Plain-English explanations of unfamiliar terms

Showing 121 of 121 terms

• Accrued interestMoney & investmentsInterest that has been earned on savings or investments up to the date of death but had not yet been paid out.
• Additional Permitted SubscriptionMoney & investmentsAn allowance letting a surviving spouse or civil partner pay an extra amount into their own ISA, reflecting the value of the deceased's ISA.
• Administration expensesEstate administrationReasonable costs of administering the estate, such as valuation fees, probate registry fees and professional costs, usually paid from the estate before distribution.
• AdministratorWills & peopleThe person who deals with someone's estate when there is no valid will, or no executor able to act.
• Agricultural ReliefInheritance TaxRelief that can reduce or remove Inheritance Tax on qualifying agricultural property, such as farmland and farm buildings.
• Annual exemptionInheritance TaxAn amount someone can give away each tax year that is immediately outside their estate for Inheritance Tax purposes.
• AnnuityPensions & insuranceA financial product that converts a pension pot into a regular income, which may or may not continue to pay a spouse or dependant after death.
• AssentPropertyThe legal document used to formally transfer a property from the personal representatives into the name of the beneficiary who inherits it.
• AssetMoney & investmentsSomething of value owned by the person who died, such as a property, bank account, investment, vehicle or personal belonging.
• AttorneyWills & peopleA person appointed under a Lasting Power of Attorney to make decisions on someone else's behalf while they are alive.
• Bare trustTrustsA simple trust where the beneficiary has an immediate and absolute right to the trust property, and the trustee simply holds it for them.
• Beneficial ownershipPropertyWho actually benefits from an asset — for example, who is entitled to the sale proceeds of a house — which can differ from who is named on the legal title.
• BeneficiaryWills & peopleA person, charity or other organisation entitled to receive something from an estate or a trust.
• Business ReliefInheritance TaxRelief that can reduce or remove Inheritance Tax on qualifying business assets, such as a share in a trading business.
• CaveatProbateA formal notice lodged at the probate registry that stops a grant being issued while a dispute is resolved.
• Certified copyAfter a deathAn official copy of a document, such as a death certificate or grant of probate, stamped or marked to confirm it is genuine.
• Chargeable Lifetime TransferInheritance TaxA lifetime gift, typically into certain types of trust, that can attract an immediate Inheritance Tax charge rather than being a Potentially Exempt Transfer.
• Charity exemptionInheritance TaxAn exemption meaning gifts left to UK-registered charities are free of Inheritance Tax, and can also reduce the rate charged on the rest of the estate.
• ChattelsWills & peoplePersonal belongings such as furniture, jewellery, cars and household items, as distinct from property, money and business assets.
• CitationProbateA formal court notice used to require someone, such as an executor who is not acting, to either apply for probate or step aside.
• CodicilWills & peopleA separate signed document that changes part of an existing will, without replacing the whole thing.
• CoronerAfter a deathAn independent official who investigates deaths that are sudden, unexplained, or where the cause is unclear.
• CreditorMoney & investmentsA person or organisation the estate owes money to, such as a lender or utility company.
• Date-of-death valuationMoney & investmentsThe value of an asset or debt as at the date the person died, used when reporting and administering the estate.
• Death benefitPensions & insuranceA payment made by a pension scheme or insurance policy when the person who was covered dies.
• Death certificateAfter a deathThe official certified copy of the death registration, needed to deal with banks, pensions, insurers and probate.
• DebtorMoney & investmentsA person or organisation that owes money to the estate.
• Deed of variationInheritance TaxA document allowing beneficiaries to redirect their inheritance to someone else, which can be treated as if the deceased had made that gift for tax purposes.
• Defined benefit pensionPensions & insuranceA workplace pension, often called a final salary pension, that pays a retirement income based on salary and years of service rather than a pot of money.
• Defined contribution pensionPensions & insuranceA pension built up from contributions invested over time, with the eventual pot depending on contributions and investment performance.
