National IFA slams Govt’s Probate shake-up

National financial adviser LEBC Group has hit out at the Government over plans to change the way Probate is calculated. The firm expressed “dismay” over the decision to alter the basis for totting up fees, which will mean approximately 230,000 families a year paying more to access their loved one’s assets. LEBC’s statement came in the wake of announcements around the first part of the Office of Tax Simplification’s review into Inheritance Tax, which showed that executors are already finding applying for Probate “burdensome and over complicated when a loved one dies.”LEBC says the Ministry of Justice fee hike will only add to the difficulties faced by bereaved families. Kay Ingram, director of public policy at LEBC, said: “Solicitors tell us there is no difference whatsoever in the work required based on value, so the extra charges cannot be justified on grounds of cost.” “Many solicitors presently pay the fee up front and recover it later, but it is unlikely they will be able to do so once the fees increase. “This change constitutes a tax on the bereaved, and we expect many families to face financial difficulties as a result.” LEBC Group says it is currently advising its clients to take a number of steps now to safeguard their families from the worst impacts of the new tax.These include: • Reviewing life policies to ensure they provide adequate funds for dependents and are written in trust. This means the sum paid sits outside of the estate, saving both inheritance tax and probate fees. This also enables access to funds prior to probate being granted; • Updating pension plans as these too do not form part of the estate and can be left to family members outside of the estate, thereby circumventing both probate and inheritance tax; • Ensuring that there are adequate funds in joint bank accounts or that each adult has access to cash savings of their own, to cover 6 to 12 months’ spending; • For younger families, under state retirement age, making a claim for State Bereavement Support at the earliest opportunity. This benefit changed in 2017, with an increase to upfront payments to the spouse or civil partner (not cohabitant); however, the changes also brought about a reduction in the period the benefit is paid for, from up to 20 years to just 18 months. At the time, the Government justified this change on the basis that families need more money in the immediate aftermath of bereavement. It is likely that this benefit will be used by many families to pay the probate fees, so what the Government gives with one hand will be taken away with the other.

National IFA slams Govt’s Probate shake-up

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