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Why Use an Accountant for Probate Proceedings

Gary Green
Gary Green
August 26, 2022

When someone dies it can be a difficult time both emotionally and practically. Although you are in the process of grieving, there is a lot of paperwork to sort and financial affairs to finalise. This is generally referred to as the process of obtaining Probate.

While it is usually possible to handle Probate yourself, many people are turning to a chartered accountant to manage the process. There are many advantages to using a chartered accountant and tax adviser for Probate, and we are going to look at that in more detail below.

The Probate Process

If you have never been through the process yourself, you may only have a vague understanding of what probate is and how it works. Before we run through the reasons why an accountant can help, it might be useful to first describe the Probate process.

Probate simply means the administrative tasks of collecting together the estate of the deceased, ascertaining its assets and liabilities, and distributing the estate in accordance with the wishes of the deceased. As part of this process, any tax liabilities will also need to be calculated and settled.

Once the value of the estate has been assessed and any inheritance tax liability calculated, a Grant of Probate can be applied for. This is a legal document which appoints personal representatives to deal with and manage the estate.

A Grant of Probate is sometimes referred to colloquially as “proving the Will”. If no Will was left by the deceased, a different type of document can be obtained which serves the same purpose. This is known as Letters of Administration, but the general whole process is still referred to as probate.

Another generic term which refers both to a Grant of Probate and Letters of Administration is a Grant of Representation.

Applying for these documents is not a quick process. It can take a considerable length of time to value the estate (both assets and liabilities), and the process of calculating tax can be onerous. This information is required before applying for Probate. The estate is also required to settle its IHT bill before Probate is granted; if all of the money is tied up in assets, this can be difficult.

Once Probate is granted, the estate is distributed in accordance with the Will of the deceased, or in line with intestacy laws. Strict records must be kept about the distribution of the assets in case of any disputes or later challenges.

An executor can be held personally liable for any mistakes which are made so it is essential that the estate is dealt with correctly.

Is Probate Always Necessary?

There may be some circumstances when probate is not required, and the estate may be wrapped up more swiftly. This is often the case if the estate is small, or most of the assets are held in joint names. Assets held in joint names will simply pass to the surviving owner, without the need to go through probate.

It is important to check that any assets are definitely held in joint names and not set up as tenants in common. With the latter, both names are on the ownership but when one party dies, their share passes to their estate rather than reverting to the surviving owner.

Every organisation contacted by someone administering an estate has its own limit for paying out funds without requiring sight of the Grant of Probate. This can vary very significantly and there are no universal rules which apply. Some organisations consider the total value of the estate while others are only concerned with the amount that they are paying out.

If you do not need probate for any other purpose and one organisation is requesting it, you could ask if it is a compulsory requirement or whether they will waive it. In some cases, companies ask for probate but are willing to waive the requirement, if requested.

The Role of an Accountant

The law changed in 2014 to allow chartered accountants to provide professional services for non-contentious probate. This has meant that executors who want professional support have the choice between appointing a solicitor, a bank or an accountant.

A chartered accountant may either be appointed as a named Executor or may support the named Executor/s in their professional capacity.

It is important to note that not every accountant is licensed to provide probate services. Only chartered accountants licensed by the Institute of Chartered Accountants in England and Wales are able to provide full and regulated services. Before appointing an accountant it is therefore imperative that you check they hold a probate licence.

The role of the accountant can vary depending on what capacity they are acting in - named Executor or providing advice - and also what they are requested to do. Some simple estates where the accountant is merely providing professional guidance and is not named may not require a comprehensive suite of services. However, potentially an accountant could carry out all of the following duties:

  • Registering the death*
  • Organising the funeral*
  • Securing belongings and property
  • Notifying organisations and individuals of the death
  • Collecting the estate assets
  • Assessing and valuing the estate
  • Paying outstanding debts
  • Corresponding with estate beneficiaries
  • Preparing belongings and property for sale
  • Calculating inheritance tax
  • Applying for Probate
  • Paying inheritance tax
  • Finalising other tax affairs such as completing a final tax return
  • Checking for liability under Capital Gains and Income Tax
  • Tracking down all beneficiaries
  • Providing accurate accounts for the estate for distribution to beneficiaries
  • Distributing all assets of the estate

*if not done by the family

These duties may be simple or complicated depending on the size of the estate and the type of assets held. When acting as a named Executor the accountant will be directly responsible for carrying out the duties, including at any future date after the estate has been settled should a query arise.

Why Choose an Accountant?

Traditionally a solicitor would have been used to provide professional support for a probate application, but many chartered accountants are now licensed to provide probate services. There are many reasons why an accountant and tax adviser is best placed to help with probate, and why it is usually better to get assistance than to make an application alone.

Below are some of the most important reasons why you should use an accountant for probate proceedings.

Space to Grieve

Dealing with the loss of a loved one is never easy, and the pressures of dealing with the estate can feel like an enormous burden. There are strict deadlines which have to be met and a number of onerous duties to be carried out; this can feel too much while you are grieving.

