Unfair probate treatment.

bostonerimus

I just got my "affairs in order" and one of the goals was to avoid probate. So when I die everything except my retirement accounts passes to a trust and the retirement accounts pass directly to my heirs. This avoids probate entirely. I'm in the US, but I believe similar steps can be taken in the UK.

masonic

peter_batty said:

According to the government's own website Gov Uk. Savings or estate valued (not sure which as I can't find the statement to hand) below 5k are automatically exempt from Probate

Not exempt, but there is no fee for estates valued at under £5,000. See https://www.gov.uk/applying-for-probate/fees which makes it clear that you can apply for probate even if the estate is valued at less than £5k.

peter_batty said:

My issue was/is that there may be a multitude of low value estates where a small saving exists. The examples you give above don't appear to recognise a minimum estate or savings value. ergo, the cost of probate application is or may be prohibitive or unnecessary.

Obviously my wife's estate doesn't fall into this category but the principle is the same. Shouldn't Raisin et al be asking for an estate valuation first?

Whether they should ask depends entirely on whether it would affect their decision. They know the value of the assets they hold and whether there are any other assets elsewhere to be added to the estate may make no difference. If it would make a difference, then they should ask, but the institutions I have dealt with in the past did not take the total estate value into consideration.

peter_batty said:

Secondly. The comparison T's and Q's are interesting and denote there is a differentiation between organisations, even those apparently working with Raisin. What I am hoping the FCA will discover is, how disparate term's and conditions are and whether these should be consistent across the Financial Market

I don't think there is a substantive difference between the organisations based on what is written in the T&Cs. They differ in what is disclosed within the document, but there is nothing to suggest the approach is different. All of the organisations mention requiring appropriate legal documents (some specify Grant of Probate, others leave it vague), all suggest access can be provided after this (only OakNorth explicitly mentions that accounts can remain open accruing interest in the interim, QIB implies early termination is an option rather than a requirement, while ICICI 'allows' access to the funds. None close the door to continued interest, or allowing fixed term accounts to run to maturity). None of them disclose enough for a reader to form a view of what they would do in practice given a particular set of circumstances.

peter_batty said:

Fourthly. OakNorth isn't that clear on what the cut off point would be. They only appear to be saying it will accrue until account closure. Is the account closure the date of death or, upon production of all the formal documents which, of course , could be months or even years after death

It is clear that the account will not be closed until the personal representative is verified, and implies the representative would need to instruct them to close the account. Where a fixed term account matures in the interim, I very much doubt interest would continue to accrue beyond the date of maturity, but whether the money is sent as normal back to the holding account they do not say.

peter_batty said:

On the 28th July I asked Raisin to confirm or clarify its statement of 21st April - "Interest will be paid up until the date of death, and these funds will be paid out once MAM have received all of the required documentation". Surprise, surprise, they have yet to answer.

I remain very sceptical at this time. Settlement is still somewhere on the horizon as Raisin is now insistant that all 3 executives open a joint banking account and (Wet) sign a letter advising Raisin where to send the money. Unbelievable. 

The joint bank account thing seems a bit over the top, but my understanding is that joint executors should not act alone and so a request for an instruction signed by you all (or a signed agreement that one of you may act alone) is not surprising.

peter_batty

Thanks for the input and advice Masonic Today the FCA provided me with direct contact details of appropriate persons in the partner banks. Should be interesting. I am off air for a few days but hope to have finalisation next week. I will update you as and when

Keep_pedalling

bostonerimus said:

I just got my "affairs in order" and one of the goals was to avoid probate. So when I die everything except my retirement accounts passes to a trust and the retirement accounts pass directly to my heirs. This avoids probate entirely. I'm in the US, but I believe similar steps can be taken in the UK.

I don’t think that is possible in the UK for anyone holding things like equities in a GIA or ISA. Large cash deposits or sole ownership of property would also make it impossible to avoid probate. 

bostonerimus

Keep_pedalling said:

bostonerimus said:

I just got my "affairs in order" and one of the goals was to avoid probate. So when I die everything except my retirement accounts passes to a trust and the retirement accounts pass directly to my heirs. This avoids probate entirely. I'm in the US, but I believe similar steps can be taken in the UK.

