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Probate Applications during Covid-19
 
Covid-19 has had a significant impact on the process of obtaining a Grant of Probate in the estate of a person who has died in order to administer their estate.

A Grant of Probate is a document issued by the Probate Registry giving the executors named in the Will of a person who has died, the legal authority to administer their estate.  If a person left no Will, then the people entitled to the estate are the next in line to apply for what is called a Grant of Letters of Administration.

Regardless of which type of Grant is needed, the process is largely similar requiring completion of an Inland Revenue account – an inventory of the estate assets and liabilities in effect.  This will enable the executors and HMRC to calculate whether any inheritance tax is due as a result of the death and if so, part of that tax must be paid ‘up front’ when the application for the Grant is made.  Once that tax bill has been, HMRC issue a receipt, which in turn allows the executors to apply to the Probate Registry for whichever Grant they require.   Incidentally, the remainder of the tax is usually payable around 6 months later and can be postponed to be paid by ten annual instalments if the executors and beneficiaries prefer this.  This means that it isn’t always necessary to have to sell property in order to pay the tax bill, which is helpful to families wanting to keep the family home, for example.

Once the Grant has been issued, the executors can then sell property, close accounts, and pay debts before making distributions to the people entitled to receive the estate.

As a probate practitioner, I can report it has been a painful journey, navigating through a new and improved online probate application process at a time when tragically, deaths as a result of the pandemic have increased significantly.  This has put a lot of pressure on the Probate Registry.

The days of advising clients of a wait of 7-10 working days to receive the Grant seem like a distant memory and we are now waiting anything from 1-3 months, more so in an estate where inheritance tax is payable.

The good news is that the Probate Registry and HMRC have taken steps to make the process a little easier in the light of the practical difficulties arising from the pandemic restrictions. 
 
  • Both will now accept electronic signatures on the probate application forms and the Inland Revenue accounts, which makes a lot of sense given electronic capabilities and avoids the need to circulate a document between several executors at different addresses, which could take weeks.
 
  • Applications for Grants are now made online through the Probate Registry’s portal and updates can be found by checking the portal after submission.  Enquiries are sent by email so can be responded to the same day meaning much quicker turnaround times where additional information might be needed to process an application.  It is still necessary to send paperwork after the online submission has been made – including the original Will, if there is one – but it is reassuring to know that the account has been opened already, so to speak.
 
The Stamp Duty Land Tax (SDLT) incentives offered by the Government through the pandemic has boosted the property market without question, but the knock-on effect is that there are horrendous delays in processing by the Land Registry.  The reason is that social distancing measures has meant a reduced workforce and so there simply aren’t enough people to keep up with the demand at the moment.  Hopefully, this will improve, and the backlog can be reduced but beneficiaries waiting for properties to be transferred to them are looking at 4-6 months, possibly more.   If property is to be sold, the pressure on conveyancers trying to cope with the demands of buyers frantically trying to complete before the SDLT incentive deadlines, has also created a log jam.

Introducing the above changes is a positive step, but at a time when many are struggling to cope with the impact of social distancing restrictions in the workplace caused by Covid-19, the pressures on the court system and other Government agencies is very apparent. 

If you have any questions about matters covered in this article, please contact Clare Young on 07802 618 132 or at clare.young@legalstudio.co.uk
 
2021 12 01
Clare Young
Probate Fees Hike
 
A Grant of Probate is a document issued by the Probate Registry giving executors named in a Will the legal authority to administer the estate of a deceased person.

Probate professionals and bereaved families alike suffered a collective and significant fright back in 2019 awaiting the introduction of drastic increases to the cost of obtaining a Grant of Probate – set to be as much as £20,000 based on a sliding scale.  We all then breathed a collective sigh of relief as that proposal was shelved, although many were frantically submitting applications just in case the measures were pushed through.

Another round of increases has been announced, but fortunately these are nowhere near as swingeing.

