How much money can you have before probate? Understand probate meaning, probate rules, probate fees, the probate threshold 2020, grant of probate & more
UK Probate: How Much Money before a Probate is Required?
As a general rule, probate is required in the UK if a deceased individual’s estate is worth over £5000. If you’re in the position where you now require a probate, the next few points will help you understand the process ahead of you.
What is Probate?
Probate is the legal and financial process to follow after someone has died.
The probate process includes:
- identifying all assets and liabilities to determine the value of the estate
- proving the will to be valid in probate court
- identifying the beneficiaries and executor of the will
- applying for letters of administration, if there is no will
- paying any applicable inheritance tax
‘Probate’ is also the name for the legal document that is used to appoint executors of the will.
Who has to Pay Probate?
The executor of the will initially pays the probate fees. The executor of the will is the person who is obligated to carry out the instructions of the deceased person’s will. The first step they take is to fill in the probate forms and send them to the local Probate Registry. The probate forms to fill in are the PA1 form for England, Wales and Northern Ireland. For Scotland, the required form is the C1.
If the estate is worth £5000 or more, there will be probate fees of £215. The executor of the will is responsible for paying for this cost of probate. Once the estate is settled, the executor of the will can be reimbursed this fee and any other tax they have paid on the estate’s behalf. If an executor needs financial assistance to cover the cost of the fee, they may fill out an EX160 form.
How Do You Know if Probate is Necessary?
If the deceased’s individual estate is valued at more than £5000, a probate application is most likely necessary. However, this ultimately depends on the bank’s threshold for probate.
What is the threshold for probate?
The threshold for probate refers to the amount a bank is willing to release before seeing a grant of probate.
The official probate threshold 2020 for the different banks and financial institutions in England and Wales can vary between £5,000 and £50,000.
Here’s a list of probate thresholds from the most popular financial organisations:
Aviva – £50,000
AXA – £10,000
Bank of Ireland – £10,000
Bank of Scotland – £50,000
Barclays – £50,000
Birmingham Midshires – £25,000
Britannia – £30,000
Cheltenham & Gloucester – £25,000
Co-op Bank – £30,000
First Direct – Decided on a case-by-case basis
Halifax – £50,000
HSBC – Decided on a case-by-case basis
Lloyds TSB – £50,000
M&S Money – £15,000
Nationwide – £50,000
Natwest – £25,000
NS&I – £5,000 to £15,000 depending on the will and the number of executors
Post Office – £10,000
Royal Bank of Scotland – £25,000
Sainsbury’s Bank – £20,000
Santander – £50,000
Skipton Building Society £15,000
Tesco Bank – £25,000
Virgin Money £35,000
Woolwich – £15,000
Yorkshire Building Society – £30,000
Each financial institution also has different rules regarding the threshold. Sometimes, the threshold refers only to the amount held in the account. Sometimes, it relates to the overall estate (including everything the deceased person owned).
How do you avoid probate?
Probate is not required if the estate is deemed a “small estate” or if it consists of only:
- life insurance policies or pension benefits
- property or bank accounts jointly-owned with another living person (like a spouse)
- cash and possessions, such as cars or jewellery
- if the deceased’s debts are of greater value than their assets
One way to avoid the need for probate is by making use of trusts. If the deceased placed their assets into trusts, this means they are placed outside of the estate, and are controlled by the trustees. This is often why life insurance policies are held in trusts. It means that the assets (which includes properties) can be paid directly to a beneficiary, without requiring probate. Typically, this is also done so that the beneficiaries can avoid Inheritance Tax.
How Does it Work Without a Probate?
If a bank does not require you to supply a grant of probate to access the assets, they will still need to see a couple of documents before you can access the accounts and the funds. The two documents you must bring to the bank where the assets are held are:
- the death certificate
- proof of identity
Inheritance Tax when probate is not required:
Cases where probate is not needed often overlap with cases where Inheritance Tax does not need to be paid. An example of this would be when the estate and assets pass directly to a spouse, or the value of the estate is below £5000. However, if you do not require a Grant of Probate, but the estate is worth more than £5000, you might still need to pay inheritance tax to HMRC.
In these such instances, you might want to contact a professional to help you deal with Inheritance Tax. At Fenix Funeral Directors (insert hyperlink), we are always available to give advice, recommendations and legal guidance, so you can navigate this process with ease. For many years, we have successfully helped our clients secure their inheritance through grant of probate, as well as when probate is not required. We also have dedicated Inheritance Tax consultants available for your ease.