The Credence Blog 2020

Lessons from the Kate Garraway Story

The Importance of a Lasting Power of Attorney (LPA)

17th December 2020 (3 minute read)

It’s a thought no one enjoys pondering, but what would happen if we fell ill or had an accident and were unable to make important decisions for ourselves? Many people believe this only applies as we get older, however, no one is immune to an unfortunate circumstance, which makes it all the more important to think about and plan for sooner rather than later. Unfortunately, 53-year-old Derek Draper, husband to Good Morning Britain presenter, Kate Garraway, contracted COVID-19 in March 2020. As Derek battles the effects of the virus, Kate recently spoke out about her financial struggles as Derek fell ill without a Lasting Power of Attorney (LPA) in place. Before examining Derek’s situation, let’s take a closer look at what this means.

What is an LPA

An LPA is a document that lets someone, the ‘Donor’, give one or more people, known as the ‘Attorney(s)’, the legal authority to make decisions on their behalf. This would apply if the Donor ever lacks the physical or mental capacity to do so themselves or they choose not to make decisions for themselves for another reason. According to the Office of the Public Guardian, less than 1% of the adult UK population has an LPA. In England and Wales, there are two types of LPA: Health &welfare: This can include things related to one’s daily routine, medical care, decisions on moving to a care home or receiving life-sustaining treatments. This only applies when someone is unable to make their own decisions. Property & finances: This can include decisions related to managing one’s bank account(s), paying bills, benefits or pension payments or selling one’s home. This can apply as soon as it is registered, with the Donor’s permission. To set up an LPA, you need to be at least 18 years old and have mental capacity (i.e. the ability to make your own decisions).

What happens without an LPA?

If someone loses mental or physical capacity, it's often a significant emotional and psychological burden on their family. However, if a loved one doesn’t have the legal authority to make decisions on their behalf, that burden intensifies. For example, if someone has a joint bank account and they lose their mental capacity, a bank will likely freeze the account, blocking most transactions. They will only reinstate the account after the court has appointed someone, called a deputy, to handle financial responsibilities on the individual’s behalf. This can be a long and expensive process, during which no money can leave the account to take care of bills or other family expenses. Similarly, if decisions need to be made about medical treatment without an LPA in place, a family loses their authority to make those health-related decisions.

LPAs and estate administration

An LPA can only be in effect while the Donor is alive. If the Donor passes away, the LPA is no longer in effect, meaning the Attorney(s) can no longer make decisions on behalf of the Donor nor control any assets. Upon death, the Will comes into effect and the Executor becomes responsible for administering the estate. If there is no Will, the rules of intestacy apply, and the appointed Administrator manages the estate. The Attorney may or may not be the same person as the Executor, however, if there is no Will, the Attorney could apply to become the Administrator of the estate.

Putting it into perspective

As mentioned above, Derek Draper did not put an LPA in place before falling ill, which is putting his wife, Kate, in a tough situation as Derek’s name is on most of their assets. As we now know, without an LPA, no one can deal with Derek’s affairs during his incapacity, not even his wife. “One of the practical problems – which a lot of people would’ve experienced if they’ve got the absence of someone in their life – like many things the car is entirely in Derek’s name, the insurance is in Derek’s name, a lot of our bank accounts.” - Kate Garraway, wife of Derek Draper. With an LPA in place, Kate would have been able to focus on caring for their two young children as well as dealing with the emotional difficulties of her husband being ill. Handling household finances and insurers would have been one less thing to worry about. This is clearly not a situation anyone wants to be in, however, their story truly highlights the importance of an LPA to reduce the weight on your loved one’s shoulders, just in case.

Please get in touch if you have questions about Lasting Powers of Attorney. 01943 678100

Is your Will going to stand up?

Are we at risk of seeing more disputed Wills?

