Making probate easier for those you leave behind

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It’s easy to put off doing the things in life that feel overwhelming. Thinking ahead to your family’s future without you, for example. But what if we told you that this can be a positive exercise?

Good planning during your lifetime means loved ones stand to benefit later from the financial and other arrangements you put in place. Doing this gives real peace of mind. You can relax, knowing you’ve provided for the right people and that the practical steps after you have passed away will be easier to work through. The emotional toll on your family won’t be added to by loose ends, missing information, confusion.

When a person passes away, their estate (in most cases) must go through the process of probate. Probate is the key to unlocking assets. It confirms who has authority to ‘administer the estate’ and deal with the person’s personal, financial and other affairs. Until probate is issued, the estate assets cannot be sold or distributed. (Where a person dies without a Will, the process is similar but the intestacy rules apply.)

The idea of going through the finer details of everything a loved one owned, owed, and intended for others can be daunting. As probate specialists, we help families deal with the legal process and practicalities. And we help people prepare so that, when the time comes for their estate to be dealt with, probate is an easier experience for those they care about.

How can you make probate simpler?

Make a Will

A Will sets out your wishes and allows you to control how your estate will be dealt with. It names the ‘executors’ – the people who will administer your estate. It can also set out funeral wishes, beneficiaries, and identify guardians for minor children. These types of details give much-needed certainty and guidance to those left behind.

A Will is not a once-in-a-lifetime document. You should review your Will any time your personal or financial circumstances change. And it’s a good idea to let your executor and/or family know where the Will is stored, as the original document will be needed during the probate process. Without it, the process of applying for probate becomes more complex.

Plan for inheritance tax

Inheritance tax (IHT) must be calculated and paid before the executors can apply for probate. With good planning, you’ll be able to minimise the amount payable so that there’s more value to be distributed from the estate. If you think your estate will be liable to IHT, a financial advisor and a solicitor could help you mitigate the liability.

Get your paperwork in order

Imagine being the person responsible for having to trace another person’s assets. Unfamiliar paperwork and online accounts can make this complicated and time-consuming. So help them out by keeping a record of your assets, together with any usernames and passwords that might be needed by your family. Store these in a safe place.

With the right help, future planning can be straightforward. And it’s always worth the effort. As trusted experts with years of experience in helping people and families before, during and after probate, we see the difference forward-thinking makes. That’s why we work very closely with people to understand their circumstances, share their burden, and support them with the very best legal and practical guidance.

For tailored advice on future planning and probate contact Thomas Mansfield’s Wills & Probate team on 0808 256 2917 or email [email protected].

How have the intestacy rules changed?

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The Government has announced that the statutory legacy will increase from £270,000 to £322,000 with effect from 26 July 2023.

What is the Statutory Legacy?

If a person dies without a Will (known as dying ‘intestate’), their estate will be divided according to the rules of intestacy. A significant component of these rules is the ‘statutory legacy’, which may not reflect one’s personal wishes.

In simple terms, the statutory legacy is a fixed sum of money that a surviving spouse or civil partner is entitled to when their partner dies intestate, and they have surviving children. The amount of the statutory legacy can change over time, being updated to reflect inflation and other economic factors.

The remainder of the estate, after the statutory legacy has been paid, is then divided according to the rules of intestacy. This often means that the remaining assets are shared between the surviving spouse and the children.

While the statutory legacy might offer a degree of protection, and the increase to £322,000 is certainly welcome, it’s a blunt tool in the nuanced world of personal relationships and individual wishes, and can have many unintended and negative consequences.

Potential pitfalls of not having a Will

  • Unintended beneficiaries: The rules of intestacy are generic, so they might not reflect your personal relationships or your wishes for your assets. Close friends, unmarried partners, and even certain relatives might not receive anything from your estate.
  • Delayed access to assets: The process can be time-consuming, causing additional stress for your loved ones during an already challenging period.
  • Additional costs: dying intestate may lead to increased legal fees and potential court proceedings, diminishing the assets available to beneficiaries.
  • Lack of control over children’s inheritance: Without a Will, children automatically inherit at the age of 18. This might not align with your wishes or the maturity level of the child.

You can avoid leaving the division of your assets to a one-size-fits-all system by drafting a Will to protect your loved ones, ensure your wishes are respected, and potentially save on taxes and legal fees.

Our team is here to help. For professional advice about drafting a Will that reflects your personal desires and safeguards your family’s future, contact Emma Howlett or a member of the Private Client team on 0808 256 2917.

The legal process after someone dies

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When a loved one dies, you may find yourself asking: what now?

It’s a big question, emotionally. It’s also one that needs answering in a practical sense. Certain things need to happen when a person passes away, and many of these will fall to those closest to them. But what’s involved in this process? What steps need to be taken?

Get a medical certificate

This is the official document that confirms the cause of death, where that can be ascertained at the time. In some situations, a post-mortem and perhaps even an inquest will be needed to establish the cause.

 Register the death

This needs to be done at a local register office within five days of death. The registrar will need the medical certificate and will ask for various other pieces of information about the deceased. It can be helpful to take along key documents, like the person’s birth certificate and driving licence.

