Over the past year, we’ve monitored several news headlines and developments that have impacted the estate administration industry, including the probate application delays, the rising cost of death, and everyone’s favourite topic, Brexit.
In addition to this, Kings Court Trust has undergone some exciting changes that have made it better and easier to work with us.
There’s a lot to cover so let’s jump into the highlights from the past 12 months.
Probate application delays
As you may have been aware, earlier this year the Probate Registries in England and Wales experienced significant delays in their processing of Grant of Probate and Grant of Letter of Administration applications. This was due to the roll-out of new case management software that hindered the speed of processing applications that were submitted between March and May 2019.
To make matters worse, the IT upgrades were concurrent with the recently proposed changes to probate fees that were due to be implemented. This led to increased application submissions to avoid the new probate fees – contributing to the backlog of the new IT software.
The impact of the backlog was felt for several months as Executors, Administrators and estate administration providers were unable to progress the administration of any estates in a timely manner. Processing times are starting to improve but they are by no means back to normal.
Inheritance Tax updates
The OTS published its second report on Inheritance Tax in July 2019 which highlighted how unpopular and misunderstood the tax is among the public. As a result of the report, 11 recommendations were made to simplify the structure of Inheritance Tax.
There have been rumours that Inheritance Tax may be scrapped after Sajid Javid shared how he understood arguments against the tax and suggested that he’s considering changes. However, there is substantial revenue generated from this tax so doing away with it could be impactful.
The rising cost of death
As mentioned above, there is a lot of money to be made by the HMRC when Inheritance Tax is paid – a record-breaking £5.35 billion in the 2019 – 2020 tax year! However, Inheritance Tax is only paid by less than 5% of estates in the UK. For the average Personal Representative in England, the average cost of death is approximately £405 (including cost of probate fees, land registration fees and death certificate costs).
The cost of death is largely determined by the value of owned property which is on the rise throughout the nation. Here’s an example:
- From 2009 to 2010, the average residential property price was just £164,159 for the whole of the UK and £265,249 for London.
- From 2018 to 2019, the average house price increased dramatically to £229,075 in the UK and £475,297 in London.
Although house prices have risen considerably, the Inheritance Tax threshold has remained at £325,000 since the 2009 to 2010 tax year. The frozen threshold means even more estates are beyond the Inheritance Tax threshold and as a result, the average Londoner may now have property valued at £150,297 over the threshold. So, for a homeowner living in London, with no spouse or children, who purchases a coffin and is cremated, the cost of death could cost over £60,000!
The plan to increase probate fees is dropped
A proposal that could have had a hefty impact on probate fees was something on our radar throughout 2019. Instead of a fixed fee of £215 for all personal probate applications (and £155 for applications made by professionals), it was proposed that the fee should depend on the value of the estate. This would’ve meant a variable fee starting from £250 and potentially increasing up to £6,000.
Also, the current estate value threshold would have been raised from £5,000 to £50,000.
The new charges were intended to generate £185 million a year to fund improvements to the court system but critics argued that the figures did not reflect the administration costs.
On Monday 14th October, the proposal to dramatically increase probate fees was scrapped by the Ministry of Justice.
Secretary of State for Justice, Robert Buckland, commented, “While fees are necessary to properly fund our world-leading courts system, they must be fair and proportionate. We will withdraw these proposals and keep the current system while we take a closer look at these court fees as part of our annual wider review.”
Instead, the next annual fee review will look at making only small changes to cover the costs of probate applications – any plans to considerably increase probate fees is reportedly off the table.
Our 2019 review would not be complete without mention of the most talked about and potentially most frustrating topic of the year… Brexit. There has been an abundance of uncertainty surrounding what will happen as a result of Brexit and it looks like that ambiguity will continue into 2020.
There has been much speculation about what could happen when the UK exits the EU but nothing has been confirmed. Predictions of how it will impact estate administration include how it could lead to more complications when dealing with overseas assets and property, as well as fluctuations with currency exchange rates.
Let’s wrap up with a few newsworthy Kings Court Trust headlines…
- In March, we welcomed our new leadership team – Simon Hancox and David Masterton. Both are highly experienced, successful and well-regarded business leaders who have already taken significant steps to move the business forward.
- Our core business model has always been based on a full estate administration service offering however earlier this year, we launched smaller service packages for less complex estates, now starting from simply obtaining the Grant of Probate.
- Our website received a facelift to simplify navigation, improve optimisation and make it easier to get in touch with us.
- We’ve launched a series of new marketing materials to help educate and inform you and your clients on various parts of the estate administration process. They are all available digitally on our website but please contact us if you need hard copies.
- And last but certainly not least, Kings Court Trust is the proud winner of Probate Provider of the year (Large Firms) at the 2019 British Wills and Probate Awards held in October. This award is not only a testament to our exceptionally high standards of service and the support provided to our clients and partners, but also to your support and hard work as a dedicated business partner. We’d like to thank you for working with Kings Court Trust, supporting us to provide an award-winning estate administration service and helping thousands of grieving families receive their inheritance.
Clearly, 2019 was a busy and successful year for us. We cannot wait to see what 2020 brings. But in the meantime, we thank you again for your continued partnership and hope you enjoy a wonderful Christmas season with your loved ones.