Probate - From the Wasatch Mountains to Sherwood Forest
Probate -- the process by which an executor or administrator will distribute the estate of someone who has passed away to their beneficiaries. It is a legal practice that has existed for hundreds of years and occurs in many countries, but is it practiced the same way all around the world?
We have teamed up with our friends across the pond at Last Steps Probate in Nottingham, England to help answer this question. Together we have looked at the process used in the UK vs the USA to help understand some of the similarities and differences in how probate is completed.
In the US, the law on probate differs from state to state rather than just having one overarching law for the whole country. This may be surprising, but this is actually a similarity compared to the process in the UK, with the rules on probate being different in England and Wales compared to Scotland. The process in Scotland is called confirmation rather than Probate, and there are some procedural differences between the two jurisdictions. In Scotland confirmation is granted regardless of whether someone has passed away intestate or with a will. In England and Wales, there are different types of grants issued: a grant of probate is given where there is a valid will and letters of administration are given where someone dies intestate.
There is also a difference regarding the number of people who can apply to take out the grant. When making an application for a grant of probate in England and Wales, a maximum of 4 people that can apply. This limit does not exist in the Scottish confirmation process. The details of what becomes public is also different in England and Wales compared to Scotland. In Scotland a detailed list of all the deceased assets and their values becomes a public document, whereas in England and Wales, it’s only the total value of the estate gross and net that become public.
SKV is located in Salt Lake City, Utah, so most of our experience and expertise is centered around Utah’s laws. But we have done probate in a handful of other states and have seen how the law differs from state to state. One of the main differences is how people can avoid probate. Most states have adopted a unified system where any estate valued under $100,000 does not have to be probated. However, in California, estates under $150,000 don’t have to be probate. In New York, the threshold is $50,000. In Ohio, all estates valued over $35,000 must be probated unless the entire estate is being transferred to the surviving spouse, in which case, the estate can be worth $100,000 without having to be probated.
In England and Wales, the threshold for a small estate is one valued at less than £5,000, and if you pass away with an estate valued at this amount or lower then you do not need to get a grant of probate. As discussed above, there is a concept of a small value estate in the US process as well, however the value is substantially different. Utah is one of the states that has adopted the uniform probate system, so an estate there is considered small if it is valued at less than a $100,000.
Expiration dates on Wills
Another difference in probate laws amongst the states is whether or not a will expires. In Utah, if three or more years have passed since a person has died their will is deemed to have expired, as the will is no longer valid the estate will be distributed via the intestate statutes.
This is very different to England and Wales where a will doesn’t have a time limit. Once a will is written it lasts forever unless it is revoked. In Scotland, the same applies and wills don’t expire there either. One big difference between the process in England and Wales and that in Scotland is that remarrying doesn’t invalidate a will in Scotland. If you do separate, it’s, therefore, really important to look at amending your will otherwise your ex could still be entitled to inherit. Having no expiration dates on wills isn’t just a UK thing though, it is also common in other states of the US for example, North Dakota.
In order for a will to be used for Probate it has to be valid. Both the UK and the US have certain rules which must be followed in order for a will to be valid. One similarity is that the will has to be signed by two witnesses. However, in the UK these must not be beneficiaries of the will or the spouse of a beneficiary, whereas in Utah this is deemed a “best practice” approach as opposed to a statutory requirement. Interestingly if a will is handwritten, and it is apparent that the testator wrote it, only the testator must sign the will in Utah, and it is known as a holographic will. In the UK the concept of a holographic will exists, i.e., one that is handwritten; however, this still needs to be signed by two witnesses in order for it to be valid.
In Utah, as in most states, probate cases are divided into formal and informal cases. An informal case is one where all the interested parties agree on the personal representatives and how the estate will be distributed, whereas, a formal case occurs when there are disputes regarding this. In informal cases the personal representatives can be appointed without a hearing, whereas in formal cases a hearing is needed for the decision to be made. This is not a concept in the UK, but is probably most likened to our contentious and non-contentious distinctions. In the UK, disputes regarding beneficiaries and personal representatives also need to be decided by the courts.
If a person dies without a will, they are said to have died intestate. This is the same in both the UK and in the U.S., however the process followed by both places regarding intestate cases are slightly different. In the UK, the statutory provisions clearly layout who is eligible and in what order they are eligible to make an application to be a personal representative. The following hierarchy needs to be followed:
Spouse or Civil Partner
Father or Mother
Whole Blood Siblings
Half Blood Siblings
Whole blood Aunts and Uncles
Half Blood Aunts and Uncles
An administrator in a lower priority group cannot request to be an administrator if there is someone eligible to take out the grant in a higher priority group. In some situations, you can have an administrator in one group obtain the grant with an administrator in an inferior group if there is no other person of a higher priority. This is common where you have a spouse taking out the grant with their child.
In Utah, anyone who is over the age of 21 can file a probate case and ask to be the estate’s personal representative. Certain applicants do have priority, including a person named as the personal representative in the will, or a surviving spouse, but anyone can apply. And, even in cases where all interested parties agree on who the personal representative should be (or an informal probate), a hearing where the personal representatives will petition the court for a determination of heirs must be held. This is usually just a formality but is necessary to confirm who is responsible for the estate. As the UK has a very defined hierarchy in terms of who can apply, this is not a process they follow.
Though there are inheritance taxes in both countries, taxes in both the UK and US vary massively. Spoiler alert from the small estate section above: the US has much more generous thresholds. In Utah there is no state inheritance tax, and so nothing is payable to the state. There is a federal inheritance tax, however, the threshold before this is payable is $11.5m USD, a far cry from the UK’s threshold of £325K. The tax rate in the US is also lower than in the UK. The UK’s inheritance tax rate is 40% compared to the average tax rate in America, which is 19%. It’s also not only the personal exemption that’s more generous, but the annual exemption is also much higher. In the UK you are able to gift £3,000 away each year tax free. However, the US this amount is $15,000 per person (meaning you can give a gift with a value of $15,000 to as many people as you want)! I can hear those UK high net wealth individuals scrambling for their private jet keys now!
Hopefully this post gives you some interesting insights into both the UK and US processes regarding probate. Although there are lots of similarities between these processes there are also some key differences. Its important to bear these in mind, especially if you have property overseas where there may be local laws in place which effect how the estate should be handled. We have provided the details to Last Step Probate below if you need support with British estates. We also hope to bring you another blog of some interesting historic UK and US case studies to help bring to life the process in each place.
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