Appointing an accountant means that you can delegate the majority of the work. Your appointed accountant will be able to handle the whole process and if they are only supporting and not the named Executor, they will be able to let you know what you need to do and when. During a difficult period, you will feel extremely grateful to have an expert pair of hands to guide you through the probate process.

Knowledge of Financial Affairs

If the deceased already had an accountant for their financial affairs, you can save a lot of time by appointing them to deal with probate (assuming they are licensed to do so). Getting to grips with the deceased’s finances can be a big task, but their accountant will already be familiar with most of the information.

An accountant will have had previous access to the deceased’s income and outgoings, and will be able to check their own records. They may also have dealt with the tax returns. All of this is valuable knowledge which will save a lot of time - and expense - when administering the estate.

Financial Exercise

In the vast majority of cases, the probate process is a financial exercise and does not require any complex legal advice. Accountants are only licensed to deal with non-contentious probate cases; if the estate becomes contentious it must be passed to a solicitor to resolve before work can be resumed by the accountant.

The processes involved in probate all centre on data, record-keeping, financial calculations and distribution of assets. These fall firmly within the natural remit of an accountant, rather than a solicitor. It therefore makes sense to use an accountant to manage the process, as they have the specialist knowledge to deal with every aspect of the finances.

This is especially true when having to submit a final tax return for the deceased which may include employment termination income and obtaining the correct paperwork from the employer, disposal of capital assets while claiming the full allowance entitlements, or whether some insurance products of the deceased is taxable or not.

There may also be ways to use a deed of variation to restructure a will to be tax efficient amongst family members or there may be tax questions about what taxes are due on assets held by beneficiaries after probate has been given. An accountant could save a lot of taxes with the right planning.

Tax Expertise

As part of distributing an estate, the subject of tax must be dealt with. Inheritance tax is payable before the Grant of Probate is issued (unless a special agreement is reached) but this is not the only tax that needs to be considered.

Capital Gains Tax and Income Tax may also need to be finalised, and this requires input from an accountant. If you have a chartered accountant and tax adviser managing probate, they have the expertise to deal with all the tax calculations themselves.

One-stop process

When a solicitor deals with probate, they typically require the services of an accountant to handle the more complex financial elements such as tax calculations. This means there will need to be multiple professionals dealing with the case, which can increase costs.

In the case of non-contentious probate, an accountant can deal with all aspects. As an accountant has the specialist knowledge required for tax and other financial calculations, there is no need to call in another expert. An accountant can offer a one-stop shop service providing you with as much support as you want during the probate process.

Additionally, we may suggest that a partner in an accountancy practice has lower charge out rates than solicitor partners.

Accuracy

Distributing the deceased’s belongings and property is a big responsibility that anyone would want to get right. If it is a large estate the job can be particularly complicated, and keeping accurate accounts of monies, items sold and what has been distributed is vital.

These records are not just important to keep everyone happy; the Executor has a legal obligation to get things right. And if there are any mistakes made, the Executor will be personally liable. This is why accuracy is imperative when dealing with an estate, and why an accountant may be better placed to handle the process.

Not only are accountants very familiar with complex financial work, they also have a professional responsibility and liability insurance.

Length of Time

Once the funeral is over, it is normal to feel a sense of closure and a desire to get back to normal life. However, the probate process is lengthy even for simple estates. Even obtaining the Grant of Probate typically takes 8-10 weeks, and the estate cannot be distributed until this has been granted.

A simple estate with few beneficiaries can take around six months to administer from start to finish. More complex estates or where there are multiple beneficiaries, it can be anywhere from a year or more to complete the task.

This means that a very significant chunk of time is required to deal with the estate, and not everyone can accommodate this easily. If you work or have other life commitments, finding time to administer the estate can be difficult, and stressful. Choosing an accountant to deal with the probate process relieves you of the burden, and you have the added advantage of knowing that the estate will be distributed as swiftly as possible.

Future Responsibility

The role of Executor may seem to be complete once all the assets are distributed and the estate is wound up. And in many cases this is true, but it is not necessarily the case.

You do not ever stop being the Executor, and if any queries arise in the future or of further assets are found, you are obliged to resume your duties. There is no way of knowing if or when this might happen, but if it does you will need to accommodate the responsibility.

It is much easier for an accountant to act on your behalf, so if further Executor obligations materialise at a later date, your accountant can deal with the work again.

Choose the Service Required

With an accountant licensed to handle probate, you have the option to use them for as little or as much of the process as you want. The accountant can act as the Executor, or they can just provide professional advice to the Executors.

You may want support from the accountant until Probate is obtained, but no assistance with distributing the estate. This may be particularly the case if the estate is simple. Conversely, you might require the accountant to provide a more comprehensive service from start to finish. This could involve taking decisions about what assets to sell on behalf of the estate and the best way to handle the deceased’s belongings.

There is no right or wrong answer to appointing an accountant to handle probate, and you can specify exactly how much you want to delegate and the level of support you need.

Talk to the Probate Experts

Over the years we have handled many probate cases for our clients, and always offer a sympathy, friendly and compassionate service. To find out more about how we could help you, please get in touch today.

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