• DeputyProbateA person appointed by the Court of Protection to manage the affairs of someone who has lost mental capacity. A deputy's role also ends on death.
• Discretionary trustTrustsA trust where trustees decide, from a group of potential beneficiaries, who receives income or capital and when.
• DistributionEstate administrationThe process of paying or transferring assets from the estate to the beneficiaries entitled to them.
• DividendMoney & investmentsA payment made to shareholders out of a company's profits, which may need to be accounted for as part of the estate's income.
• DomicileInheritance TaxA legal concept broadly describing the country someone treats as their permanent home, which affects how their worldwide assets are taxed.
• Equity releasePropertyA lifetime mortgage or similar arrangement letting a homeowner release cash from their property, which is normally repaid from the estate when they die.
• EstateEstate administrationEverything the person owned and owed at the date of death, taken together as a whole.
• Estate accountEstate administrationA summary of everything that came into and went out of the estate during administration, and what each beneficiary received.
• Estate administrationEstate administrationThe whole process of collecting in an estate's assets, paying its debts and tax, and distributing what is left to beneficiaries.
• Estate bank accountMoney & investmentsA dedicated bank account opened by the personal representatives to hold the estate's money separately, making it easier to keep clear records.
• Estate incomeEstate administrationIncome, such as interest or dividends, earned by the estate's assets during the period of administration.
• Estate's IHT reference numberForms & HMRCA unique reference issued by HMRC for the estate, needed before certain Inheritance Tax payments can be made and before the IHT400 is submitted.
• Excepted estateProbateAn estate that does not need a full Inheritance Tax account because it is straightforward or below the reporting thresholds.
• ExecutorWills & peopleThe person named in a will who is responsible for dealing with the estate.
• Executor's yearProbateThe informal principle that executors are given up to a year from the date of death to complete the administration before beneficiaries can press for distribution.
• Expression of wishesPensions & insuranceA non-binding form telling a pension scheme who you would like any death benefits to go to. Trustees usually consider it but are not legally bound by it.
• Final distributionEstate administrationThe last payment to beneficiaries once all debts, tax, expenses and earlier distributions have been accounted for.
• Gift with reservation of benefitInheritance TaxA gift where the giver keeps some benefit from the asset, such as continuing to live in a house they have given away rent-free.
• Grant of ProbateProbateThe court document confirming an executor's authority to deal with the estate of someone who left a valid will.
• Grant of RepresentationProbateThe umbrella term covering both a Grant of Probate and Letters of Administration — the document that gives legal authority to deal with an estate.
• Gross estateInheritance TaxThe total value of everything in the estate before debts, funeral costs and other liabilities are deducted.
• Grossing upMoney & investmentsA calculation used when a will leaves a tax-free gift, working out the larger amount needed so that, after tax, the beneficiary receives the sum intended.
• IHT205Forms & HMRCA short-form return previously used for many excepted estates in England and Wales; for deaths from 1 January 2022 this information is normally given as part of the probate application instead.
• IHT217Forms & HMRCThe form used to claim a deceased's unused nil-rate band from their late spouse or civil partner where a full IHT400 is not otherwise required.
• IHT400Forms & HMRCThe main Inheritance Tax account form used to report the value of an estate to HMRC when it is not an excepted estate.
• IHT421Forms & HMRCThe probate summary HMRC sends to the probate registry once it has processed an IHT400, confirming the estate's tax position so the grant application can proceed.
• Inheritance TaxInheritance TaxTax that may be due on the value of an estate, and on some gifts made in the years before death.
• InquestAfter a deathA formal hearing held by a coroner to establish who died, and how, when and where.
• Insolvent estateEstate administrationAn estate where the debts owed are greater than the value of the assets, meaning not all creditors can be paid in full.
• Interest in possessionTrustsA trust arrangement giving a beneficiary an immediate right to income or use of the trust property, typically for life.
