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Probate – Non contentious contention

By Simon Dawson, Chief Commercial Officer at Legacy Release

The probate process is never easy; whilst dealing with the emotional stress of loss, individuals must quickly turn their attention to managing financial and estate matters. Not only can this be overwhelming, but with emotions running high conflicting priorities and expectations amongst those that are left to make decisions and reach an agreement can often lead to delays and disharmony. In such circumstances, it is down to professional advisors such as IFAs to support the executor and beneficiaries to make decisions collectively. Sometimes however, harmony amongst friends and family is not an easy balance to find.

There are many social and political factors that can influence the timely liquidation and distribution of assets. Some beneficiaries, out of personal necessity, may need to access their inheritance sooner than others. Recent research by the Institute of Fiscal Studies (IFS) found that not only do 81% of those born in the 1980s expect an inheritance, they also actively change their lifestyle choices and spend a proportion of that inheritance in advance. It could be the case that the inheritance is relied upon for helping to support children or grandchildren in the cost of ‘time critical’ spends such as education fees, weddings or healthcare. With the average lifetime inheritance expected to be between £170k-£390k per household (approximately 15-16% of lifetime income), the pressure has never been higher to access inheritance as soon as possible.

The state of the economy and the housing market plays a significant part in influencing decision making. Some beneficiaries may want to maximise the value of assets, such as property and securities, by waiting for optimal market conditions or by undertaking necessary maintenance or development in preparations for sale. It is also the case that the process of selling assets which may include childhood homes, family heirlooms or simply anchored memories, may come too soon for some in the mourning process. IFAs will not only need to advise on the correct time to sell assets according to market conditions, but be sympathetic to emotional conflict which could lead to procrastination in some, but frustration in others.

The executors’ primary concern is to work with beneficiaries and respective IFAs to administer the estate and discharge liabilities, which includes the settlement of the inheritance tax (IHT) liabilities. IHT of up to 40% is levied on the net estate and is payable within six months of the deceased passing. Most recent HMRC statistics demonstrate that the government acquired c£5.4bn of IHT in the last tax year, with the IHT bill averaging to c£209k in 2018/19. Cash in the estate cannot typically be used to pay IHT and with many HNW estates taking up to 12 months to complete the probate process, the funding gap can be substantial.

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