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Bereaved families are having to wait nine months to obtain vital documents needed to deal with the affairs of their deceased loved ones, while the probate office continues to suffer long delays.
The delays mean many families have been plunged into financial hardship as they are forced to cover essential costs including funerals, inheritance tax bills and paying off the deceased’s debts before they can lay their loved one to rest.
Wealth readers have expressed concern about the problems their families will face when the time comes.
In some complex cases, it can take 36 weeks or more for a probate application to be granted, warns Emma Dean of the Society of Trusts and Probate Practitioners (STEP).
Delays at the probate office mean many families have been left in financial difficulties following the loss of a loved one.
But those who plan ahead can save their families a lot of trouble by speeding up the probate process and making it easier for them to carry out their wishes. Here’s our checklist of five essential steps you can take now.
1. Write your will
More than half of adults do not have a will, according to pension group Canada Life.
Without a will, your possessions will be distributed according to the rules of intestate succession, meaning that only your spouse or civil partner and your close relatives will receive an inheritance.
In the worst cases, this could result in your stepchildren being excluded or your partner being forced to leave the home if you are not married. An unclear or incorrect will can significantly delay the probate process as additional legal documents may be needed to verify that your will is valid.
You should review your will every five years and after a major life event, such as if you get divorced or a new child or grandchild is born.
Inform your executors that they will be administering your will and let them know where it is stored.
You can lodge your will directly with the Probate Service for a fee of £20, but you will need to make an official application to withdraw it again if you need to amend it.
In this case you cannot ask a lawyer to access it for you.
2. Take inventory
When your family applies for probate, they will also need to pay any inheritance tax (IHT) that is due on your estate.
Until your loved ones know the value of your assets, they won’t be able to work out how much tax you need to pay. If your assets are worth more than £325,000, your estate is subject to inheritance tax, which must be paid within six months of your death.
After this point, interest is charged at a rate of 2.5 percentage points above the Bank of England’s base rate, which is currently 5 percent. One of the most important tasks that the executors of your will must perform is to draw up a list of all the assets, possessions and debts you own and value each of them.
But if you make this list yourself ahead of time, you can help your family members speed up the probate process, says Jay Smith, a senior associate at the law firm Circe Law.
“Increasingly, items are stored away from home in storage rooms, multiple properties or moorings,” she says. “Preparing a list of the items you own will give your loved ones a head start on what to look for and what to value.”
A list will help you think about what items you want to give to whom, which can be expressed in a letter of wishes, a companion letter that can help your executors after your death.
This letter can be updated when the possessions you own change and can help your executors when they need to assess how much money items are worth.
If you have any expensive pieces of art, Smith says it can be helpful to stick labels on the back of the frame to indicate how much you spent on it and who you want to gift it to.
3. Consider a trust
If you have a life insurance policy, consider placing it in a trust to help your family receive the money quickly and avoid IHT, says Dean.
A trust is a legal arrangement set up so that a person or organisation can manage money, property or investments on your behalf, and then hand the assets over to your beneficiaries in a tax-efficient way. Any money placed in a trust is owned by its trustees and is held outside of your estate, so is not subject to IHT.
If you have a life insurance policy, consider placing it in a trust so your family can access it quickly and avoid IHT.
A life insurance policy pays a lump sum or regular payments after your death.
Your family does not need to apply for probate to receive a life insurance payout as long as the policy has been placed in a trust, meaning they could receive your inheritance a couple of weeks after your death certificate has been issued. The money can then be used to pay IHT or other urgent bills.
Most insurers will offer to put a life insurance policy into a trust when you take it out, and you shouldn’t have to pay extra.
You can also place a life insurance policy into 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 help a loved one quickly access small sums of your cash once you have passed away.
This is because the partner, spouse or family member you share this account with does not need to go through probate to access the money saved in a joint account, although this money still counts 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 will become the sole owner of the account.
To transfer the account to your name, you 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.
Some banks and building societies will allow the executors of your will to access the cash held in these accounts before probate is approved, as long as it is less than a certain amount.
For example, Tesco, Barclays and Santander will allow their beneficiaries to access up to £50,000 without the need for probate.
But National Savings & Investments (NS&I) will only release £5,000 without a grant of representation – the legal document you receive from the probate office once an application is approved.
Your loved ones will 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 money held in your accounts before probate was approved.
A ‘direct payment plan’ allows your bank or building society to pay this money directly to HMRC, which can avoid late payment penalties.
A spokesperson for Her Majesty’s Courts and Tribunals Service said: “Most probate applications take around eight weeks and we are working to reduce waiting times, which has resulted in a record number of grants being issued in recent months.”
Has your family had a nightmare with probate? Email: money@mailonsunday.co.uk
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