At the moment, the cost of applying for a Grant of Probate depends on whether a professional is applying - £155 - or an individual (known as a ‘personal application’) - £215. 

The new proposals set to take effect in early 2022, will mean a flat fee of £273 for all applications, regardless of the value of the estate.

The reason for the increase?  The Ministry of Justice claim that the increase is needed to cover the administrative cost of running the service, currently operating at a loss it claims.  Interestingly, the 2019 proposals were intended to generate extra revenue to help subsidise increasing costs across the court service as a whole.  At that time, the probate service wasn’t loss-making as it now appears to be!

A consultation period on the proposed increased has recently ended and so we await the outcome with interest.

If you have any questions about matters covered in this article, please contact Clare Young on 07802 618 132 or at clare.young@legalstudio.co.uk
2021 09 01
Clare Young
                                           Should you disclaim or vary an inheritance?

Introduction

Receiving an inheritance from a loved one can be a very emotional experience and may also give rise to tax issues.  It may be that your personal circumstances are such that receiving an inheritance increases the value of your estate to a level where you become concerned about inheritance tax (IHT).

Redirecting an Inheritance

It is possible for changes to be made to the distribution of an individual’s estate after they have died to mitigate capital gains tax (CGT) and IHT.  The changes can be made in one of two ways:
  1. A Variation; and/or
  2. A Disclaimer.
What is a Variation?

A Variation allows you to redirect the inheritance you receive under a Will or the Rules of Intestacy so that the person you are gifting your inheritance to is deemed to have received it under the terms of the deceased’s Will for IHT and/or CGT purposes.

For a Variation to be valid the following conditions must be satisfied:
  • The Variation must be evidenced in writing and signed by the beneficiary who is redirecting their inheritance. The executors of the deceased’s estate will also need to sign the Variation if it results in a larger IHT bill;
  • The Variation must be executed within two years of the deceased’s death;
  •  The Variation must not be made for any consideration in money or money’s worth. In other words, the person who is receiving the benefit of the gift should not pay anything to the individual who is making the gift.
  • The Variation must contain a statement to the effect that certain tax provisions under the IHT and CGT tax codes should be included.
What is a Disclaimer?

A Disclaimer operates differently from a Variation.  It is where a beneficiary under the Will chooses not to accept the gift made to them by the deceased.  It is important that the beneficiary has not accepted the gift as it is not then possible to disclaim it.

The following should be noted to ensure a disclaimer is valid:
  • A beneficiary is unable to disclaim only part of a gift; and
  • It is advisable for a disclaimer to be made in writing to the executors of the deceased’s estate although it may be made orally.
The main differences between a Variation and a Disclaimer is:
  • The individual who is disclaiming their inheritance may seek some form of monetary consideration from the person who benefits under the Disclaimer.  This is prohibited under the rules applying to Variations; and
  • Under a Variation the beneficiary who is making the gift can decide who should receive the benefit of the gift whereas the beneficiary cannot do this with a Disclaimer because the terms of the Will to determine who will inherit it.
This can often produce some unexpected results.

Example

Mr Lucky sadly dies and leaves his estate equally between his two children, Soo and Not-Soo and if either child dies before him then the deceased child’s share passes to his or her children in equal shares on reaching the age of 25.

Soo has done very well financially and decides that she would like her brother, Not-Soo to receive her share of their late father’s estate.  Soo does some research on the internet and decides to disclaim her interest in her late father’s estate thinking that it will pass to her brother under the terms of their late father’s Will.

By entering into the Disclaimer Soo is treated as having died immediately before her father for the purposes of the Wills Act 1837. Under s33 of this Act Soo’s children will inherit her share of her late father’s estate. The Disclaimer is therefore, ineffective.

If Soo had taken legal advice she would have been advised to enter into a Variation where she could have nominated her brother, Not Soo to receive her share of their late father’s estate. 

For more information call Malcolm Emery on 07708 613 789 or email him at malcolm.emery@legalstudio.co.uk
2021 10 30
Malcolm Emery