A Review Of The Wills And Probate Sector In 2018
As 2018 is coming to an end, we can review and re-cap what has happened in the Wills and probate industry. There has been big changes in the past 12 months which will effect the sector going forward which has included key Government related announcements and thought-provoking research papers which could transform the future of the sector.
So before you fully immerse yourself in the Christmas festivities and wind down at work by sending those final emails, let’s take a final look back on 2018.
The first part of 2018 centered around a growing area of importance to the UK economy, namely wealth transfer. Kings Court Trust research revealed fascinating insights into intergenerational wealth transfers.
The research found that a substantial number of Independent Financial Advisers (IFAs) are losing capital when dealing with the affairs of a client who has died. What is more concerning is that 18% of IFAs have no current working business retention strategy, suggesting that numerous IFAs are not making the most of the opportunity to retain and increase their revenue through intergenerational wealth transfers.
Find out more about the research here.
The Estate Administration people, Kings Court Trust commissioned their second research on the will writing industry in 2018 with a specific focus on changing family structures and what the implications for Will writing services will be.
The research paper provided new and exciting insights into the UK’s Will writing industry, it was revealed that 45% of adults have a Will which is an increase on 39% from 2017, which still means a large percentage are most at risk of dying intestate as they still do not have a Will.
Unbelievably specific life events did not seem to encourage people to draft their Will, as only just over a quarter (26%) of adults with children aged 4 years and under have reported having a Will in place. Statistics also showed that 58% of adults who are married or in a civil partnership have a Will, by way of comparison, only 30% of adults who are living as married (what is known as ‘cohabiting’) have a Will. Whether you are married or not these results highlight the need for countless adults to prepare their Wills to ensure their loved ones are protected and their wishes are carried out to the letter.
To read more on the Kings Court Trust report findings here.
Transparency in the Legal Sector
Pricing transparency within the legal sector has been a hot topic of discussion for a while. Finally, in the summer of 2018, the regulatory bodies, Council for Licensed Conveyancers (CLC) and Solicitors Regulation Authority (SRA) took a bold approach and made it a reality.
The Legal Services Board approved CLC’s and SRA’s proposed new rules which would legally require law firms to be more transparent about their prices to allow consumers to make informed purchasing decisions.
The CLC’s new rules call for licensed conveyancers and firms regulated by them to publish information about their services and prices online. Furthermore, the SRA’s rules said that that law firms must publish “clear and accessible” prices in a “prominent place” on their website.
The deadline to comply was set at 6th December in which law firms must publish certain price, service and quality information on their websites. The CLC and SRA, in the lead up to the deadline, provided information, guidance, and templates to ensure firms were compliant ready on the day.
Inheritance Tax System
In January this year, Chancellor Philip Hammond 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) took nearly a year to carry out their review but released their first report of findings in November 2018.
Their report collected information from more than 3,500 people which found that the general public was worried about the administrative drain on estates and complicated 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 gives recommendations to make inheritance tax simpler to resolve administrative issues. The OTS suggests that the “government should implement a fully integrated digital system for Inheritance Tax.” Other recommendations consisted of making changes to the existing system, restructuring the probate and payment process and implementing a general overview of its Inheritance Tax guidance.
It has been reported that OTS is due to publish a second report covering other areas of concern in spring 2019.
The Government announced proposed changes to probate fees last month which will see a new, banded structure of fees if passed by parliament.
The new legislation will raise the estate value threshold from £5,000 to £50,000 which will exclude around 25,000 estates from probate fees altogether. However, the remaining estates will have an increased fee with the revised structure ensuring that the value of fees will be more than 0.5% of the estate’s value.
Currently, a flat fee of £215, or £155 if an estate uses a solicitor to apply for probate, is made on all estates over £5,000. From April, estates valued between £50,000 and £300,000 will now pay a fee of £250.
Those between £300,001 and half a million pounds will now pay £750. Estates between £500,001 and a million will pay £2,500. Whilst estates in the enviable position at being priced over £2 million will now pay £6,000 to make a grant of probate application.
The proposed fees have not been welcomed by the professionals in the industry, many branding them as a sneaky and deceptive ‘stealth death tax.’
However, a small majority of professionals believe the increased fees could be viewed as encouraging and disagree with the backlash because removing the fees from the estates under £50,000 will benefit more low income families and may be more likely to access legal services as a result.
There will no doubt be a lot of updates on this topic in months to come as the probate fee changes are predicted to launch in April 2019. Next year looks set to be an interesting year so keep a look out for the latest news in the Wills and probate industry on Today’s Wills and Probate.
It has been a fantastic year and our privilege to help deliver the news to your inboxes. The entire content team would like to wish you a happy festive period and a fantastic New Year. We will see you all in 2019!