• Interim distributionEstate administrationA partial payment made to beneficiaries before the estate administration is fully complete, once it is safe to do so.
• IntestacyWills & peopleWhat happens when someone dies without a valid will: fixed legal rules decide who inherits, regardless of what the person may have wanted.
• IntestateWills & peopleDescribes someone who died without leaving a valid will, in whole or in part.
• ISA after deathMoney & investmentsAn ISA does not automatically keep its tax-free status after death, though it continues to be tax-free up to the point of closure or the estate administration ending.
• Joint tenantsPropertyA way for two or more people to own property together, where on death a co-owner's share passes automatically to the surviving owner(s), not under their will.
• Land RegistryPropertyThe government body (HM Land Registry) that records who owns registered land and property in England and Wales.
• Lasting Power of AttorneyWills & peopleA legal document letting someone appoint an attorney to make decisions for them if they lose mental capacity. It ends when the person dies.
• Legal ownershipPropertyWhose name appears on the official title of an asset, such as the Land Registry title for a property.
• LegateeWills & peopleA person who receives a specific gift under a will, such as a named item, a sum of money, or a particular property.
• Letters of administrationProbateThe court document giving authority to deal with an estate where there is no valid will, or no executor able to act.
• LiabilityMoney & investmentsMoney the person owed at the date of death, such as a mortgage, loan, credit card balance or unpaid bill.
• Life assurancePensions & insuranceAn insurance policy that pays out a lump sum, or sometimes a regular income, when the person insured dies.
• Life tenantTrustsA beneficiary entitled to income from trust property, or to use an asset such as a house, for their lifetime.
• Medical Certificate of Cause of DeathAfter a deathA certificate completed by a doctor or the medical examiner setting out the cause of death, which you need before you can register the death.
• Medical examinerAfter a deathAn independent senior doctor who reviews the cause of death before it is certified, and can explain it to the family.
• National SavingsMoney & investmentsNational Savings and Investments (NS&I), a government-backed savings provider, which has its own process for dealing with a deceased customer's accounts.
• Net estateInheritance TaxThe value of the estate once debts, funeral costs and other liabilities have been deducted from the gross estate.
• Next of kinAfter a deathThe person's closest living relative. It has no fixed legal meaning and does not by itself give any legal authority over the estate.
• Nil-rate bandInheritance TaxThe amount an estate can be worth before Inheritance Tax may become due.
• NominationPensions & insuranceA record kept by a pension scheme or provider naming who should receive benefits or a payout after death.
• Normal expenditure out of incomeInheritance TaxAn exemption for regular gifts made from surplus income, where the giver keeps enough income to maintain their usual standard of living.
• PA1AForms & HMRCThe probate application form used when the person who died did not leave a valid will.
• PA1PForms & HMRCThe probate application form used when the person who died left a valid will.
• Pecuniary legacyWills & peopleA gift of a fixed sum of money left in a will, for example £5,000 to a named person or charity.
• Personal representativeWills & peopleThe general term for whoever is legally responsible for dealing with an estate — an executor or an administrator.
• Policy proceedsPensions & insuranceThe money paid out under an insurance policy following a claim, such as after a death.
• Potentially Exempt TransferInheritance TaxA lifetime gift that becomes entirely free of Inheritance Tax if the person who made it survives seven years.
• Power reservedProbateWhere one of several named executors chooses not to act for now, while leaving open the option to apply for probate later.
• Premium BondsMoney & investmentsA National Savings and Investments product offering the chance of tax-free prizes instead of interest, which can continue to be entered for up to 12 months after death.
• ProbateProbateThe overall process of proving a will and dealing with the estate of someone who has died.
• Probate valuationPropertyA valuation of an asset, often a property, needed to establish its value for the estate and for Inheritance Tax purposes.
• Quick succession reliefInheritance TaxRelief that reduces Inheritance Tax where the same assets have been taxed twice in quick succession, because two deaths happened close together.