12th November 2020 (1 minute read)

The physical presence of traditional Will witnessing has been challenged due to COVID-19, resulting in The Ministry of Justice temporarily amending the Wills Act 1837 to allow Wills to be witnessed remotely using video technology. This took effect at the end of September 2020, but will cover all Wills created between 31st January 2020 and 31st January 2022. There is still cause for debate about how to address some of the gaps in guidance or concerns about fraud, all amounting to the potential for an increase in Will disputes. Here are some of the most common concerns raised to date:

Wills in transit:The original Will must be delivered to each witness within 24 hours after the previous signature was made. This comes with the risk of getting lost in transit, being fraudulently intercepted and changed while in transit, or the testator passing away before all parties have signed.

Undue influence: Virtually, it’s difficult to ensure the testator is not under undue influence to create or amend the Will outside of the camera’s view. If proven, this will automatically invalidate a Will.

Unstable video connections: Video quality and stability is not always consistent, which raises concerns about poor connections impacting the process, opening the door to disputes over Will validity.

A measure of last resort:The Ministry of Justice have stated this procedure must only be used as a last resort when restrictions make it impossible to witness safely in person. It is likely people will abuse this use of technology when in-person witnessing is a feasible option. This violates guidelines, and therefore can be used as an argument for someone disputing validity.

Please get in touch if you have questions about virtual Will witnessing. 01943 678100

The world's largest 'digital graveyard'

The ongoing trend of leaving a digital legacy

17th July 2020  (1 minute read)

By the end of this century, the number of dead people on the popular social media network, Facebook, is expected to outnumber living members – turning it into the world’s biggest ‘virtual graveyard’.

Additionally, a recent YouGov survey revealed that 26% of people would like the content of their social media accounts to pass to their loved ones once they have died. The survey showed that 67% of respondents wanted their social media accounts taken offline after their death and only 7% wanted them to remain online.

Due to the strong interest in social media and our ‘online life’, the trend of people looking to leave farewell messages to their loved ones via various social networks or online platforms is becoming more common.

Digital legacies can cause issues linked to privacy rules and data protection regulations, highlighting the question of who ‘owns’ your virtual life. Online assets are being viewed as an increasingly important subject and many people are now including clauses about them in their Wills. It is not clear what happens to data collected during a lifetime after someone passes away, which could potentially cause upset to family members if there is any uncertainty.

It is important to discuss your wishes regarding your online accounts with your Executor so that your final wishes are carried out, regardless of your intentions.

Contact me today for more information on digital legacies.

Are you married or in a Civil Partnership without a Will?

What happens to your estate when you are deceased might surprise you.

26th May 2020  (1 minute read)

Leaving a legal spouse or civil partner and children (natural or lawfully adopted children only)

The spouse or civil partner will inherit the first £270,000 (net after debts etc.) plus personal chattels/belongings, as defined by section 55 (i) (x) of the Administration of Estates act 1925 (as amended by the Inheritance and Trustees' Powers Act 2014). The spouse or Civil Partner will then have an absolute entitlement to half of the balance.

It surprises some that the other half of the balance will pass automatically to the children in equal shares absolutely immediately upon death. This could be an issue for example if it leaves the spouse in financial difficulties or the children who inherit are too young, not mature enough or simply not financially aware.

The above will also receive statutory interest at the Bank of England rate that had effect at the end of the day on which the intestate died, payable from the date of death to the date of distribution.

Leaving a legal spouse or civil partner but no children

The spouse or civil partner inherits the whole estate absolutely. This can be what is wanted, but not always, particularly if a person has other close family members.

This is one of many reasons why having a Will is important. Credence can help. 01943 678100

8 life events that should trigger a Will update

12th March 2020  (6 minute read)

Life isn’t predictable nor does it happen in any specific order. Some people may get married at 21 or others at 60. Some may get divorced while others may have an opportunity to move to a new continent every few years. Whatever path we are led down in life, there is one thing that applies to us all – we will experience events that trigger the need to create and update a Will.