Where an inquest is needed, you’ll be given an interim death certificate enabling you to register the death. A final certificate will be issued once the inquest has been completed. You’ll also get a certificate that allows burial or cremation to take place.

Track down the Will

These are usually filed away at home or stored in solicitors’ offices. (Read our blog: Finding the Will). The Will may express particular wishes about a funeral (read more here about why it can be a good idea to include these in Wills). And it will name an executor, or executors, whose job it is to deal with the deceased’s ‘estate’ (their assets and liabilities).

Remember that there may not be a Will. If that’s the case, the rules of intestacy will apply. An ‘administrator’ (rather than executor) will be appointed to deal with the estate. They are usually a member of the deceased’s family.

Notify others

The government’s online ‘Tell Us Once’ service is a useful way of letting various government departments (HMRC, Passport Office, DVLA, for example) know about the death. Your registrar should explain this at your appointment – if not, ask.

There will be various others to contact, including the deceased’s employer, insurance companies, banks, credit card company, pension provider, utility providers.

Arrange the funeral

There are all sorts of funeral plans available that cover various costs, so you should check to see if the person who died had any sort of cover in place.

Remember to take account of funeral wishes the deceased may have expressed, although it’s not a legal requirement to follow them.

Value the estate

There’s an important threshold to bear in mind: £325,000. This is the trigger for inheritance tax (IHT). If the total value of the deceased’s estate is less than £325,000, IHT liability will not kick in. Tax will be payable on anything in excess of that, with certain exceptions (things that have been left to the person’s spouse or civil partner, for example).

Note that inheritance tax has to be paid by the end of the sixth month after the person died, so the process of valuing the estate needs to happen relatively swiftly.

 Probate

Probate is the legal permission an executor needs to be able to deal with the assets and liabilities of the person who has died. (The equivalent, if there’s no Will, is called Letters of Administration.)

Probate isn’t always needed – it depends on what the deceased owned and how they owned it. Once granted, probate enables assets to be gathered in, debts to be settled, distribution to beneficiaries, and loose ends tied up. For an executor to do this properly (and to avoid personal liability) all estate-related information needs to be considered, which includes claims by creditors. Executors therefore seek out creditors by putting a notice in The Gazette, giving details of the death and contact details so that anyone owed money by the estate can get in touch.

Deal with the estate

The executor first needs to pay debts and any tax owed by the estate. Once that’s been done, assets can start to be distributed to beneficiaries.

That’s a quick guide to some of the main things that need to happen after a person has died. Individual circumstances are all-important, so there’s no substitute for advice on your situation, whether you’re a family member or friend of the deceased, or an executor navigating your way through the process.

Our team is here to help. For advice about dealing with probate or estate administration, contact Emma Howlett or a member of the Private Client team on 0808 256 2917.

Latest statistics show 18% drop in LPA applications and a jump in digital applications and grants of Probate

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The Ministry of Justice has released the Family Court statistics for January to March 2021, revealing that there were 195,734 LPAs received, down 18% compared to the equivalent quarter in 2020.

LPA applications had been steadily increasing, peaking in 2020 – largely brought about by increased publicity and the new online forms introduced in July 2015, making it simpler and faster to apply. As the pandemic took hold LPA applications declined and the first quarter of 2021 saw a significant drop.

Private Client legal adviser at Thomas Mansfield, Emma Howlett, said:

‘The latest UK-wide statistics are interesting. At Thomas Mansfield we have in fact seen a surge of interest in LPAs over the the last 18 months. As much as the pandemic has brought normal life to a halt, it has also sharpened focus on what matters. The future is uncertain and an LPA is a great provision to have made, in the event that you somehow lose the ability to take full care of your property and finances and/or your health and welfare. While the UK-wide statistics show a drop in LPA applications we expect this to increase as the UK exits lockdown and normal life resumes.’

The Family Court statistics also pointed to an increase in the proportion of digital applications and grants issued for probate. Since the Court introduced the online system, simple applications where the person died testate and there are no issues with the Will, have been dealt with efficiently and more quickly than paper applications.

However, the Family Court statistics for the first quarter of 2021 show that where a case has been ‘stopped’ for any reason (in the case of a dispute, issues with a Will or proposed Will, or if an error is identified and a request for further information made), probate grants took 13 weeks on average to be issued, compared to 5 weeks for those that were not stopped.

The full report is available at Family Court Statistics Quarterly: January to March 2021.

Time to change your plans?

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The lead-up to the recent Budget was peppered with speculation about how the Chancellor might start to recoup some of the expenditure of the last 12 months and more.

This included predictions about fairly significant changes to the Inheritance Tax (IHT) and Capital Gains Tax (CGT) regimes. But these didn’t materialise. Rather, the government announced that the IHT nil-rate band (currently £325,000) and the residence nil-rate band (£175,000) are to stay as they are until 2026. Also frozen until 2026 is the CGT allowance of £12,300.

