Pricing and service information: Probate

The administration of an estate can involve a wide range of issues. Each person’s estate is different in terms of the provision they make under their Will (if they have one) and the nature and value of the assets and liabilities they leave behind. We deal with a broad range of estates, from the straightforward to the very complex.

We have specialist teams who can assist on estates with international elements and those involving disputes. The relevant contacts for disputed estates are Justin Briggs, Kevin Kennedy and Suzanne Padmore and for international estates Suzanna Harvey, Edward Hayes and Rachel Pinn.

General pricing

We charge based on an hourly rate which varies depending on the member of staff dealing with your matter. Our lowest hourly rate is £180 plus VAT (at a rate of 20%) and our highest hourly rate is £680 plus VAT (at a rate of 20%). The seniority of the members of staff dealing with you case will depend on its complexity. We will discuss this with you when you instruct us. 

We will always provide you with a pricing proposal at the outset which clearly shows what work will be included in and excluded from the estimate given and what assumptions have been made about the estate and we will update you throughout the administration if circumstances change and the estimate needs to be revised. The pricing proposal also sets out which members of the team will be dealing with the administration and at what hourly rate.

Broad summary of the procedure

Step 1: summary of assets and liabilities

Generally the first step is to establish the exact nature and value of the assets and liabilities in the estate and how they are held (i.e. in the sole name of the deceased or in joint names with someone else). The extent to which exact valuations are required depends on the inheritance tax position.

Step 2: inheritance tax

Once a summary of the assets and liabilities is available it is possible to assess whether a full inheritance tax return (the IHT 400) needs to be submitted to the Inland Revenue and whether any inheritance tax is payable.

If the assets in the estate (being any assets in the sole name of the deceased, and his or her share of any jointly held assets) amount to a total in excess of £325,000 then it will be necessary to complete and submit an IHT 400. An exception to this may apply if an estate is less than £3 million and passes mainly to a spouse or charity. In all other cases it will be necessary to complete and submit a simpler tax summary.

The IHT 400 details the value of all of the assets and liabilities of the estate as at the date of death. In some circumstances estimated values can be used but generally formal valuations are required.

If the assets in the estate amount to a total in excess of £325,000 then the estate is potentially liable to pay inheritance tax on the amount over and above this sum at 40%. Depending on the nature of the assets in the estate and the status of the beneficiaries, there may some exemptions and reliefs which reduce or even negate the inheritance tax liability. Common examples are the spouse and charitable exemptions, and agricultural and business property reliefs. Full details of any claims for such reliefs need to be provided up front in the IHT 400.

Step 3: application of the grant of representation

The Grant, in essence, provides proof that the people named on it are the appropriate people for asset holders (such as banks) to deal with in respect of the deceased’s estate and to pay out to.

Once any inheritance tax liability has been paid an application for a Grant can be made.

Who applies for the Grant depends on whether the deceased left a Will appointing executors or not. If no Will has been left the deceased is said to have died intestate and we can advise further on who is entitled to take out a Grant and ultimately who is entitled to benefit from the estate.

Step 4: collecting in the assets and paying the liabilities

Once a Grant has been issued the executors can close any accounts, sell any investments they wish to and generally collect in the assets. From this pool any liabilities, expenses and legacies can be paid.

Step 5: finalising the estate

The executors are liable to income tax and capital gains tax in the same way as an individual. Tax returns covering the whole period of administration will therefore need to be submitted and any tax liability settled before the estate is distributed.

Estate accounts should be prepared on behalf of the executors. These detail all the assets and liabilities as at the date of death, the movement of these and all administration expenses, leading to the final totals available for distribution.

Typical examples

The information set out below is intended to illustrate our likely charges in respect of three typical examples of UK based estates based on our experience but this is not intended to replace the detailed pricing proposal above. 

Simple UK estate

We anticipate that an estate of the following nature would cost between £12,500 and £17,500 plus VAT (at a rate of 20%). This excludes the cost of selling the property or any first registration with the Land Registry.

The circumstances are:

• There is a valid Will (no codicils) leaving the estate to immediate family members only.
• There is one residential property.
• There are bank accounts but no shareholdings.
• There are no disputes between relevant parties or claims against the estate.
• There is no inheritance tax due and no need to submit a full inheritance tax return to HMRC.
• There are no income tax or CGT reporting requirements.
• There is no requirement for any formal financial accounts.

Likely disbursements (other third party charges) charged in addition are:

• Probate application fee of £300. This is currently a flat fee to include 1 official copy of the Grant of Probate, additional copies are priced at £1.50 each. 
• Statutory Advertisement Fees between £150 and £300 plus VAT (at a rate of 20%). The placing of these adverts helps to protect the Executors against any future unknown creditors.

Likely timescale

On average simple estates of this nature are dealt with within 6 months of instruction. Typically obtaining the Grant takes 2 to 3 months and collecting in all of the assets takes 1 to 2 months. Once this has been done we can distribute the assets which can normally be done within a month.

Possible factors which could increase costs:

• The number of assets within the estate.
• Issues arising relating to the occupation of the property.
• The potential reclaim of allowances from the Department of Work and Pension.
• HMRC enquiries regarding income tax or tax credits.
• Any delay in the provision of information.

