Pro­bate time bomb: de­lays could cost fam­i­lies thou­sands

The Daily Telegraph - Your Money - - FRONT PAGE - Harry Brennan

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

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