Inheritance Tax

The nil-rate band is the amount below which no IHT is payable. So, if the value of the assets you pass on to beneficiaries is less than (currently) £325,000, IHT will not apply. If the value is above £325,000, IHT will be charged at 40% of that excess amount.

The residence nil-rate band is a separate tax-free allowance, which can be combined with the nil-rate band to make IHT payable on a smaller portion of your estate. It applies where you pass your property on to a direct descendant – usually a child, grandchild or a step-child.

It’s important to understand the extent of your available allowance (has it been eaten into by gifts made during your lifetime, for example?) and to factor some of your planning around it. Note that, as well as usually being able to pass your estate to a spouse or civil partner without IHT applying at all, you and your partner can pool your nil-rate bands, potentially leaving a bigger tax-free allowance to apply to the surviving partner’s estate.

Capital Gains Tax

When you dispose of an asset that has risen in value, CGT may be payable on that increase. This is subject to a tax-free allowance, currently set at £12,300. Selling, transferring and gifting are all ways of ‘disposing’.

If you are someone who has put firm financial plans in place for the future, this continuation of the status quo may come as a relief. Your existing arrangements may be able to stay in place, without the threat of assets being ‘devalued’ through the application of more onerous tax rules. But we all know that change will come at some point; if not now, then almost certainly in 2026. And we always advise every client to stay on top of arrangements for their financial future and that of their loved ones.

It is so important to build review periods into your planning, whether it’s your Will, your trusts, your assets. Keeping up to speed with changes in the law and in tax rules – and, better still, anticipating future twists and turns – should mean you can structure your estate tax efficiently. Ultimately, we all want to be able to preserve the value in the things we own, and enable those we care about to inherit as much of that value as possible. But that doesn’t just happen; it needs to be carefully mapped out.

And it’s not just changes to tax rules that need to be taken into account. Any significant changes in family life – marriages, births, deaths, divorces, should prompt you to review your planning. Financial changes, too, such as an increase or reduction in assets and asset values should trigger a call to your advisors to ensure you put the best arrangements in place.

Our team is here to help with any queries about your existing arrangements, and to help you put new plans in place.

Emma Howlett

01892 337540

[email protected]

When a Beneficiary Can’t Be Found

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The executor of a Will has a hefty responsibility. As the person who must make sure that those entitled to benefit from a deceased’s estate do so, he or she must sometimes handle some tricky situations – not least of which is when a beneficiary can’t easily be tracked down.

It’s not the norm. In most situations, it will be close relatives that stand to benefit from a Will, and those people will usually be on-hand. (When you’re making a Will, include and keep up-to-date as much detail as possible about your beneficiaries; full names and addresses can make the executor’s job far more straightforward.) However, when relationships drift and people lose touch with one another, there is a good chance that the executor will have to invest some serious time in trying to find any ‘missing’ beneficiaries.

This is a legal duty. An executor must take reasonable steps to contact a beneficiary. If that’s not done, the executor could be personally liable to pay the beneficiary what they were due under the Will. It’s a situation that no executor would want to find him or herself in, and many come to us for advice on what to do.

The first, and most obvious, step is to ask around. Family and friends of the deceased are sometimes able to help track down the beneficiary. If that doesn’t work, an advert in relevant newspapers – usually where you expect the beneficiary or others that might know them to be living – is a sensible next step. If that proves fruitless, it might be worth investing in a tracing agent, but perhaps only if the value of the estate would justify that cost.

We have advised on a number of situations in which a beneficiary simply can’t be found. Once all reasonable efforts have been made, it’s time to draw a line. The administration of the estate can’t be delayed indefinitely, so the executor must bite the bullet and move on. But we always advise putting in place some protections to avoid facing personal liability in the event that the beneficiary turns up – which can happen.

There are various options:

  • A reserve fund – hold some money back to pay to the beneficiary.
  • An indemnity from other beneficiaries – they agree to pay the ‘missing’ beneficiary’s share.
  • Insurance – some companies will cover the beneficiary’s entitlement.
  • A court order – the court gives permission to distribute the estate based on a presumption (usually that the beneficiary has died).

Each of those options has pros and cons, and will be more suited to some situations than others. One of the big considerations is the value of the inheritance due to the beneficiary. Not only will that be relevant to the reasonableness of the steps taken to find the beneficiary, but it may mean that the cost of one or more of the protective options is disproportionate.

The good news is that far more often than not, estate administration is relatively straightforward. That is particularly so where the Will is clear and unambiguous and gives plenty of information about future intentions. For the executor, it’s a case of working through each stage of the process – and if that involves having to try to track down someone who has ostensibly vanished, then so be it.

The outcome may not be the one the executor had hoped for; sometimes a beneficiary simply can’t be traced and there’s a degree of uncertainty for years to come about whether or not they might at some point show up looking for their inheritance. As long as the executor is happy that he or she has explored all available options when it comes to trying to contact the beneficiary, and has got some protection against personal liability, there is not much more that can be done. And, ultimately, the executor will be able to say that they took their responsibilities seriously and did their very best.

For advice about tracking down a missing beneficiary, or on any aspect of Wills and estate administration, contact us 0808 256 2917 or email [email protected].