What is probate?

A grant of probate is the legal permission that is needed in order to access and distribute someone’s estate when they die. 

On death, assets (property, pensions, investments and savings) can be frozen. In order to free up these assets (the estate), probate is needed.

Contrary to popular belief, any inheritance tax due on an estate needs to be paid before a grant of probate gives access to the deceased’s estate. 

In fact, the court will not grant probate until it receives a stamped receipt from the tax office showing that the tax has been paid.

Different financial services institutions have different limits that dictate when probate is required, and this will depend on the value of the assets in question. 

In many cases, a financial firm will need sight of probate before they can release someone’s holdings. 

Tip

One solution that would make life easier would be for anyone whose estate is likely to be subject to IHT to take out a life insurance policy and put that policy in trust with their executors as beneficiary.

They could set the sum assured at the level of the expected tax bill and due it being in trust, the proceeds would go straight to the executors without needing to go through probate, allowing them to pay the IHT.