When someone in the UK dies, then their property is distributed. This distribution might either take place according to a standard process, or it might be informed by the specific wishes of the deceased, laid on in the will.
To deal with the property of a deceased person, you’ll need a legal right known as probate. This is not required in every case; in cases where the estate in question consists only of savings rather than solid assets, it tends not to be needed. Different financial institutions (like banks) will also impose different rules concerning probate.
How long does it take to get probate?
If you’re applying for probate, you should expect to wait for between nine and twelve months. It’s generally inadvisable to make plans for the money, or to put any property up for sale, until you’ve got probate secured.
If you want to bridge this gap, then you might look into specialised probate loans, a form of bridging finance. This means taking out a loan during probate, which you’ll pay back once your inheritance comes through.
When you’re making an application for this loan, you’ll need to calculate the amount that you’re going to inherit. This will tend to mean getting a valuation for any properties.
HMRC advises that a professional valuation should be obtained for assets worth more than £1,500 – unless the total value of the estate is less than £250,000, or the entire estate is passing to just one person. In this latter case, there’s no real possibility of a dispute, and so you can get away with a little more uncertainty.
What tax would I pay?
Inheritance Tax is a tax on the estate of someone who has passed away, and it’s usually paid before the estate is distributed to the beneficiaries.
It’s important to note that tax laws can change, so it’s recommended to consult with a tax professional or solicitor who is familiar with the current Inheritance Tax regulations in the UK.
If you’ve recently inherited a property and want to understand the financial implications, use this calculator to find out how much inheritance tax you will pay which is an essential tool to complement everything you need to know about inheriting a property.
Who is in charge of applying for probate?
If there is a will, then it will tend to name an executor. This is the person who’ll assume responsibility for assets being distributed. It’s the executor who needs to apply for probate. If no one is named in the will, or no will exists, then the closest living relative might apply, instead.
Support services like My Probate Partner provide guidelines to help you settle your estate more quickly and easily.
What about inheritance tax?
Estates worth more than £325,000 will tend to be subject to Inheritance Tax, which sits at 40% of everything above the threshold. If you feel that you’re not in danger of passing the threshold, then you might feel more comfortable with the estate agent’s informal valuation. More valuable properties might look into getting a formal valuation from a chartered surveyor.
If the property is sold for more than the value of the probate, then you might be at increased risk of being taxed. For this reason, an accurate valuation is a worthwhile thing to have. On the other hand, if the property ends up selling for less than the valuation, then you might be due a debate. This will tend to apply only if you’re selling within four years of the death.
Can I sell the property?
You cannot sell a property for which you don’t have probate – but you can put it on the market. Make sure that the would-be buyer knows your situation, and you’ll be at lower risk of them pulling out later on.
