Throughout 2023, there were a number of legal industry updates and news stories that affected the Wills and probate sector. We’ve summarised some of the key changes and the ongoing discussions that could affect professionals and their clients in 2024.
2023 Autumn Statement
Chancellor Jeremy Hunt delivered the government’s 2023 Autumn Statement on 22 November. Despite widespread anticipation that changes to Inheritance Tax (IHT) rates would be announced, IHT was excluded from the statement. IHT receipts for the first seven months of 2023 show a 12% increase compared to the same period in 2022, yet the rate remains at 40% for the time being. The current uncertainty surrounding potential future changes to IHT could affect clients’ willingness to make long-term decisions on their estate planning; professionals should keep an eye out for any future updates to the IHT rate so that they can inform their clients.
However, one key change that was announced during the Autumn Statement was that pensions will remain tax-free from April 2024 onwards – the government has decided to withdraw their previous plans to tax inherited pensions when someone dies under the age of 75.
Discussions have been ongoing with regards to lowering the retirement age, which is currently 66 for both men and women. It is due to rise to 67 by 2028.
Arguments for lowering this include more choice and control for people; studies showing that earlier retirement leads to greater health and happiness; and, as a result, a reduced strain on healthcare, as a healthier, happier population is less likely to need it.
Arguments against lowering the retirement age are predominantly regarding the potential strain on the government’s finances, as people who work longer pay more taxes and increase government revenue.
Lasting Powers of Attorney
Lasting Powers of Attorney (LPAs) continue to see increased growth. In 2022, there were 702,358 LPAs processed, and 771,822 in 2021. LPAs give a trusted person the legal authority to make decisions on behalf of someone who has lost capacity. However, the LPA must be set up when the individual has mental capacity, else it becomes invalid. Without an LPA, when a person loses mental capacity, their relatives would need to apply through the court to obtain authorisation to access their finances. This process can be long and involve significant cost, hence the ongoing increase in LPA applications.
Statutory Legacy sum update
As of 26 July 2023, the Statutory Legacy sum was raised from £270,000 to £322,000. This is the sum that the surviving spouse or civil partner of the deceased can inherit solely on intestacy (without a Will) before it is split between any children. If the deceased had children, 50% of anything in excess of £322,000 must be split equally between them, with the other 50% going to the spouse or civil partner.
The sum was due to be reviewed in January 2025. However, as the inflation rate increased by more than 15% from the base rate applicable when the Statutory Legacy sum was last set, legislation stated that an earlier review must be conducted.
It’s important to note that the previous sum of £270,000 is still applicable on deaths between 6 February 2020 and 25 July 2023. Additionally, if the person who has died did not have children, the Statutory Legacy sum is not applied – the spouse or civil partner receives everything (or the next of kin according to the rules of intestacy).
Wills Project consultation
The Law Commission’s Wills Project initial consultation was published in 2017, but the project was paused between 2019 and 2022. On 5 October 2023, the Law Commission launched a supplementary consultation paper to gain views from consultees.
The project considers the need for vulnerable Testators to be afforded further protection against predatory marriages, with the current Wills Act ruling that a marriage or civil partnership revokes a Will. Additionally, views are being sought on electronic Wills, with increased recognition of digital documents and signatures due to remote Will witnessing being legalised as a result of COVID-19.
2023 Spring Budget
The annual tax-free allowance for pensions was increased from £40,000 to £60,000. With the personal lifetime allowance also being abolished, this could prevent people from needing to make risky decisions in regard to their pensions and savings.
Unregulated Will Writers
Society of Trust and Estate Practitioners (STEP) published a report on the unregulated Will Writing sector in September 2023. It found that dishonest, unqualified, and incompetent Will Writers are causing additional stress to bereaved families when they come to administering the Testators’ estates. 54% of respondents highlighted concerns about unregulated firms advising that Wills lead to increased taxed bills.
This poses a risk of individuals being financially and legally responsible for mistakes made during the estate administration process, including vast sums being wrongly paid in additional tax. Additionally, Testators could be charged additional fees on top of their original quote.
Death certificate requirements
In January 2023, the Office of the Public Guardian (OPG) removed the requirement that a death certificate must be provided for a death to be verified. The Passport Office’s ‘Life Event Verification’ system will be used to confirm deaths going forward. However, should any issues surrounding the verification of a death arise, then a death certificate will still be required.
GOV.UK currently advises that probate should be received within 16 weeks so long as they do not need to request additional information. This wait time has almost doubled from April 2022 to April 2023. Between July and August 2023, HMCTS received 52,459 probate applications, including 39,940 online applications. There is an estimated backlog of around 9,000 applications. Bereaved individuals and professionals alike have been extremely frustrated by the service received.
Due to the continued delays at the Probate Registry, the Justice Committee has launched an inquiry into HMCTS. This was introduced in November 2023 to follow up on extensive concerns about the level of service that professional applicants and the bereaved are receiving. The committee calls for evidence on capacity, resources, and delays across the probate service; the deadline for evidence is 22 January 2024.
We look forward to working with you in 2024 to provide our expert, fixed-fee probate and estate administration services to your clients.
Merry Christmas and a Happy New Year from the team at Kings Court Trust!
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