Creating a Will is often to first hurdle to overcome. Keeping an existing Will up to date is the next one. It’s no secret that many people do not enjoy thinking or planning for their death but simply having an updated Will can eliminate complications and make things easier for our loved ones left behind.

Generally, it is recommended that one updates their Will every five years, however at the very least, there are certain life events that should help trigger a reminder. Let's have a closer look at eight of them.

1. Getting married or becoming civil partners

 Our research has shown that approximately 45% of the British population has a Will. However, many people do not realise that if they get married or enter into a civil partnership, their Will becomes invalid and must be updated. If they don’t do so, their estate would be distributed according to the rules of intestacy, not the Will, and could result in their spouse or civil partner losing out. On the upside, including a spouse or civil partner as the beneficiary of the assets in your Will could allow them to take advantage of Inheritance Tax (IHT) exemptions, giving them the ability to double the IHT threshold, up to £650,000. This would mean that if an estate is valued under this threshold, no IHT is paid. Anything over the threshold is subject to the 40% tax.

2. New additions to the family

 Statistics released by Royal London, YouGov, IRN Research and Orchard show that more than half of British parents (59%) do not have a Will or they have one that is outdated. This is a worrying indicator as having a baby is a critical point event Wills should be updated.

Why? Well, there are two key reasons: A Will ensures that your children are taken care of financially if you are no longer here to support them as they grow up. This especially applies to stepchildren, who are currently not accounted for in the Laws of Intestacy. Unless a stepchild has been formally adopted by you, they will not automatically benefit financially from your estate unless they are included in your Will.

A Will provides you with an opportunity to express who should become your children's guardian in the event their other parent is already deceased or your children lose both parents at the same time. Without including this in your Will, the courts will decide who will be appointed as guardian, which could be someone your children are not familiar with or a member of the family who you would not have appointed if you had the choice.

This life event does not only apply to parents, but also grandparents who would like their grandchildren to inherit part of their estate. Updating your Will whenever a new grandchild is added to the family will ensure no one important is left out.

3.Buying a property

 For most of us, buying a property is not just the place we call home, it is the largest purchase we will make in our lifetime. Because of this, it has the potential to significantly increase our own net worth or that of your beneficiaries, so dictating who this asset should be passed to is not a decision to be taken lightly. If you own a property solely and pass away without a Will, your property will be distributed according to the rules of intestacy. If you own property jointly, it will be arranged as either joint tenants or tenants in common. If property is owned as joint tenants, your share automatically passes to the surviving joint party meaning that it cannot be passed to a named beneficiary in a Will. If the property is owned as tenants in common, you are able to pass your share of the property to a named beneficiary in a Will. Therefore, buying property should be a moment that makes one realise the significance of having, or not having, a Will.

4. Moving overseas

 Whether it is due to work or fulfilling a bucket list dream, spending several years overseas or moving from country to country is not as uncommon as it once was. This means that more and more people are likely to have assets in more than one country that need to be accounted for in a Will. However, if expats do not plan appropriately, they could significantly complicate their estate. Generally, each country where an asset is held will have its own rules to dictate what happens to those assets, including who can inherit them and what taxes are applicable. Another important area where the rules differ is in whether your country of residence will recognise a Will made in a foreign country or to what extent they will do so. Here are a few examples: Anyone domiciled in the UK will pay Inheritance Tax on assets held anywhere in the world. It’s not like this in many other jurisdictions. Many European countries, such as Spain or France, do not allow a person to freely decide who receives their assets, even if they have a Will. This is called ‘forced heirship’ and, in a nutshell, the laws will dictate who entitled heirs of an estate are. Using a professional Will Writer when you live or have lived in a foreign country is a wise idea. This will help lower the risk of assets being distributed against your wishes, shorten the amount of time it takes to settle the estate and could help to lower the amount of tax payable.

