A Step-by-Step Guide to Applying for Confirmation in Scotland
When someone dies, the person who is responsible for administering their estate will often need to apply for ‘Confirmation’ before the deceased’s money and other property can be engathered and distributed. This blog post will cover everything you need to know about applying for Confirmation.
- What is Confirmation?
- Why do I need a certificate of Confirmation?
- Clarifying whether Confirmation is needed
- Taking inventory of the estate
- How do I calculate the worth of the estate?
- Is the estate liable to Inheritance Tax?
- Excepted estates
- When is an estate not an excepted estate?
- Confirmation with a will
- Confirmation without a will
Confirmation is a legal document from the Sheriff Court that provides the executor with authority to uplift the deceased’s assets from the holder (such as the bank), and to administer and release the estate accordingly. By granting Confirmation, the court is confirming that the executor, has the right to administer the deceased’s estate and entrusts them to transfer the assets in accordance with either the deceased’s Will or the law.
Obtaining Confirmation provides the bank or insurance companies with proof that the executor has the authority to receive and administer the deceased’s money or assets. Without the certificate, they may refuse access to the funds - particularly for large amounts of money - meaning the executor is unable to distribute the assets to the beneficiaries of the estate.
First and foremost, an executor must determine whether Confirmation is necessary for the estate. Although Confirmation is almost always required, there are a few exceptions to the rule:
- If the deceased’s total estate value does not exceed £5,000, or
- The deceased owned everything jointly with someone else and every asset from the estate automatically passes on to the surviving joint owner.
In order to apply for Confirmation, the executor must provide a thorough list of the deceased’s heritable and moveable estate at the time of death and its value. Confirmation can only be applied for if the inventory consists of at least one item of money or property in Scotland. The inventory might include assets such as:
The process of completing the deceased’s inventory can be lengthy – this is due to a waiting period for organisations to get back with an up to date valuation of their assets.
In Scotland, there are two types of Confirmation: small estates and large estates.
A ‘small estate’ has a total value of £36,000 or less. Where the estate is classed as a small estate and the deceased has left a Will, the Sheriff Clerk at the Sheriff Court can assist the executor with completing the forms.
A ‘large estate’ is an estate which has a total value of anything above £36,000. Sheriff Clerk cannot assist executors in applying for Confirmation to a large estate and, therefore, legal guidance from a professional executry and probate solicitor is highly recommended.
It is crucial that, when calculating the total value, that any debts owed by the deceased are not deducted. These can include funeral expenses, gas or electricity bill.
Once all the assets in the estate have been ascertained, a solicitor can then determine whether or not inheritance tax (IHT) will need to be paid. Estates with a value of over £325,000 are liable to IHT, and this must be paid before or at the same time that the executor applies for Confirmation. The executor will have to pay the tax before the money from the estate is distributed and so, a short-term bank loan may be needed.
An excepted estate is where IHT is not payable. There are currently three types of excepted estates:
- Low-Value Estate: no IHT liability because the gross value of the estate is below the IHT threshold applicable at the date of death. If the death occurred between the 6th April and the 5th August and an application for Confirmation is made before the 6th of August in the same year, the IHT threshold from the previous year must be used.
- Exempt Estate: the estate’s gross value is below £1 million and all the estate or everything over the IHT threshold is either inherited by a spouse or civil partner in the UK, or a qualifying charity.
- Foreign Domiciliary: there is no liability to IHT if the deceased permanently lived abroad and the value of the UK assets are below £150,000.
It should be noted that, since 6 April 2010, it has also been possible to use the excepted estate procedure if the value of the estate is less than double the IHT threshold and a claim is made to transfer the unused IHT Nil Rate Band from the death of a spouse or civil partner.
An estate cannot qualify as an excepted estate if the deceased:
- left an estate worth more than the IHT threshold,
- left an estate worth more than £1 million to a spouse, civil partner or ‘qualifying’ charity,
- had a permanent home outside of the UK at the point of death but had a permanent home within the UK at some other time,
- had assets in a trust valued in excess of £150,000, or held more than one trust,
- had assets worth more than £100,000 outside of the UK,
- made gifts within seven years before they died and the value of the gifts totalled more than £150,000 after deducting any IHT exemptions,
- made gifts into trusts,
- continued to benefit from a gift they had made to someone else, such as their house or car,
- had a personal pension from which they had not taken their full retirement benefits, and when they were either in poor health or terminally ill, they changed the death benefits payable on it to increase the value of the lump sum.
The Confirmation procedure will vary depending on whether or not the deceased left a Will. If there is a Will, the estate is referred to as ‘testate’. If the Will complies with all of the legal requirements in Scotland, then the information above regarding small and large estates will apply.
If the deceased did not leave a Will, the estate would be referred to as ‘intestate’, or Intestate Estate. An executor will have to obtain an insurance policy known as a Bond of Caution before applying for Confirmation. A Bond of Caution is insurance against an executor applying for Confirmation when they are not entitled to do so and also failing to distribute the estate according to law. In the case that the deceased left a ‘large estate’ but no Will, there is an additional step to the process above and that is that the appropriate person must apply to the Sheriff Court to be appointed executor.