Friday, 9 January 2015

Doing Your Own Probate?


Thinking of Doing your Own Probate? 
Pictured are my DIY Probate files with 12 months of paperwork


A year ago this week my mother died aged 80. Today we sold the house our family (my brother, sister and me) all grew up in. Our family lived there for 50 years. This was the final step in winding up my much missed mother's estate.


You're probably reading this because you're and executor and you're in the process of or thinking about applying for probate or you're in the middle of the admin jungle.

I'd never been named as an executor before. My brother and I decided to apply for probate on behalf of all 3 of us. We would share the paperwork. It does mean 2 people have to sign forms, and we live in separate cities so there was a lot of posting things back and forth.

Solicitors can charge around £10,000 for this service. That's an eye-watering sum. 12 months on I can fully appreciate why they charge so much. It is a lot of work.


More and more UK homeowners will fall into the Inheritance Tax net. The individual tax free allowance on death is £325,000. The same allowance carries forward from a previously deceased spouse or civil partner making a total of £650,000 before any IHT is payable. However many family homes now exceed this value. Above this figure IHT is payable at 40% on the balance.

However I can honestly say I think it is worth doing it yourself. But there are a few things you must be aware of:

1. It will take a long time. 12 months is relatively quick to wind up an estate upon which death duty / inheritance tax is payable.

2. You must be organised.

3. It will be much easier if you have internet access, a PC and a printer. You'll also be making a fair amount of phone calls.

4. Some of the tasks will be upsetting. If you can share the burden it really helps. My brother and I managed to have a good laugh when things got really ridiculous. 

There is a lot of information to gather before you can even apply for probate. (These notes assume you are dealing with the last surviving resident of a property. They will be slightly different if the home is still occupied).


First Things First
During the first week after the loss of someone very close, things can be very difficult. Sleeping is hard, thinking straight is a challenge. Don't make any other big life changes! You must register the death (get a few copies of the death certificate). If you can, you should collect up any key documents - the Will (assuming there is one) Deeds to any property, tell the bank and cancel deliveries like newspapers and subscriptions. Remove any valuable items from the unoccupied house.


Notify Utilities and Insurers
The next set of tasks can be very frustrating. Some companies have 'bereavement teams' who are specially trained to help you and provide the information you need. They will help you through the 'data protection' hurdles so you can discuss the deceased account. They will possibly need to see a copy of the death certificate. O2, SSE, and Plusnet scored very highly here, as did the Telegraph and Independent newspapers which my mother subscribed to (They both refunded fees for unused subscriptions). The History Magazine wanted to see a probate certificate to refund £19! You'll need to pay any outstanding bills or collect in credit. You will be able to continue services like gas and electricity as executors. Make sure the home remains insured.


Pension Providers
Pension providers (including the state pension) need to know the date of death and receive a copy of the death certificate. 


Banks and Building Societies
The real frustration starts when you have to contact financial institutions. All the financial institutions I dealt with had different procedures and forms. 

Nat West does have a bereavement 'estates' department, but they were a nightmare. Even they agreed the service fell far short and paid me £100 compensation. They also refused to release any funds (except to reimburse funeral expenses) until probate was obtained.

Santander released a sizeable cash ISA sum on sight of the death certificate. They will release up to £25,000. Halifax still wouldn't tell me how much was in a savings account after 2 long phone calls, and a letter. I had to attend a branch appointment to discover the account held £88 (40% of which was later paid in inheritance tax).

Shares and Investments
The 2 main registrars for all shares are Equiniti and Capita. We found the former much more helpful. Capita were almost obstructive at times. Unless shares are held electronically in the CREST system you'll need to find all the share certificates. There is a charge to replace them and it can be significant.

Fund and Life Assurance providers also vary enormously in their handling of probate enquiries. Invesco Perpetual were excellent, Skandia a nightmare (they would only deal with the financial adviser even after they received the death certificate) Aviva were also difficult to deal with and their answers inconsistent. Sterling released funds immediately (which was very useful to pay the inheritance tax, more on that in a moment) while others insisted probate was obtained before funds were released.


Open an Executors Bank Account
The Nat West were keen for us to open an executors account, but due to their appalling service we went to Santander as I was a customer. Santander don't actually offer formal 'executor' accounts so we opened a current account in joint names and hoped this would work for us. It did. We needed the account to pay the utility bills and collect the funds into.


Property Valuation
You'll need a valuation for any property. We decided to hire a chartered surveyor to do this. It cost a few hundred pounds, but we decided the cost was worth it to ensure HMRC accepted the figures. On the IHT400 form HMRC ask who has provided the valuation so a qualified professional is worth the expense in my view.


Valuing the Contents of the home
This seems a daunting task at first. I looked at some examples of valuations and was shocked to discover how low they were. Then reality set in. The possessions we spend a lifetime of spending on aren't worth much when we're gone. Books, clothes, linens, kitchen stuff and so on have no value. Even all the furniture in the home may be worth very little. We gave all the clothes to charity almost immediately so others could benefit from them. We settled on £1250 as a value for the other things. later, on reflection this figure seemed quite high. The furniture had little value and we sent over half to the British Heart Foundation (who willingly came and collected it). My mother subscribed to Royal Mail First Day Covers. We discovered they were worthless too (have a look on eBay where 100 fetch about thirty quid!).