5. Separation or divorce

With a divorce rate of 42% in England and Wales, couples with a Will need to be aware of how to handle this unfortunate circumstance. Separation and/or divorce has the potential to significantly disrupt one’s life and lifestyle, which means that among the settlement of finances, children, property, etc., updating a Will is likely to be forgotten about. But what could happen if it falls off the to-do list? It is important to remember that being separated means that you are still legally married or in a civil partnership, so if your spouse or civil partner is due to inherit part or all of your estate or become your Executor, that will still happen if you pass away before it is updated. Even if there is no Will, your spouse or civil partner would still be eligible to inherit under the rules of intestacy. So in other words, separation has no effect on a Will. This is a perfect example of an event that should trigger the creation or update of a Will to prevent someone you are in the process of parting ways with from benefiting from your estate. Alternatively, divorce has a bigger impact on a Will. Once the decree absolute (the final order) is issued, the former spouse or civil partner is removed from the Will in any areas they were mentioned, creating a gap if no substitute arrangements are made. As a result, until the Will is updated, those assets which your former spouse or civil partner were due to inherit will be distributed according to the rules of intestacy. While this could mean that an estate is inherited by children or siblings, it could also mean that a new partner or new family would not be provided for. Therefore, it is advisable for a divorcee to update their Will as soon as possible to ensure their wishes are carried out.

6. Change in financial situation

It can happen – you win the lottery, inherit a large sum of money from a loved one or the stock market skyrockets in your favour. Experiencing any significant change in your financial situation is a time when one should review the contents of their Will to account for the change in their net worth. Similarly, property values may decrease or you may experience financial hardship resulting in high withdrawals from a savings or investment account. Being familiar with what exactly your beneficiaries could expect to receive can help you plan for all outcomes accordingly.

7. Change in health situation

 Increases in age tend to correlate with the likelihood of having an up to date Will due to the higher risk of health complications as we get older. However, anyone is subject to a sudden change in health or an accident that could result in incapacity or premature death. The sudden diagnosis of a serious or terminal health condition is scary to ponder, however it’s important to remember that under certain circumstances, the validity of a Will could be challenged due to your health if it is postponed. For example, if your mental capacity is impacted by the condition, and you create or update your Will during this time, it may not be valid. If the condition will not affect mental capacity but could shorten your life expectancy, planning ahead to ensure your affairs are in order and your loved ones will be taken care of by way of a valid Will is an action worth pursuing.

8. Death of a loved one

 The passing of a beneficiary could disrupt the plans you have in place for your estate. If this unfortunate event happens, an update to your Will is required to decide what should happen to the gift left to them. If it is an Executor that has passed away before you, you need update who you would like to be responsible for administering your estate to avoid any confusion upon your passing. As you can see, there are quite a few life events that trigger the need to update a Will. It is worth noting that if you’ve already created a Will, a brand new Will may not always be required if you are making small changes such as changing the name of a beneficiary or Executor, or changing the amount of a gift. Generally, it is acceptable to use a codicil if the amendments affect less than 10% of your estate.

Inheritance Tax investigations: Executors liable for mistakes

18th Sept 2019  (3 minute read)

The role of an Executor or Administrator: Risks and responsibilities

Personal Representatives (Executors if there’s a Will or Administrators if there’s no valid Will) are responsible for administering someone’s estate when they pass away. This includes handling all the paperwork and paying the correct amount of Inheritance Tax, as well as dealing with assets, paying debts, handling Income Tax and transferring the inheritance to beneficiaries.

The role of an Executor or Administrator is not to be taken lightly as they have a legal and financial duty to ensure everything is dealt with correctly and in a timely manner. Among other responsibilities, they’re personally liable for the correct distribution of an estate, responsible for maximising the estate for the beneficiaries, and accountable if there are any errors on the Inheritance Tax return.

Many people are unaware of the risks and responsibilities that come with the role. A case reported by The Telegraph last year highlighted the serious repercussions that can occur when mistakes are made. A Personal Representative distributed an estate to the beneficiary as he was under the impression that the beneficiary would pay the Inheritance Tax bill. However, the beneficiary left the country leaving the Personal Representative to foot the £345,000 bill. This is a severe example, but it does highlight how Executors or Administrators need to ensure that the estate is administered correctly.

