Grieving families are facing administrative ‘chaos’ and waits of 12-14 weeks when applying for probate to get control over a loved one’s estate, say lawyers and inheritance experts.
The probate service is in the midst of a ‘perfect storm’ because of a surge in applications ahead of fee increases of up to 2,700 per cent alongside a drastic overhaul involving staff cuts, office closures, new IT systems and changes to work processes.
Getting probate is an important step that allows someone to take over a dead person’s finances.
Without it, relatives can struggle to meet a six-month deadline to pay inheritance tax or other essential bills out of their own pocket and they are barred from selling a loved one’s property.
Sorting out an estate: Getting probate is an important step that allows someone to take over a dead person’s finances
This is Money reported in May that technical glitches and a rush to beat probate fee hikes were creating a backlog that extended the usual 10-day process to seven or eight weeks, and 11 in some cases.
Lawyers and other professionals tell us the problems are still ongoing and have slammed the Government’s HM Courts and Tribunals Service for putting grieving relatives through huge inconvenience and worry.
People are facing the threat of house sales collapsing or running into debt due to probate delays that are out of their control.
When grants of probate finally arrive, some bereaved relatives are discovering staff have made ‘red pen’ amendments, or that no will is attached to their documents.
Banks and overseas institutions are rejecting their validity as a result, and relatives must then reapply for probate from scratch.
How much are probate charges?
At present, applying for probate costs a flat fee of £215, or £155 if a lawyer does it on your behalf.
In future, it will cost nothing for estates under £50,000, which is more lenient than the current £5,000 threshold for exemption.
But £250 will be levied on estates worth £300,000-£500,000, rising to £6,000 for those worth £2million-plus.
It is unclear when the rises will be introduced – read more below.
A HM Courts and Tribunals Service spokesperson said: ‘We understand that it can be emotionally difficult dealing with a loved one’s finances when they die.
‘Delays to probate applications are steadily decreasing, meaning those who apply in good time should be able to pay inheritance tax well within the six-month window.’ Read more from the Government below on what to do if you owe inheritance tax.
Ian Bond, chair of the Law Society’s wills and equity committee, says the Government is trying to bring in new fees and modernise probate service infrastructure at the same time, and this is having negative consequences.
‘It’s created a perfect storm. They have had a surge of applications because of the proposed fees, they have had disengaged staff because of centralisation and redundancies and they have got new systems and processes to get used to.’
Bond, who is also director and head of trusts and estates at Talbots Law, adds: ‘People want closure after they lose a loved one to start the process of moving on. With these delays, they are stuck in limbo for a very long period of time.’
Regarding how long probate used to take, Bond says: ‘Two weeks is normal. We are a long way off getting back to that.’
Emily Deane, technical counsel at the STEP trade body of inheritance professionals, says probate delays and administrative problems have ‘resulted in chaos for families who are grieving and need support’.
‘We are very disappointed with the current level of service being provided, since the Probate Service has historically provided an exceptional service to professionals and members of the public.
Emily Deane: ‘The Government was aware that there would be a spike in probate applications as a result of the proposed probate fee increase’
‘The Government was aware that there would be a spike in probate applications as a result of the proposed probate fee increase, so it seems an odd decision to move to an online system, reduce the number of registries and level of customer service, and change to a new-style certificate at the same time.’
Dan Garrett, co-founder and boss of will writing and probate service Farewill, says: ‘In the UK, approximately half of all deaths require probate. Those involved are often overwhelmed, and unclear where to start.
‘Under the newly proposed fee structure, probate fees will be calculated depending on the worth of the estate – so for some families, the cost of sorting probate could be much higher than it is now.
‘More than anything, it’s just not clear enough yet.
‘The current delays of up to 13 weeks at the registry are also causing families a great deal of worry, at an already stressful time.’
The Government has previously come under fire for farming out the vital job of detecting bogus wills to a private ‘bulk scanning’ firm as a money-saving exercise.
Civil servants were responsible for checking wills are original before granting probate, and their union claims automating this task means fakes are likely to get missed, increasing the risk of fraud.
The Government says the role of a private firm, Exela, will be to determine whether a will is original or a copy, and HM Courts and Tribunals Service staff will continue to check the validity of wills.
HMCTS runs the probate service, while the Ministry of Justice has separately overseen the increase in probate charges.
What problems are bereaved families facing?
Ian Bond, chair of the Law Society’s wills and equity committee, makes the following points.
– HMCTS has told the Law Society that delays to probate are currently running at 8-10 weeks, but in reality waits are now 12-14 weeks.