• R185Forms & HMRCA certificate given to a beneficiary showing the income they have received from an estate or trust, and any tax already paid on it, for their own tax return.
• RegistrarAfter a deathThe local council official who registers a death and issues the death certificate.
• RemaindermanTrustsThe beneficiary who becomes entitled to trust property once an earlier interest, such as a life tenant's interest, ends.
• RenunciationProbateA formal, signed statement by a named executor giving up their right to apply for probate.
• Residence nil-rate bandInheritance TaxAn extra amount that may be available on top of the nil-rate band when a home is left to children or grandchildren.
• Residuary beneficiaryWills & peopleA beneficiary who inherits some or all of what is left of the estate after specific gifts, debts, expenses and tax have been dealt with.
• Right of survivorshipPropertyThe rule that when one joint tenant dies, their share automatically passes to the surviving joint owner(s), regardless of what their will says.
• Section 27 noticeEstate administrationThe formal name for the statutory notice to creditors, referring to section 27 of the Trustee Act 1925, which can protect personal representatives from personal liability for unknown debts.
• SettlorTrustsThe person who creates a trust and puts assets into it.
• Seven-year ruleInheritance TaxThe general rule that most lifetime gifts fall outside the estate for Inheritance Tax if the giver survives seven years from making them.
• Severance of joint tenancyPropertyThe formal process of converting a joint tenancy into a tenancy in common, so each owner's share can be left in their will.
• Small estates procedureProbateA simplified process some banks and building societies offer to release small balances without a formal grant, usually below a set limit per institution.
• Small gift exemptionInheritance TaxAn exemption allowing small gifts up to a set amount to be made to any number of people each tax year, free of Inheritance Tax.
• Specific legacyWills & peopleA gift of a particular, identifiable item left in a will, such as a piece of jewellery, a car or a named property.
• Spouse and civil partner exemptionInheritance TaxAn exemption meaning most gifts and inheritances passing between UK-domiciled spouses or civil partners are free of Inheritance Tax.
• State PensionPensions & insuranceThe government pension paid based on National Insurance record, which stops on death, though a surviving spouse or civil partner may inherit part of it.
• Statutory legacyWills & peopleA fixed sum a surviving spouse or civil partner receives first under the intestacy rules, before the rest of the estate is shared out.
• Statutory noticeEstate administrationA formal notice, usually placed in The Gazette and a local newspaper, giving creditors a set period to come forward before the estate is distributed.
• Taper reliefInheritance TaxRelief that can reduce the Inheritance Tax due on a gift made between three and seven years before death, on a sliding scale.
• Taxable estateInheritance TaxThe value of the estate left after deducting reliefs and exemptions, on which Inheritance Tax is actually calculated.
• Tell Us OnceAfter a deathA free government service that lets you report a death to most government departments and local council services in one go.
• Tenants in commonPropertyA way for two or more people to own property together, each holding a distinct share that forms part of their own estate and passes under their will.
• TestatorWills & peopleThe person who made the will. (A woman is sometimes called a testatrix, though modern usage tends to use testator for both.)
• Transferable nil-rate bandInheritance TaxAny unused proportion of a deceased spouse or civil partner's nil-rate band, which can be added to the surviving partner's own nil-rate band when they later die.
• TrustTrustsAn arrangement where assets are held by one or more trustees for the benefit of others, on terms set out by the person who created it.
• Trust propertyTrustsThe assets held within a trust, such as investments, cash or property, managed by the trustees for the beneficiaries.
• TrusteeTrustsA person or organisation who holds and manages trust property on behalf of the beneficiaries, in line with the trust's terms.
• Unique Taxpayer ReferenceForms & HMRCA 10-digit number HMRC uses to identify a taxpayer, including, where needed, an estate that has to file its own tax return.
• WillWills & peopleA legal document setting out who should deal with someone's estate and who should inherit from it.