Simplifying Inheritance Tax
These new figures have come to light soon after the Office of Tax Simplification (OTS) revealed their recommendations to simplify Inheritance Tax. The OTS explored how the administrative and technical aspects of the tax could be improved after the Chancellor requested the review in early 2018.

The OTS followed a consultation process that received an unprecedented amount of interest and the findings have been outlined in two reports. The first report was published in November 2018 and looked at the administration of Inheritance Tax. The second report was introduced in July 2019 and explores the key complexities and technical issues surrounding how the tax works.

It is yet unclear how the government will implement the proposed changes if they take on board the recommendations, however, the high number of Inheritance Tax investigations further supports the need to make the tax clearer and easier to understand.

Executors and Administrators should be more aware of their responsibility when it comes to administering an estate. Estate administration can be extremely complex so it is advisable to put the estate in the hands of an expert, preferably someone who will take the legal and financial burden off your shoulders. If you would like more information call 01943 678100.

Handwritten Will found under sofa cushion in Aretha Franklin’s home

It was originally believed that Aretha Franklin died without a Will, leaving her multimillion pound estate to the rules of intestacy. However, the lawyers for her estate revealed that three Wills have subsequently been found.

Initially, two handwritten Wills written in 2010 were found locked in a cabinet. These Wills revealed that the singer had named her niece Sabrina Owens and son Theodore White II as Executors of her estate. The third Will discovered under a sofa cushion was supposedly written in 2014 and names her son Kecalf Franklin as Executor.

The 2014 Will is reportedly difficult to decipher, so it needs to be determined whether it qualifies as valid Will. The Will has words crossed out, notes in the margins and the handwriting is hard to read in places.

Aretha Franklin’s estate is reportedly worth approximately $80 million (£62 million) and it is still unclear as to who will inherit the estate. If a Will is found to be valid then the estate should be distributed as per the wishes set out in the Will. On the other hand, if it’s ruled that the singer died intestate, then under the intestacy rules set out by Michigan state law, Aretha Franklin’s four surviving children would inherit an equal split of her estate.

The importance of leaving a valid Will The uncertainty around how Aretha Franklin’s estate will be distributed highlights the importance of not only creating a Will but also ensuring that it is legal and stored in a safe place. Regardless of age, health and wealth, it’s crucial that people state their wishes in a Will. This avoids their estate being distributed in the predetermined way dictated by intestacy laws.

To make a Will in the UK, you must be 18 years old or over, make it voluntarily, be of sound mind and make it in writing. Additionally, you are required to sign it in the presence of two witnesses who are both over 18, and your two witnesses must sign the Will in your presence. You can’t name the witnesses or their married partners as beneficiaries in the Will. You should also consider where you store the Will. The best approach to ensure your Will is found when the time comes is to inform your Executor(s) of where the Will is stored. Storing Wills at home can be dangerous as they are at risk of being damaged or destroyed in an accident such as a fire or flood. You could also store your Will with a professional company that offers Will storage, your solicitor, a bank or the London Probate Service.

Overview - Tax payable to HMRC on a deceased person's estate.

5th June 2019  (2 minute read)

This blog post explores how Inheritance Tax works and which other taxes HMRC applies to a deceased person's estate.

When someone dies, their estate – their cumulative assets, money, investments and possessions, less any debts – will be passed on to their beneficiaries. These are usually family members but may also include friends and charities. If the deceased has left a Will, the beneficiaries will be named. The Will will also name an Executor – a person who the deceased has entrusted to ensure that their wishes are carried out. In the case of intestacy, where there is no Will, the entitled beneficiaries must be established in accordance with the rules of intestacy. This will be the role of the Administrator (who has exactly the same duties as the Executor – where there is a Will).

