Survivors are having to wait nine months for important documents they need to settle the affairs of their deceased loved one, while the probate department continues to struggle with long waiting times.
The delays have left many families in financial difficulty, as they must first pay funeral expenses, inheritance tax and settle the deceased’s debts before they can lay their loved one to rest.
Wealth readers have expressed concerns about the problems their families will face when the time comes.
In some complex cases, it can take 36 weeks or more for an application for approval to be approved, warns Emma Dean of the Society of Trust and Estate Practitioners (STEP).
Delays at the probate office have left many families in financial trouble after the loss of a loved one
But those who plan ahead can save their families a lot of hassle by speeding up the homologation process and making it easier for them to follow your wishes. Here’s our checklist of five essential steps you can take now.
1. Write your will
According to pension organization Canada Life, more than half of adults do not have a will.
If you do not make a will, your assets will be distributed according to the rules of inheritance law. This means that only your spouse or registered partner and next of kin will receive an inheritance.
In the worst cases, this can result in your stepchildren being disfellowshipped or your partner being forced to leave their home if you are not married. An unclear or incorrect will can significantly delay the probate process, as additional legal documents may be required to verify that your will is valid.
You must review your will every five years and after a major event in your life, for example if you get divorced or if a new child or grandchild is born.
Inform your executors that they should administer your will and where it will be kept.
You can lodge your Will directly with the Probate Service for a fee of £20. However, if you wish to amend the Will, you will need to make an official request to have it re-listed.
In this case, you cannot ask a lawyer to access the documents.
2. Make an inventory
When your family applies for approval, they must also pay any inheritance tax due on your estate.
Until your loved ones know the value of your assets, they can’t calculate how much tax is owed. If your assets are worth more than £325,000, your estate will be liable for inheritance tax, which must be paid within six months of your death.
After this point, interest will be charged at 2.5 percentage points above the Bank of England base rate, which is currently 5 percent. One of the most important tasks that the executors of your will will have to perform is to draw up a list of all the property, assets and debts that you have and to determine the value of each.
But if you make this list yourself ahead of time, you can help your family members speed up the approval process, says Jay Smith, senior associate at law firm Circe Law.
“More and more, things are being kept outside the home in self-storage, multiple properties or moorings,” he says. “Making a list of the things you own can help your loved ones know what to look for and what to value.”
A list will help you decide what you want to leave to whom. You can record this in a letter of wishes or a cover letter that can help your executors after your death.
This letter can be updated as your assets change and can assist your executors in determining the value of monetary items.
If you have an expensive piece of art, Smith says it can be helpful to put labels on the back of the frame, stating how much you spent on it and who you want to give it to.
3. Consider a trust
If you have life insurance, consider putting it in a trust. That way, your family will receive the money quickly and you can avoid inheritance taxes, says Dean.
A trust is a legal arrangement set up to allow a person or organisation to manage money, property or investments on your behalf, with the assets later being given to your beneficiaries in a tax-efficient manner. Any money placed in a trust belongs to your trustees and sits outside of your estate, so is not subject to IHT.
If you have life insurance, consider putting it into a trust so your family can access it quickly and avoid IHT
With life insurance, a lump sum or periodic amount is paid out after your death.
Your family does not need to apply for a probate to receive a life insurance payout, as long as the policy is held in a trust. This means that they can receive their inheritance a few weeks after your death certificate is issued. The money can then be used to pay IHT or other urgent bills.
Most insurers offer to put a life insurance policy in a trust when you take it out, at no extra cost to you.
You can also place a life insurance policy in a trust with the help of an independent financial advisor or attorney. You may have to pay for this.
4. Joint bank account
Opening a joint bank account can give a loved one quick access to small amounts of your money after you pass away.
This is because the partner, spouse or family member you share this account with does not need homologation to access money stored in a joint account, although this money will still count as part of your estate for IHT purposes. Any money held in a joint bank account is considered to be owned by both partners, meaning that if one partner dies, the surviving person becomes the sole owner of the account.
In order to transfer the account to their name, they must provide the bank with a death certificate.
5. Use banks to help
Make a list of all your current accounts, ISAs and savings accounts and how much money is in each account.
Some banks and building societies will give the executors of your will access to the money held in these accounts before the probate is approved, as long as the amount remains below a certain amount.
For example, Tesco, Barclays and Santander offer your beneficiaries the ability to withdraw up to £50,000 without the need for a approval procedure.
But National Savings & Investments (NS&I) will only release £5,000 without a power of attorney, the legal document you receive from the probate office after an application is approved.
Your loved ones may also be able to ask your bank, building society or NS&I to pay some or all of the IHT owed on your estate from the money held in your accounts before approval is granted.
With the ‘direct payment scheme’ your bank or housing association can pay the money directly to the Tax Authorities. This way you avoid fines for late payment.
A spokesman for HM Courts and Tribunal Service said: ‘Most probate applications take around eight weeks and we are working to reduce waiting times, which has resulted in record numbers of grants in recent months.’
Has your family had a legacy nightmare? Email: [email protected]
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