This year has been a big year for government-related announcements, including proposed probate fee changes, civil partnerships set to be extended to mixed-sex couples, and recommendations to simplify Inheritance Tax. 2018’s research papers have also revealed some interesting insights about the Will writing and financial service industries.
As the end of 2018 is nearly upon us, we’re recapping on the biggest industry news from the year. Sit back, relax and read about this year’s most popular topics of conversation in this informative blog post.
In the first quarter of 2018, research about wealth transfer in the UK provided interesting insights into intergenerational wealth transfers; a growing area of importance to the UK economy. The research revealed that a significant number of Independent Financial Advisers (IFAs) are losing funds under management when a client dies. Furthermore and even more worryingly, 18% of IFAs have no active business retention strategy, which suggests that many IFAs are not capitalising on the opportunity to retain and gain assets through intergenerational wealth transfers.
Watch the animation below to find out more about the research highlights:
The ‘Changing family structures: The Will writing industry in 2018’ research paper provided new insights into the UK’s Will writing industry, in the second quarter of 2018. The research revealed that 45% of adults have a Will which is an increase on 39% from 2017. However, those most at risk of not having their wishes followed if they were to die intestate still do not have a Will.
An astonishing number of adults with children do not have a Will. The research found that only one in three adults with children in the household have a Will. The report also revealed that 30% of adults that are living as married have a Will. In comparison, 58% of adults who are married or in a civil partnership have a Will. These statistics highlight that many adults still need to create a Will in order to protect their loved ones and ensure their estate is distributed as per their wishes.
Watch the video below to discover other research highlights:
Transparent pricing in the legal sector has been a popular topic of conversation for some time now, and in August 2018 we finally saw regulatory bodies taking action to make it a reality.
The Legal Services Board has approved new rules proposed by the Council for Licensed Conveyancers (CLC) and Solicitors Regulation Authority (SRA), which will require firms to be more transparent about their prices.
The CLC's new rules call for licensed conveyancers and firms regulated by them to publish information about their services and prices online. In addition, the SRA's rules state that law firms must publish "clear and accessible" prices in a "prominent place" on their website.
The legal industry has been calling for transparency surrounding pricing for many years now to allow consumers to make effective purchasing decisions.
In October, Theresa May revealed that all couples in England and Wales would soon be able to enter into a civil partnership. At present, civil partnerships are only open to same-sex couples, while both same-sex and mixed-sex couples can marry. If the Bill is passed by Parliament then all couples will be given the same life choices.
Civil partnerships avoid the religious connotations of marriage and offer couples some of the same rights as married couples in relation to inheritance, tax benefits and social security.
The UK’s fastest growing family type is cohabiting couple families which numbered approximately 3.3 million in 2017. This could suggest that fewer people are getting married, so will more cohabiting couples now be inclined to enter into a civil partnership?
At the beginning of the year, the Chancellor requested a review of Inheritance Tax (IHT) “to identify opportunities and develop recommendations for simplifying IHT from both a tax technical and an administrative standpoint.” The Office of Tax Simplification (OTS) carried out the review throughout the year and released their first report of findings in November 2018.
The OTS gathered evidence from more than 3,500 people and found that members of the public are concerned about the administrative burden on estates and complexities within Inheritance Tax rules. More specifically, the review revealed that:
• 38% of those surveyed (who didn’t use an adviser) spent more than 50 hours on estate administration.
• ‘Understanding and completing the relevant forms’ and ‘obtaining probate’ were cited to be the most time-consuming
The report offers recommendations to simplify Inheritance Tax in order to resolve administrative issues. The OTS suggests that the “government should implement a fully integrated digital system for Inheritance Tax.” Other recommendations include making changes to the current forms, streamlining the probate and payment process and carrying out a general overview of its Inheritance Tax guidance.
The OTS are expected to release a second report in spring 2019, which will cover other wider areas of concern.
November was a busy month for changes impacting estate administration as it was also announced that a new, banded structure of probate fees could soon be introduced. Lucy Frazer QC MP announced that the legislation had been presented before Parliament.
The announcement revealed that if the proposal is passed:
• The current flat fee could become tiered fees based on the value of the deceased’s estate. The tiered fees would start from £250 and could reach up to £6,000.
• The current estate value threshold would be raised from £5,000 to £50,000, which could mean that every year approximately 25,000 estates may avoid probate fees.
The probate fee changes are predicted to launch in April 2019 so keep your eyes peeled for more updates on this subject in 2019.
With potential updates to probate fees and Inheritance Tax on the horizon, as well as the possibility of changes from Brexit looming, 2019 is set to be an interesting year. Kings Court Trust always strives to keep you up-to-date with the latest industry news. If you’d like to get these updates sent directly to your inbox, click here to subscribe to the blog.