Probate time bomb: delays could cost families thousands

Inheritance tax perks introduced a decade ago could leave families to deal with two sets of complicated and expensive probate processes at once, lawyers have warned.

Since 2007, surviving spouses have automatically inherited unused inheritance tax allowances. For many people this has removed an incentive to apply for “grant of probate” – the gathering up and distribution of the assets of the deceased.

When a surviving spouse continues to live in the same home and has access to joint accounts or their own pots of cash, there is little immediate need to obtain a grant of probate. Lawyers have said this increasingly common omission would leave families having to apply for two or more grants of probate at the same time when it came to distributing their inheritance.

Not only will this mean more paperwork but, because of radical changes to probate fees proposed by the Government, it could make for a far more expensive process.

Currently, a £215 flat fee is charged if probate is applied for by friends or family, or £155 if a solicitor completes the process.

Under the Government’s proposed system, for estates worth £2m or more just one grant of probate would cost £20,000. A fee of £8,000 to £12,000 would apply for estates worth more than £1m.

Gavin Holt of Co-op Legal Services said the “double probate” problem was more common than people thought and “comes down to the fact that there is often no pressure on surviving relatives to step in and sort everything out”.

He said: “People can take a passive approach to legal matters and act only when they are forced to.”

Sky Oakes-Nash, 56, a mental health nurse, was forced to apply for two grants of probate when, four months after her father’s death, her mother also died.

Her husband, Brian Nash, said: “Having been asked to sign various pieces of legal paperwork while Sky’s dad was alive, we knew that his wishes were very specific, and this became more complicated when Sky’s mum died.”

The couple employed lawyers and ended up spending around £5,000 to complete both processes.

Government plans to reform probate fees were supposed to be introduced in May 2017 but, following an intense backlash, were put on hold ahead of the general election. However, a spokesman for the Ministry of Justice confirmed that the changes were still government policy and would be introduced “in due course”.

Once in place, estates worth less than £50,000 will pay nothing for probate, but estates worth more will incur far higher fees.

Lawyers have encouraged people to take a proactive approach in dealing with relatives’ affairs to ensure that family members and heirs do not have to deal with increased costs later on.

Mr Holt said: “It is much easier and cheaper in the long run to deal with probate as soon as possible after death so that double probate situations do not arise.

“Sometimes it will be unavoidable, as the time between deaths can be short, but by starting as soon as possible bereaved families will give themselves the best chance of avoiding having to deal with additional costs at what is already a difficult time.”

Probate fees are based on the value of your estate on death. This means that only by reducing the value of the estate can you cut probate fees. Tax experts have suggested using “discretionary” or “bare” trusts to do so. Inheritance tax allowances, currently £325,000 per person, are not relevant in this calculation.

Sky Oakes-Nash, right, had to arrange two sets of probate within a few months