Medium UK estate (chargeable to IHT)

We anticipate that an estate of the following nature would cost between £25,000 and £40,000 plus VAT (at a rate of 20%). This excludes the cost of selling the property or any first registration with the Land Registry

The circumstances are:

• There is a valid Will with up to two codicils which include a number of specific and cash legacies.
• There is one residential property.
• There are bank accounts.
• There are investments managed through a stock broker’s nominee name.
• There are insurance policies and bonds.
• There are no disputes between relevant parties or claims against the estate.
• There are no associated trusts.
• Inheritance tax is payable as the value of the assets exceeds the available allowances which include a transferrable nil rate band and residence nil rate bands and a full inheritance tax return needs to be submitted to HMRC.
• A Trusts and Estates income tax return will need to be filed reporting the income and gains for the period of administration.
• Full Estate Accounts are required.

Likely disbursements (other third party charges) charged in addition are:

• Probate application fee of £300. This is currently a flat fee to include 1 official copy of the Grant of Probate, additional copies are priced at £1.50 each.
• Statutory Advertisement Fees between £150 and £300 plus VAT (at a rate of 20%). The placing of these adverts help protect the Executors against any future unknown creditors.
• RICS Property Valuation Fee between £750 and £1,250 plus VAT (at a rate of 20%).
• Share Valuation Fee between £200 and £500 plus VAT (at a rate of 20%).

Likely Taxes

An estate of this nature is likely to include:

• A liability to inheritance tax. The exact amount due depends completely on the circumstances and we will provide you with a clear calculation once all of the information is available.
• A liability to income tax and capital gains tax. Executors are responsible for reporting to HMRC for all estate income and capital gains from the date of death to the date the administration is complete. Most income is received gross and Executors are liable to pay basic rate tax at 20% on the gross income received. They are also liable pay capital gains tax on all capital gains at a rate of 20% except for gains relating to property which carry a rate of 28%. We will calculate this for you and report it to HMRC unless agreed otherwise.

Likely timescale

On average an estate of this nature takes about 12 to 18 months to administer. Typically obtaining the Grant takes 4 to 6 months as exact valuations of all assets and liabilities need to be obtained. Collecting and distributing all of the assets can take between 2 to 3 months depending on the wishes of the residuary beneficiaries and any tax considerations. It often takes many months to agree the inheritance tax with HMRC who have in recent years been slow to process returns and this often delays the final administration of estates.

Possible factors which could increase costs:

• The number of legatees and compliance issues (we are now required to obtain identity information for all beneficiaries).
• Delayed communications from HMRC regarding the IHT.
• The existence of nominations in relation to life policies.
• Collating information for pre-death income tax reporting and a complex income position with any foreign income.
• Lengthy consideration of specific assets to be transferred to beneficiaries and the tax implications.

Complex UK estate

We anticipate that an estate of the following nature would cost between £50,000 and £100,000 plus VAT (at a rate of 20%). This excludes the cost of selling the property or any first registration with the Land Registry.

The circumstances are:

• There is a valid Will with up to two codicils which include a number of specific and cash legacies.
• There is residential property and land.
• There is a family partnership or business.
• There are bank accounts.
• There are investments managed through a stock broker’s nominee name.
• There are insurance policies and bonds.
• There is a life interest trust which has come to an end on death.
• There are no disputes between relevant parties or claims against the estate.
• Inheritance tax is payable as the value of the assets exceeds the available allowances and claims for agricultural and business property relief can be made. A full inheritance tax return needs to be submitted to HMRC.
• Information will need to be provided to the family accountants for them to prepare and file the income and gains of the estate for the period of administration.

Likely disbursements (other third party charges) charged in addition are:

• Probate application fee of £300. This is currently a flat fee to include 1 official copy of the Grant of Probate, additional copies are priced at £1.50 each.
• Statutory Advertisement Fees between £150 and £300 plus VAT (at a rate of 20%). The placing of these adverts help protect the Executors against any future unknown creditors.
• RICs Property Valuation Fee between £3,500 and £7,500 plus VAT (at a rate of 20%).
• Share Valuation Fee between £200 and £500 plus VAT (at a rate of 20%).

Likely taxes

An estate of this nature is likely to include:-

• A liability to inheritance tax. The exact amount due depends completely on the circumstances and we will provide you with a clear calculation once all the information is available.
• A liability to income tax and capital gains tax. Executors are responsible for reporting to HMRC for all estate income and capital gains from the date of death to the date that the administration is complete. Most income is received gross and Executors are liable to pay basic rate tax at 20% on the gross income received. They are also liable pay capital gains tax on all capital gains at a rate of 20% except for gains relating to property which carry a rate of 28%. In certain circumstances it is more cost efficient for accountants to report to HMRC in which case we will pass on to them all relevant information which we hold. 

Likely timescale

On average an estate of this nature takes about 1 to 2 years to administer. Typically obtaining the Grant takes 5 to 6 months as exact valuations of all assets and liabilities need to be obtained. Collecting and distributing all of the assets can take between 4 to 6 months depending on the wishes of the residuary beneficiaries and any tax considerations. It often takes many months to agree the inheritance tax with HMRC who have in recent years been slow to process returns and this often delays the final administration of estates.

Possible factors which could increase costs:

• The number of legatees and compliance issues (we are now required to obtain identity information for all beneficiaries).
• Valuation issues relating to land including any differing interests in it.
• Delayed communications from HMRC regarding the IHT and any claims for relief.
• Protracted considerations relating to partnership or business issues.
• Lengthy consideration of specific assets to be transferred to beneficiaries and the tax implications.
• Onward tax planning considerations including variations and any appointments out of trust.

The Probate team

The Probate team is part of the Private Client department of Burges Salmon. It is headed by Rachel Pinn and includes Andrew Kerr, Sarah Carlyon, Tom Bradfield and Natalie Cross. Each estate is supervised by a partner, either Tom Hewitt or Jim Aveline and the level of their day to day involvement depends on the complexity of the estate and the experience of the other members of the team involved.