Inheritance: Expert gives advice on 'good planning'
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Inheritance tax (IHT) is levied on the estate of someone who has died and is passing on their assets. Usually, these assets are passed onto friends, family and children and the costs can be managed through the use of Wills and the probate system, which provides a person (usually a solicitor or other professional) with the legal right to manage the assets involved.
Today, JMW Solicitors, the probate solicitors, detailed there has been a sharp increase in enquiries relating to inheritance disputes and the contesting of Wills, as well as fewer families leaving their estate to their children.
The law firm said that compared with the previous six months, enquiries had risen by 111 percent between October 2020 and April 2021.
It noted while an increase in unexpected deaths due to the COVID-19 pandemic “undoubtedly” contributed to intestacy rates (where someone dies without a Will), its experts said inheritance disputes were already on the rise in England and Wales.
JMW Solicitors explained figures showed one in four adults would now contest a Will if they didn’t feel it was correctly distributed, with a common misconception around inheritance law across England and Wales being another contributing factor to the rise in contentious probate cases.
Alison Parry, a partner and the head of will and trust disputes at JMW, broke down how these disputes can cost estates dearly, even before IHT is factored in.
“Say you have got an estate that’s worth £200,000,” she said.
“When you have got two or three people arguing over that pot of money and each person has their own lawyers, very quickly you could see half of that pot disappear in legal costs before you have got anything off the ground.”
Inheritance lawyer Joe Cobb, a partner at JMW Solicitors, also said: ‘Traditionally, children are the chief beneficiaries when a parent dies — however we are increasingly seeing clients who do not wish to leave the whole of their estate to children for various reasons.
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“Some wish to encourage their children to make their own way in life, while others prefer instead to pursue charitable or philanthropic aims, or to protect the estate for future generations beyond their children.
“Historically, moral obligation has played an important role — parents have felt that they must provide for their children and that view is also supported by law.”
Mr Cobb went on to warn in some circumstances, children can bring claims against an estate if they have been totally excluded.
As well as the rise in enquiries seen by the law firm, before the pandemic hit the UK, it had already seen a “staggering” 260 percent year-on-year rise in contested probate cases.
With this in mind, JMW Solicitors theorised a shift in inheritance traditions could Continue in a post-pandemic world.
Currently, IHT is levied at 40 percent but this is only charged on the parts of an estate valued higher than £325,000.
To ensure assets are passed on correctly, Wills can be created which can manage the inheritance process and even reduce what’s paid.
However, there are a number of factors which could make a Will invalid and as such, estate planners regularly advise families to seek professional help.
The probate system can also be used in tangent to help with inheritance concerns but applications for grants of probate were delayed in recent months due to the pandemic.
Additionally, the Ministry of Justice is currently consulting on aligning the fees for professional and non-professional applicants of probate into a single fee of £273.
This could raise costs across the board as the Law Society detailed the current fees are £155 for professional users and £215 for non-professional users.
Stephanie Boyce, the Law Society president, concluded: “The MoJ’s persistence of raising fees in the probate service is worrying, particularly when there are continued and significant delays to the probate service.
“With so many applications now online and the expansion of Court and Tribunal Service Centres to centralise administration, it is unclear why probate service overheads have increased to justify such a significant fee hike.
“It is no secret the probate service has faced delays for people applying for probate grants or letters of administration. In 2020, people had to wait 12 to 14 weeks on average to receive their grant. This is unacceptable, the service must be timely and allow executors to settle a loved one’s estate.”
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