Personal Finance: The art of the estate

Where there's a will, there's a way to save a small fortune. By John Andrew
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Indy Lifestyle Online
A FEW hours of my time undoubtedly saved my mother some pounds 2,000 when, earlier this year, my father passed away and I dealt with his estate.

To hand the matter over to a professional was certainly tempting. But Marlene Garcia, the author of How to Write A Will and Gain Probate, is adamant that, in the majority of cases, there is no need to involve a professional: "Anyone with a logical mind who is methodical can deal with most estates."

Help should be sought where there is a business, trusts, a lost or vaguely worded will, a possible dispute, insolvency, unknown debts and land with unregistered title or where any beneficiaries are under 18 years. As Richard Bark-Jones, the chairman of the Law Society's wills and equity committee, points out: "[The] difficulty is knowing when there are difficulties."

Thankfully most estates do not have complications. Probate Registries provides a pack for those who do not want to involve a professional. Included is the guide How To Obtain Probate - A Guide For The Applicant Acting Without A Solicitor, which answers that vexing question: what is probate?

"When a person dies, somebody has to deal with the estate (the money, property and possessions left) by collecting in all the money, paying any debts and distributing the estate to those entitled," the booklet explains. "The term probate often means the issuing of a legal document to one or more people authorising them to do this. The Probate Registry issues the document, called a `grant of representation'."

The guide explains that the grant is proof that the person named in it is entitled to collect in and distribute the estate. If there is a will with named executors, they are the first people entitled to a grant. However, if they are unable or unwilling to apply or if there is no will, basically up to four relatives may apply as personal representatives (PRs).

There are a few basic steps to follow in order to obtain a grant:

l Get the relevant application forms from your local Probate Registry.

l You need to choose where you wish to be interviewed.

l Now you can complete the application forms.

l Return them with the death certificate and the original will (if there is one) to the appropriate registry

l Attend an interview.

Two forms have to be completed for the Probate Registry. The first simply requests details about the deceased and the PRs. The second is an account of the estate.

Two account forms are supplied. One is for estates which exceed the inheritance tax threshold, currently pounds 231,000. In such cases it is advisable to seek guidance from a solicitor or tax consultant to see if there are ways of saving tax.

All you do is list the value of assets and sums due to the deceased at the date of death and deduct debts, such as funeral expenses.

As accrued interest on savings accounts has to be included at the date of death, this means writing to banks and building societies to request the information. A certified copy of the death certificate has to be forwarded with the request.

So, what do professionals charge? In Marlene Garcia's locality, the hourly rate varies between pounds 80 and pounds 120 for a solicitor and pounds 60 to pounds 80 for the solicitor's probate clerk. A survey last autumn by the Consumers' Association revealed rates ranging from pounds 51 to pounds 135.

"That is not the end of the matter," she adds. "There is also a pounds 9-pounds 12 charge for each letter written and pounds 3-pounds 4 for the response received." She cites a solicitor charging pounds 3,100 plus VAT for dealing with probate for an estate comprising four building society accounts, two pensions, the usual bank accounts and a half share in a flat. The Law Society says that differences in rates are down to location. Small provincial firms charge less than city practices. Its explanation is that it is very difficult to gauge how long it will take to deal with a particular estate. As a rule of thumb, Mr Bark-Jones considers 2.5-3.5 per cent of its value is reasonable.

So why do people hand over a simple matter to a solicitor? "At the time, they can be too grief-stricken to do anything else. Most people also do not realise how easy it is to deal with it themselves," says Ms Garcia. Mr Bark-Jones adds that with a solicitor you are paying for stress to be taken away.

Those people who do consider the DIY approach may be put off by the need to attend an interview. However, the aim is merely to clarify any points requiring an explanation and to swear that the account of the estate is true. It is not, as a rule, a daunting experience.

For those of you who are not convinced of this, Mr Bark-Jones suggests using a member or a friend of the family for the routine ground work and instructing a solicitor when legal advice is required, or just to obtain the grant.

`How to Write a Will and Gain Probate', written by Marlene Garcia, is published by Kogan Page at pounds 8.99