Bereavement Process Leaves Majority Bewildered

A recent report, carried out by the Office of Tax Simplification, has condemned the complexity of the Inheritance Tax and Probate Application process.

One of the main issues to arise from the survey concerned the complexity of the forms needed to be filled in.

There were 558,000 deaths in the UK between 2015 and 2016, the years the report focused on. Unbelievably, an inheritance tax form was completed by just under half of these deaths despite only 24,500 estates being liable to pay inheritance tax.

This is one of the main areas of difficulty; if probate is required on the estate, then a form needs to be completed. Without a completed form and a payment of inheritance tax being made, probate will not be granted and assets could not be distributed.

Having weaved their way through a gluttony of complex legalese and reaching the realisation that they need to complete an IHT form to obtain a probate grant, people are then issued with further confusion as to whether they need to complete the short or long form.

The survey indicated that 38% of respondents (who did not use an adviser) spent more than 50 hours administering an estate, which includes 12% of respondents who spent over 100 hours.

Many respondents were irritated by the fact that there is no way to complete and submit the forms online, which creates additional and unnecessary delays in the process. Similarly, despite estates not being liable to pay inheritance tax, the information required to achieve a grant of probate was disproportionately high.

The report also cast a level of scorn on the fact that there is no clear and unified system for the financial world when it comes to probate requirements.

Under the current system, each financial institution operates according to their own requirements. Therefore, when an executor or relative requires access or information about a deceased’s account, the requirements can be wildly different.

Some banks have also been known to release large balances to a next of kin that is not an executor making it challenging for executors who are responsible for the distribution of the estate.

The OTS was also critical over the vast disparities when it came to banks releasing funds of the deceased without probate. Barclays and Lloyds will release up to £50,000 whilst Yorkshire Building Society will only release £30,000 and Moneyfarm will always require probate before releasing money.

Gary Heynes of RSM, a tax consultancy, said: “Clearly there’s an urgent need to reduce this burden and we welcome the proposals to implement a fully integrated digital system.”

Sarah Coles of Hargreaves Lansdown, the broker, added: “This report shines a spotlight on the impact of forcing people through a fiendishly complicated process at a really horrible time in their lives. It’s an area crying out for radical change, and anything that simplifies the process is welcome.”

Whilst there is so much ambiguity and confusion, it is clear that financial institutions should consider creating a clear and transparent bereavement process to help standardise and simplify things for people already struggling with the death of a loved one. Similarly, the complexity in regards to forms creates a clear barrier to the easy administration of a deceased’s estate.

Are you are of people confused by the Inheritance Tax and Probate process? Should more be done to make things easier for executors?

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