Whether you are the Executor or the Administrator, you will have responsibility for ensuring that all debts and taxes due are paid before any money and assets are distributed from the estate. This is a legal requirement and failure to carry out these duties can have serious consequences, which is why many people choose to appoint a professional adviser to handle these matters.

What is Inheritance Tax and who pays it? Inheritance Tax is a tax on the deceased’s estate after they die. You may sometimes also hear the phrase ‘death duties’, though this term is now redundant as Inheritance Tax consolidated these multiple duties into a single tax in 1986. Technically, Inheritance Tax is a transfer tax on the net collective value of an estate as it passes from one person – the deceased – to another person(s). Like any other tax, it is collected by HMRC and like any other tax, there are requirements governing its payment and penalties for failure to comply.

How much Inheritance Tax do I have to pay? Every estate benefits from a threshold of value below which no Inheritance Tax is payable. This is currently £325k, so if the deceased's estate is valued at less than this, you will not need to pay any Inheritance Tax – though you will still have to complete the Inheritance Tax forms and show that the estate has been accurately valued. The exception to this rule is the estate of a married couple or civil partners (a couple joined by a civil partnership) where the first to pass away has left their entire estate to the surviving spouse or partner. In this case, you will not need to pay any Inheritance Tax unless the value of the estate exceeds £650k when the second person dies.

Inheritance Tax is levied at a rate of 40% on the net value of the estate beyond the nil-rate threshold. The net value of the estate is calculated by working out the gross value – the total worth of all assets – and then deducting any debts, such as mortgages, loans and credit card bills and bequests to charities. You also need to look at whether they made gifts of more than £3k to anyone in the seven years prior to their death – these would exceed the tax-free gift allowance and would therefore be considered as part of the taxable estate. There are also some exclusions that apply to certain types of landholding and to overseas property bequeathed to an overseas citizen. In these cases, you will almost certainly need the support of a professional adviser to accurately calculate a value for Inheritance Tax.

Who calculates Inheritance Tax? It will be up to the Executor or Administrator to calculate the value of the estate and to identify any and all applicable deductions. In very small or simple estates this can be fairly straightforward but it’s surprising how quickly things can become complicated. Valuing property, art, antiques, jewellery and investments can often take time and require expert advice. A professional Administrator will take care of all of this for you.

When does Inheritance Tax have to be paid? A Grant of Probate will not be given until confirmation is received from HMRC that all due Inheritance Tax has been paid. Since the Grant of Probate is the key to unlocking the estate for distribution to any beneficiaries, this means in practical terms that HMRC expects you to pay Inheritance Tax before you do anything else. Inheritance Tax should be paid within six months of death. If you do not pay it within this time, HMRC will start to charge interest on the overdue sum.

This may be another reason for seeking professional advice and support in calculating the value of the estate and completing HMRC’s Inheritance Tax forms. Also, any delay in paying Inheritance Tax will delay the distribution of the estate to other beneficiaries, which can lead to friction and conflict.

Which other HMRC taxes apply? This will depend on the deceased person’s circumstances but there may be Income Tax due on earnings during the year until their death. This may include any rent collected on property and earnings from investments in the UK and overseas. You will need to complete a tax return for the estate on this income.

In some cases, Capital Gains Tax may also be payable if the value of the deceased’s property and any other sold assets has risen since they were valued for probate purposes. Beneficiaries inherit assets at their probate value so if this rises they are liable to pay Capital Gains Tax on the increase.

What happens if I don’t pay or don’t pay the right amount? As the Executor or Administrator, you are responsible for accurately calculating and declaring any taxes payable from the estate. This is a legal responsibility and not to be taken lightly. Failure to discharge these duties accurately may leave you personally liable for any fines and interest due, particularly if you have subsequently distributed the value of the estate to other beneficiaries; they are under no obligation to provide funds to pay towards any miscalculations.

Credence Wills can assist with estate administration and  help you handle the affairs of someone who has died. If you have any questions about estate administration or handling Inheritance Tax, get in touch on 01943 678 100.

Rock Star or not, everyone needs a Will.

