The probate process isn’t easy, especially when you are trying to cope with the loss of a loved one.
If you have never applied for probate before, you might be overwhelmed by the steps involved, which can result in making mistakes.
To avoid wasting time, you need to make sure you get things right the first time around.
Our experts have outlined the key things to watch out for:
Failing to value the estate correctly
The first step in the process is to value the estate. You need to get this right to prevent issues further down the line, such as paying an incorrect amount of Inheritance Tax (IHT).
A common misconception is that the estate comprises of only money and property. But any possessions that were owned by the deceased also contribute to the estate.
If the individual gave away any gifts in the seven years before their death, this must also be added to the value of the estate.
Another detail that is often missed is any debts that the deceased owed. These must be accounted for in the valuation.
At Rotherham Taylor, we prepare a valuation like a balance sheet, to ensure we cover everything the first time around.
Miscalculating Inheritance Tax
Even if you have valued the estate correctly, there is still room for error when calculating whether you owe IHT.
You don’t want to be paying IHT if you don’t have to. But if you do owe IHT, underpaying can lead to penalties.
Knowing whether IHT is due is not as easy as it may seem, particularly if the Residence Nil Rate Band is applied.
If the deceased owned a business, or a share of a business, you might also be entitled to Business Relief for Inheritance Tax.
You could be entitled to receive Business Relief of either 50 per cent or 100 per cent on some of the estate’s business assets.
To give you the peace of mind that you need, it is best to consult a tax expert at this stage.
Keeping estate funds in personal bank accounts
Whilst you might not plan on keeping the money in your bank indefinitely, you shouldn’t deposit any money from the estate into your bank account until you receive a Grant of Probate.
Once you do have the grant, it might be worth setting up an executor’s bank account for the estate’s funds.
This will make it easier to keep track of funds when liquidating the estate, such as money from a property sale.
You need to also make sure that all debts have been paid, including any Income Tax and Capital Gains Tax owed to HMRC.
How can Rotherham Taylor help?
We can guide you through the probate process and make sure these errors are avoided.
As one of a small number of accountancy practices in the UK to be licensed to provide probate services, we can advise on tax matters and help to obtain the Grant of Probate.
