beneficiaries. The accounts will differentiate between capital and estate income, essential to assist with the income tax obligations an Executor has;
• Arrange final distributions to beneficiaries in line with their entitlements.

INSTRUCTING PRH – Estate where full IHT return (IHT 400) is required and IHT liability may be required

The work as noted above will still be required.  In some cases an IHT 400 is required even when IHT is not payable.  It is the Executors’ responsibility to ensure the correct return is submitted. An incorrect submission, or submitting an incomplete IHT 400, will delay the probate application and Administration of the Estate and can lead to HMRC penalty and interest charges.

The additional work would be:

• Preparation of the IHT 400 and supplementary pages as required. Including detailed asset and liability information as required by HMRC;
• Ensuring correct valuing methods and evidence is submitted as required e.g. correct valuation method for stocks and shares, and correct valuation criteria for personal items and property;
• Submission of correct paperwork to apply the Residential Nil Rate Band (if applicable);
• Ensure all available IHT reliefs, allowances and exemptions are correctly applied – e.g. charitable exemptions, Business and Agricultural Property Relief (if applicable);
• Ascertain lifetime gifts and apply available allowances (if applicable)
• Ascertain IHT liability;
• Arrange payment of all or required initial proportion of IHT due so probate can be applied for;
• Adhere to strict HMRC time-frames for submission of IHT 400 and payment of IHT to avoid late penalty payments and interest charges;
• Deal with HMRC enquiries as they arise e.g. – correspond with District Valuer if HMRC query property valuation;
• Prepare and submit Corrective Account if values of assets/change to allow possible refund or additional payment of IHT;
• Prepare and submit relevant IHT form if loss on sale of property or shares to claim IHT refund;
• Complete CGT returns if sale of assets such as property and shares result in a taxable gain. It is the Executors responsibility to ascertain the taxable gain and settle this with HMRC;
• Prepare and submit Clearance Application to confirm IHT paid correctly so estate can be distributed.

HOW LONG DOES IT TAKE TO ADMINISTER AN ESTATE?

As with providing quotes for the charges of administering an Estate, it is difficult to anticipate exactly how long an estate will take to complete.  Generally speaking, for an estate similar to the example below, it will only be possible to take steps to wind up the Administration of the Estate after the property is sold.  On average, it would be expected that such an estate would take between six and nine months to complete.

HELP US TO HELP YOU

The more details you provide at the initial meeting, the more accurate our fee and time estimate will be. You should provide:

• Details of all assets, liabilities and income;
• Details of any gifts made by the deceased;
• Up to date details of beneficiaries named in the Will;
• Highlight any issues which you believe may arise with other beneficiaries, or family members, which have not be included in the Will.

FACTORS WHICH MAY IMPACT ON FEES AND TIMESCALES?

There are many factors which may arise that can delay administering an estate, which may also impact on our fees.  In many cases our knowledge and expertise means we can pre-empt these and take these factors into consideration from the outset.  The more detail we have at the beginning, the more accurate our advice and precise our fee and timescale quotes will be.

There is always a chance unforeseen matters arise.  Thankfully, if this does occur, our experience means we understand what is required to help resolve such matters as quickly as possible.  It also means we can be immediately clear what, if any, changes this may make to fees and timescales.

Intestacies

An intestate estate is one where the deceased did not leave a Will.  While many intestate matters will be similar to the example below, it is likely additional work will be required.  For example, more work is likely in order to ascertain all the beneficiaries and calculate their shares.

Intestate estates often take longer as there is no authority to deal with certain assets until the Grant is issued.  For example an Executor(s) of a Will can begin marketing a property for sale straight away if they wished; this is not the case with an intestate estate.

Foreign Assets

Foreign assets need to be valued for England & Wales probate and Inheritance Tax.  Clearly this may take some time to arrange.

Charitable Beneficiaries

Charities rely heavily on legacies under Wills.  They understand and will always look to protect their rights as beneficiaries. Charities request details of the assets and liabilities in the estate from the outset and as the administration progresses.  They expect to be consulted on the sale of property and, in some cases, will want to give their approval to an agreed sale.

As charities have their own taxable status, they insist that all relevant taxes when dealing with an estate are dealt with correctly.  This includes IHT, to which their proportions are exempt, as well as income tax and capital gains tax.  Charities can reclaim income tax that is paid by the estate.  Executors must calculate and pay the income tax due to HMRC but must also account to the Charities what income tax has been paid as part from their income entitlement from an estate so they can claim it back.

Charities will expect assets to be appropriated to them to avoid CGT.

Charities will also expect to receive detailed estate accounts towards the end of the administration for them to approve before the Administration of the estate is completed.

DWP Recovery from Estate Claims

If the deceased was in receipt of a means tested benefits, such as Pension Credit, the DWP will make enquiries to ensure the deceased was correctly entitled to this benefit. The DWP may request we obtain historical data from the deceased’s banks etc. This can delay completion of the estate and lead to more time spent dealing with the matter.  These claims often take many months to resolve.

HMRC

HMRC may raise queries regarding Inheritance Tax. These could relate to the valuation of assets such as property or shares, claims for exemptions, reliefs or allowances, details of lifetime gifts and lifetime Trust arrangements.

HMRC can request full income tax returns be prepared for the period to the date of death as well as the administration period of the estate; both of which are the Executors responsibility. At the very least Executors need to account to HMRC for income tax to the date of death and the administration period.

If capital assets are sold as part of the administration, Capital Gains tax may be payable from the estate.

Disputes & Claims against the Estate

If disputes arise between Beneficiaries, or other parties, then time will be expended to resolve matters and to defend or admit claims against the estate.