Applying for Probate
By late March, after 3 months of collecting documents we were ready to fill in the probate forms (IHT 400). I did them in draft, which took several hours, and then my brother and I went through them all again together which took about 6 hours. This was an essential step as we uncovered a couple of significant errors I had made. 

Surprisingly you have to pay any Inheritance Tax due before probate is granted. This is a challenge if you don't have sufficient funds. It is a Catch 22. Some people have to borrow the tax due and then repay the loan when funds are released after probate is granted. I understand why HMRC does this (to stop people failing to pay up) but it seems tough. There is a grace period on any property which makes up the estate over the threshold for IHT. You also have to calculate your own tax (unlike Self Assessment there is no online HMRC facility to do this, it's all done on paper with a calculator). We sent off the forms and paid the tax online. Then waited.


Receiving the Grant of Probate
It took just over 6 weeks for the Grant of Probate to arrive at the beginning of June (six months to the day after the death). I quickly got to work calling in all the investment and bank funds starting with the most valuable. We decided to re-register all the investments and shares in the names of the 3 beneficiaries. We thought this was fairest and it avoided selling everything whatever the state of the investments. (We also wanted to be careful about triggering additional Capital Gains tax if selling investments or property at a profit over the original probate valuations). This was a good decision, but involved a lot of form filling, some of which got sent back as they were wrong, and one batch I sent to my brother for signatures was delayed in the post for a heart-stopping 12 days (I hadn't put sufficient postage on the package, but was furious the Royal Mail just sat on it for 2 weeks) and took a long time.


Tax Return for the Deceased
You'll also discover the executors need to fill in a tax return for the deceased. This makes sense as there may have been income during the last tax year of their life which has not been taxed, or over-taxed (and a refund is due). There may also be a tax return to complete for the Administration Period (between death and Grant of Probate) to cover any additional funds which have not been declared (for example rent received). Collecting all the paperwork together to complete the tax return can easily take a few hours.


The Estate's Funds Arrive
When all the funds were collected in we decided to pay the balance of the Inheritance Tax on the property and transfer the house into the names of the 3 beneficiaries. This means any gain in value at sale can be divided 3 ways for Capital Gains Tax purposes. As executors we then paid the specific bequests to the other beneficiaries of the will, and then divided the majority of the cash.


Selling the Property
We were lucky in that we didn't need the cash from the sale of the property quickly. We were able to spend almost a full year visiting the house we grew up in and carefully deciding what to do with everything. I cherish the time we have spent doing this. I have spoken to others who had to empty a family home quickly and they usually regret it. It took 3 months to sell the property after the first buyer pulled out. Luckily we weren't in a hurry.



Not Forgotten
Dealing with bereavement is different for everyone. There are many stages. I write this at the end of a difficult year. But my mother would have been pleased that all her affairs had been dealt with thoughtfully, promptly and efficiently.  Also I understand everything about the estate. I know that nothing has been missed. That's how she liked things done. During the process I noticed she kept her papers in order and annotated just the same way I keep mine! Then it dawned on me. I keep my papers just as my mother kept hers because for years I have followed her example! I miss her.



Friday, 2 May 2014

Tesco Clubcard Vouchers - Not Worth Peanuts



Tesco Clubcard Vouchers - Not worth Peanuts

Tesco famously uses Clubcard holders information to gain an advantage over rival supermarkets. They record every item you ever buy when you swipe your club card. They give you cash rewards in return, which you can also swap for other rewards.

Tesco aren't shy about revealing how much they know about your shopping habits either. Every quarter, along with the cash vouchers, they also send extra coupons equal to money off savings or extra club card points on items they know you are likely to buy, or have bought in the recent past.

Of course this isn't entirely foolproof. My partner also uses my card, so sometimes I get vouchers for things she has bought - like hair products - which I would never buy.

This quarter Tesco identified with my weakness for roasted salted peanuts. They sent me a voucher for 35p off any Tesco roasted, flavoured or coated peanuts or cashews 200g or 275g.

Great, so on one of my increasingly rare visits to Tesco (as with many other shoppers who are deserting the stores) I picked up a bag of Tesco everyday roasted peanuts 200g for 46p.

When I self scanned the voucher at the end of the transaction the computer refused to accept the voucher. I showed the voucher to an assistant, along with the bag of Tesco salted roasted peanuts 200g. 

'Tesco Everyday' products don't count' she said.

There was a time when I would have asked to see the manager. But that was when I regularly shopped at Tesco. Now I don't believe any of their claims, and mostly I shop elsewhere. 

This is Tesco's biggest problem. I am not alone.

I have sent Tesco an email pointing out that under the Consumer Protection Act if there are significant exclusions to an offer they must be printed clearly.

As you will see there is no 'exclusion' printed on the voucher, and the product is clearly branded with Tesco's name and also clearly described as 'roasted peanuts' the weight is 200g.

Refunding me 35p is the least of Tesco's problems. They are haemorrhaging customers, probably because nobody believes them anymore.