Avoiding Some Probate Costs

brianh

Given the alarming rise in probate costs, would it not be sensible for an elderly (at least) couple to ensure all assets are jointly owned and to leave everything to each other to avoid the first death probate cost by not needing probate If they wish to give some money away on death, they can let their spouse know and hopefully they would carry out their wishes.

Obviously depends on actual circumstances (particuarly ISA holdings) but seems worth thinking about to save a lot of costs (and hassle).

Keep_pedalling

All of our assets are held jointly with the exception of our S&S ISAs, but the value of those is significant so imposible to achieve what you suggest without loosing the tax free status.

Also for various reasons couples might not want to leave everything to their spouse. For example a married couple mayboth have children from previous relationships so would want to make sure their children eventually receive their fair share.

brianh

I agree KP that there will be some, for reasons such as the ones you have stated, but that it will be a non-starter for some but those with straightforward family situations whose assets are capable of being jointly owned should consider it perhaps especially so if one of you has serious health issues. What a boon it would be for your loved one if you could ensure that one of the things they didn't have to worry about was the probate process.

getmore4less

there is an anomaly in the IHT/probate system in that the net estate used to calculate the fees includes assets that don't always need probate like houses with multiple owners and there is at least one living.

For cash ISA and sole name nominee accounts it may be worth checking if there are any providers that will accept a will and ID especially if the spouse inheritance is being used.

Malthusian

brianh wrote: »

Given the alarming rise in probate costs, would it not be sensible for an elderly (at least) couple to ensure all assets are jointly owned and to leave everything to each other to avoid the first death probate cost by not needing probate

With you up to this point.

If they wish to give some money away on death, they can let their spouse know and hopefully they would carry out their wishes.

And at this point it gets dangerous for anything but the most trivial gifts ("trivial" = "recipient wouldn't mind if the survivor did not fulfil their late spouse's hopes and give them the money").

I can just imagine threads on here along the lines of "My dad wanted to leave me £50,000 in his Will but he decided to avoid probate fees by leaving everything to my stepmum for her to pass on, but she's now refusing to let go of the money. What can I do?" Forum answer: "Nothing whatsoever, if your dad wanted to leave you money he should have done so and not been penny wise and pound foolish."

The new residential nil rate band could save estates up to £140,000 in Inheritance Tax so complaining about the same government introducing a £20,000 probate fee (on the biggest 0.5% of estates only) verges on the churlish.

brianh

Malthusian - I wouldn't disagree with anything you said but I did say that it suited straightforward family scenarios with other conditions.

I would be confident it would work in our situation. In fact our mirror wills pass everything to our spouse on first death.

I wouldn't do it now because of our S&S Isas combined with the fact we are relatively young and healthy but when one of those situations change, we would definitely consider it. While costs made me think about it, avoiding the whole probate process is the big bonus.

Malthusian

My family scenario was pretty straightforward by today's standards as well (or any standards).

As I understand it you already had mirror Wills which left everything to the other spouse on first death. As you say, ensuring that the finances pass to the survivor while avoiding the probate process is a good thing in itself. That was the case before the change to probate fees.

If someone's Will currently says that certain legacies are to go to the children and the residue to the spouse then they should think very carefully before changing the Will to leave it all to the spouse in the hope that the spouse passes it on, for the sake of avoiding a few quid in probate fees. People change their minds. And family scenarios that were straightforward when the Will was written may get less straightforward. Widows and widowers remarry.

troubleinparadise

There is also advice for house owners who have a spouse who needs residential care to ensure that they own their house as tenants in common.

In that way it is possible to leave half a house to other beneficiaries, and avoid the need for the value of a whole house to be used to pay care fees.

In that case it may well be worth paying the additional probate fee to keep half the value of the house from disappearing into care fees.