Ian Bond: ‘People want closure after they lose a loved one to start the process of moving on. With these delays, they are stuck in limbo for a very long period of time’
– There are 12 main probate registries and about 20 sub-registries across the country, but the vast majority are closing and the service is being consolidated at two sites.
– The centralisation of registries means many HMCTS staff with years of experience are on redundancy notice, while new staff recruited for the two new centres have experience measured in weeks. Meanwhile, new IT systems are suffering from bugs.
– The Law Society is hearing anecdotal reports that probate delays are causing house sales to collapse, estate agents are becoming reticent about putting houses on the market when probate isn’t yet granted, and people are running up debts because banks won’t release funds without probate.
Emily Deane of STEP raises the following points:
– Wills are no longer attached to grants of probate which raises concerns about fraud, and some financial institutions abroad are rejecting grants in their new format and will not close the accounts of the deceased. The change in practice is causing people difficulties and delays.
HMCTS has told STEP that people can pay if they want certified copies of wills to accompany grants of probate. This used to cost £10 but the price was cut to £1.50 in July.
– Some grants have ‘red pen’ amendments on them made by probate service staff, and these are being rejected by financial institutions. When this occurs people have to reapply for probate again from the beginning because the service is not prioritising applications and will only deal with them in date order.
– Inheritance tax needs to be paid six months after the date of death, and interest is incurred when people cannot pay because they haven’t received grant of probate.
STEP believes HMRC should either waive interest accrued after the six-month deadline or extend the deadline for the first payment in cases where people can’t pay inheritance tax because of Probate Service delays.
Why have probate ‘taxes’ sparked fierce resistance?
Critics claim the increased charges are effectively a ‘tax on wealth’, which is expected to raise £155million a year to pay for running the Ministry of Justice, and won’t reflect actual administration costs.
The Government was accused of sneaking through the stealth ‘death tax’ by getting it waved through by calling it a fee and thereby avoiding a debate or vote.
This is Money then discovered in the small print of a document released by the Office for Budget Responsibility following the Spring Statement that the Treasury expects the newly hiked fees to be officially classified as a ‘tax on capital’, rather than a payment for a service.
This reignited the row, and prompted fresh calls for a thorough look by Parliament.
However, the Ministry of Justice insists the fees are not a tax, and any decision to define them as such would be purely for accounting purposes.
When will controversial fee hikes be introduced?
The probate logjam has been worsened by people rushing through applications to avoid pending hikes to fees.
These will rise from a flat £215 to £6,000 on the largest estates, though many inheriting modest assets will pay nothing or much smaller sums. See the table below.
The new fees, which critics dub a tax on wealth because they won’t reflect the actual administration costs of getting probate, were due to be introduced in April.
However, they have been delayed for reasons that are unclear, but may be due to gridlock caused by Brexit, or concern that opponents will try to stop them getting the final nod in parliament.
The Government still needs to put a ‘statutory instrument’ before parliament, and if it passes the fee increase would be introduced 21 days later.
Parliament is on its summer recess and returns on 3 September, but it is not on the calendar that week and the earliest it could be brought in now would be early October.
Ian Bond says the Government might let it lapse this parliamentary session, but money from the fee increase has been budgeted for so it’s likely this issue will return in the next session.
People who have already applied for probate won’t have the new fees levied on them.
Changes to charges: System will be based on the size of an estate, replacing fees fixed at £215 for all, or £155 if you use a solicitor. The Government previously intended to introduce much higher charges, but changed its plans following an outcry
What does the Government say?
HM Courts & Tribunals Service issued the guidance below on paying inheritance tax within six months and on fraud concerns:
HMRC has guidance for customers who are worried about paying inheritance tax here.
Personal representatives may be able to be helped by the direct payment scheme, where payments can be made directly to HMRC from the deceased’s bank or building society before probate is granted. National Savings and Investments also provides a similar service.
Following a death if there are assets which may take time to sell, such as a house or shares, HMRC enables personal representatives to pay any inheritance due by instalments over 10 years, although interest may be charged on these delayed payments.
If a personal representative is not sure how much tax is due by the six-month deadline, they can choose to make a payment on account.
Any overpayment made will be returned, with interest to the personal representative once the correct estate accounts have been provided.
The personal representative has up to 12 months from the date of death to file accurate accounts for the deceased’s estate.
Regarding fraud, added measures to counter it include holograms, digital seals, and digital signatures to make cheating the system even harder, and 93 per cent of those using the new service have been satisfied or very satisfied by it.
Exela, the firm awarded the contract to check whether wills are original and not copies, has 30 years of experience in the bulk scanning industry. The validity of the will is still checked by HM Courts and Tribunals Service.
Quality checking remains a priority, full training has been provided, and staff continue to be supported by experienced registrars who oversee the issue of grants.