I don’t think that is possible in the UK for anyone holding things like equities in a GIA or ISA. Large cash deposits or sole ownership of property would also make it impossible to avoid probate. 

Google "Probate Trusts". Yes, you have to be careful what you put into trust as tax can be an issue. In the US cash, houses, insurance policies and possessions often go into a "revocable trust" so that the trust can distribute the items and cash to the beneficiaries without going through probate. Retirement accounts and GIA's are best left out of the trust as they complicate the taxes, but in the US those can be passed directly to nominated beneficiaries and also avoid probate. It will be different in the UK, but trusts can be used for probate planning purposes. The good thing in the US is that you can give $15k per year per person to any number of individuals without tax consequences and so with some planning it's possible to give most of an estate away to family.

masonic

Having had a cursory look, I'm not convinced the hassle and cost of setting up and maintaining a trust arrangement makes sense to avoid the hassle and cost of applying for probate, especially in a case like this where the value of the estate is below the threshold for IHT. In a simple case, probate can be navigated without the use of a solicitor, whereas I don't think a trust could be (safely) set up as a DIY exercise. Happy to be convinced otherwise though.

dunstonh

Setting up and maintaining a trust is a hassle and creates taxation.  It is really unnecessary for the vast majority of people.   A few months delay due to probate is not a big deal and the process to obtain it is so much easier than it used to be.

P1Fanatic

I had to sort probate out for my dad when my mum passed. The only org that requested it was NS&I but to be fair my mum had a full PB holding and some other bonds so it was a decent chunk of money. If it was lower I would definitely have tried to avoid it purely to not have to pay the £275 fee. It was actually a lot easier and quicker than I had expected.

dunstonh

P1Fanatic said:

I had to sort probate out for my dad when my mum passed. The only org that requested it was NS&I but to be fair my mum had a full PB holding and some other bonds so it was a decent chunk of money. If it was lower I would definitely have tried to avoid it purely to not have to pay the £275 fee. It was actually a lot easier and quicker than I had expected.

If you apply for a grant of representation then you are meant to notify banks/providers that you are obtaining one and they should not use the small estates exemption.  So, whilst a bank may not require it based on its own value, the minute they are made aware that probate is being obtained, they shouldn't use the small estates exemption.    

For example, here is an extract from a small estates claim form:



In reality, executors often lie on that point as they don't want the hassle or are mistaken in the completion.  It happens a lot.

So, in this case, the fact that NS&I wanted it, then all banks should have wanted it based on it being obtained.

Keep_pedalling

bostonerimus said:

Keep_pedalling said:

bostonerimus said:

I just got my "affairs in order" and one of the goals was to avoid probate. So when I die everything except my retirement accounts passes to a trust and the retirement accounts pass directly to my heirs. This avoids probate entirely. I'm in the US, but I believe similar steps can be taken in the UK.

I don’t think that is possible in the UK for anyone holding things like equities in a GIA or ISA. Large cash deposits or sole ownership of property would also make it impossible to avoid probate. 

Google "Probate Trusts". Yes, you have to be careful what you put into trust as tax can be an issue. In the US cash, houses, insurance policies and possessions often go into a "revocable trust" so that the trust can distribute the items and cash to the beneficiaries without going through probate. Retirement accounts and GIA's are best left out of the trust as they complicate the taxes, but in the US those can be passed directly to nominated beneficiaries and also avoid probate. It will be different in the UK, but trusts can be used for probate planning purposes. The good thing in the US is that you can give $15k per year per person to any number of individuals without tax consequences and so with some planning it's possible to give most of an estate away to family.

Not really suitable for the vast majority of us, can’t be used for our homes (not that I would ever want to to do that) or for our ISAs and probate is really simpler that setting up any trust just to avoid it.