In some cases individuals bring claims against an estate if they believe they are inadequately financially provided for.  Such matters require additional work and will delay the administration.

Disposal of Assets

In some cases property sales may fall through, or, due to the type of property the property may be difficult to sell.

The sale or transfer of shares and similar investments can occasionally be difficult to complete if all the paperwork is not present, or up to date and duplicate documentation is required.

DISBURSEMENTS & OTHER LIKELY PAYMENTS

In addition to our fees, there are third party disbursements and other payments payable from the estate. These will, or may, include:

• Probate Court Fee - £273 plus £1.50 per additional copy of sealed Grant of Probate obtained;
• S27 Trustee Act Notices – placing adverts for creditors in the London Gazette and a local newspapers (to protect Executors/Personal Representatives).

–  fees vary but usually in the region of £250 inc VAT at 20%.

• Bankruptcy Searches on beneficiaries (Executors/Personal Representatives have a duty to carry out these searches before distributing the estate).

–  £2.00 + VAT (£0.40p) to total £2.40 per search

• Estate Agent fees;
• Conveyancing Fees;
• Ongoing Building Insurance;
• Ongoing utility fees;
• Professional asset valuation fees as may be required;
• HMRC;
• Inheritance Tax;
• Income Tax.

ACCREDITATION & REGULATION

Not all providers of this service are regulated to the same extent as PRH Solicitors, or have approved high standards of client care and file management.   PRH Solicitors are Lexcel accredited, which involves an annual assessment to demonstrate we reach and maintain high standards.

PRH Solicitors are regulated by the Solicitors Regulation Authority (SRA).  In the unlikely event that there are issues that cannot be resolved with PRH matters can also be taken to the Legal Ombudsman. While we hope you will never have to utilise either of these organisations, it demonstrates the tight regulatory framework we operate in, which does not apply to all providers of Probate and Administration of Estate Services.

FEE EXAMPLE – HOURLY RATE

As all estates are different, the only way we can provide an accurate quote is by arranging a FREE APPOINTMENT with us.  However, we include a broad example below.

Our hourly charge out rate is £185 plus VAT (£37) to total £222 as of January 2020. This rate is adopted for time spent on work spent on the estate be it in meetings or correspondence.

Example Estate consists of:

Assets

• Property valued at £180,000;
• 4 Bank Accounts with two different banks totalling £100,000;
• 2 Life Insurance Policies totalling £10,000;
• 2 share-holdings totalling £10,000;
• Possible miscellaneous refunds – e.g. Council Tax, utilities etc;
• DWP State Pension;
• Private Pension;
• Work Pension.

Liabilities

• Funeral Costs of £3750;
• Possible miscellaneous liabilities – e.g. council tax, utilities etc.

Will

• Appoints two Executors;
• 2 cash legacies to charity of £5,000 each;
• 2 cash legacies to friends of £2,500 each;
• Residuary estate shared equally between 2 beneficiaries.

We would anticipate the time required to deal with an estate such as this, acting as required and details under our Instructing PRH section, would be approximately 12 hours, which would lead to fees in the region of £2,100 plus VAT at 20%. This quote assumes no other complicated matters arise e.g. additional assets located, claims against the estate either by individuals or organisations and that dealing with the asset holders, income providers, HMRC property sale/marketing etc proceeds smoothly.

If additional time is required, then we would advise you of any changes detailing the reason and impact this will have on the fees.

FEE EXAMPLE – FIXED FEE

Using the same example above, and the same required work as details under Instructing PRH, this fee option would likely lead to a fixed fee in the region of £2,500 plus VAT at 20%.  The fixed fee reflects the possibility that additional issues may arise in the course of the administration.

DO PRH CHARGE A PERCENTAGE FEE BASED ON THE VALUE OF AN ESTATE?

Some solicitors and other providers of Administration of Estate services only charge based on a percentage of the gross value of an estate.  The rate varies but is often between 1% and 2%.   PRH Solicitors do not routinely charge a percentage fee as it does not accurately reflects the work that is required.   Using the same example above, a 1.5% fee would lead to a fee of £4,500 plus VAT of 20%. If an additional asset of £50,000 came to light, then this would lead to an additional charge of £750 plus VAT at 20%, making a final fee of £5,250 plus VAT at 20% for only a small amount of extra work.

Only in rare cases will we charge an additional percentage fee as well as our time based fees.  This charging structure may be used if PRH Solicitors are at a greater risk when administering an estate.  Such circumstances would include having to undertake the gathering of estate asset and liability information by searching property etc, overseeing clearance of property, locating beneficiaries, registering the death, arranging the funeral, if there is limited or no family involvement, if there are a high number of beneficiaries (particularly charitable) and if we are Executors.  These cases are extremely rare but if they do arise, PRH Solicitors may charge an additional percentage fee of in the range of 0.5% to 1% of the gross value of the estate, in addition to the time charges. Such decisions would be taken after consideration of factors and immediately discussed and communicated with interested parties/beneficiaries.

GRANT OF PROBATE APPLICATION ONLY SERVICE

We are able to offer in some cases a “Grant only” service.  This option can be utilised where records are in good order and it is possible to identify assets and value of the estate at an early stage.

Instructing us on this basis is limited to preparation of the relevant IHT account, the Court papers and correspondence with the Probate Registry.  This does not include administering the estate or the service detailed above. Our fees for this service are currently fixed:

• Excepted Estate -           £600 plus VAT (£120) to total £720.
• IHT 400 required -           £1,000 plus VAT (£200) to total £1,200.

Disbursements

• Probate Court Fee of £155 plus £1.50 per additional copy Grant.