11th March 2019

The death of David Bowie caused a generation to mourn the loss of one of the world's most charismatic musical stars. The man associated with numerous wild and wacky on-stage personas was perhaps one of the last people you would associate with planning for his death and making sure that his financial situation was left in a highly organised manner.

However, news reports have shown that Bowie not only understood the importance of having a Will but had also given significant thought to how his estate should be distributed to his family and loved ones. He left the majority of his estimated $100m fortune to his wife, the model Iman, and his two children. However, he also wanted to leave a legacy to his long standing personal assistant, Corrine Schwab, as well as his long term friend and the nanny to his eldest child, Marion Skene.

Bowie also used his Will to stipulate his very specific wishes regarding how he wanted his funeral to take place. As per his wishes, he was cremated as part of a highly private ceremony attended only by his immediate family, before his ashes were scattered in Bali.

While Bowie's Will dealt with the multi-million pound estate of a global star, the same sensible approach to estate planning should be adopted by everyone. While the assets of Joe Public are unlikely to reach into the millions, rising property value and increased salaries mean that you may be worth considerably more than you might think. It is hugely important to think about how you want these assets to be disributed should the worse happen as it could be the difference between your estate being shared amongst your loved ones in line with your wishes, or a potentially divisive and ugly family argument.

Fees to obtain a Grant of Probate are expected to increase

21st January 2019

In November 2018, the Ministry of Justice announced that legislation to introduce tiered probate fees had been presented before Parliament. Consequently, It is possible some changes to probate fees may take effect from as early as April 2019 if the legislation is passed by the government.

These potential increases in probate fees have been in the news since February 2017, when the plan to introduce a banded structure of fees based on the estate value was originally revealed. The plans were put on hold for quite some time but it now appears that the government will finally move forward with the changes during 2019.

The Ministry of Justice declared that the recommended fee model aims to keep up with today’s digital society, creates a “fair and more progressive way to pay for probate services”, and helps to fund an effective courts and tribunals service.

The current fixed fee for obtaining a Grant of Probate is £215 for individuals and £155 for professional bodies. If the proposed fees were to come into effect however, the fees will instead be based on the value of the estate as follows:

Estates worth less than £50,000 will typically not require a Grant of Probate. The estate threshold will rise from £5,000 to £50,000 if the legislation is introduced.

From £50,000 up to £300,000 = £250 fee From £300,000 up to £500,000 = £750 fee From £500,000 up to £1 million = £2,500 fee From £1 million up to £1.6 million = £4,000 fee From £1.6 million up to £2 million = £5,000 fee More than £2 million = £6,000 fee

The planned fees have recently been largely criticised by the House of Lords. Lord Marks of Henley on Thames said: “That this House declines to approve the draft Order, because it would be an abuse of the fee-levying power, since the proposed increased fees substantially exceed the cost involved in making grants of probate and would amount to a tax, which should only be introduced, if at all, by primary legislation.” The criticism received by the Lords could result in the government reconsidering the changes, although the government are not obliged to back down on their proposal.

The updated fees could be introduced this year but at present nothing is set in stone. 

Inheritance Tax Simplification

3rd January 2019

It is expected that there could also be some changes to simplify Inheritance Tax in 2019. In November 2018, the Office of Tax Simplification (OTS) released their first report following a review of the current Inheritance Tax system. The Chancellor requested the review and the OTS provided recommendations to simplify Inheritance Tax from an administrative and technical standpoint.

The OTS recommended that “The government should implement a fully integrated digital system for Inheritance Tax”. We predict that the government will start to create a digital system this year but this will be a time-consuming task. It is probable that the government may first proceed with some of the other recommendations made by the OTS that will be quicker to implement.

These include simplifying the current Inheritance Tax forms, establishing a short form for the simplest estates, introducing an automated payment receipts system, and streamlining the probate and payment process with HM Courts and Tribunals Service.

The OTS are expected to release a second report covering wider areas of concern in spring 2019.

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