Families face probate ‘nightmare’ with delays of up to a YEAR following huge inheritance tax changes

HOUSEHOLDS face delays of up to a year to get probate granted following major changes to Inheritance Tax (IHT) rules by the government, experts have warned.

Finance experts told The Sun that plans to include pensions within the scope of IHT from 2027 could mean thousands of families who don’t even owe any tax will face months of extra delays for probate.

Probate is the legal process of dealing with the estate of someone who has died, including ensuring the right people inherit any money or assets and any outstanding tax or debts are paid.

This can already be a long and complicated, with probate typically taking 9.3 weeks, according to official figures from July 2024.

But experts say that the changes to IHT rules will mean every pension firms will need to be contacted to confirm that there is no IHT due, which could add months to the process.

Former pensions minister Steve Webb, now partner at consultancy LCP, explained: “It can already be a nightmare trying to sort out the financial affairs of a loved one after their death, and these changes to pensions and IHT will make matters much worse. 

“The increased bureaucracy will even affect people who don’t end up having to pay an IHT bill. 

“We are looking at bereaved families still sorting out the financial affairs of loved ones a year or more after the death, putting bereaved families under real cashflow pressures”.

What will the new probate process involve?

Probate is the process of getting permission from a court to carry out the wishes left in someone’s will when they die.

This is normally carried out by the “executor” of the will, who is appointed by the bereaved person.

Before probate can be granted, the person’s estate needs to be valued to work out if any inheritance tax needs to be paid.

Currently, IHT is due if the value of the estate is over £325,000, or £500,000 if you are leaving your home to your children or grandchildren. Any assets above this are taxed at 40%.

There is no IHT due between married couples.

Previously, your estate was made up of assets like your home, investments and any other savings or properties, while pensions were exempt.

But from 2027, pensions will also need to be included in the mix when working out whether any tax is due.

Rachel Vahey, head of public policy at AJ Bell, explained that probate is often delayed anyway, but pensions are significant assets and there are often multiple pots to find, so there will be “more to be done and more assets to consider”.

“Every personal representative will have to contact every pension scheme the deceased was a member of to establish what the value of any unused pension funds is, even if the size of the estate means no IHT will be due,” she explained.

“This is going to slow everything down, even for the most straightforward lower-value estates.”

Mr Webb added: “Once the executor has heard back from all of the pension schemes, they will have to use an HMRC calculator to work out any tax bill and then contact the schemes again if tax is due. 

“Only after all of this is sorted out can they then apply for probate, which can take months to come through.” 

This will impact families who are reliant on receiving the cash to help pay for things like the bereaved person’s funeral or any other outstanding bills.

“Until pension schemes find out whether IHT is due they can’t pay any pension benefits to beneficiaries, even if the beneficiary is financially relying on getting the funds,” Ms Vahey said.

How can I speed up the probate process?

If you are dealing with the death of a loved one, the last thing you need are delays with the paperwork causing extra stress.

Unfortunately, there is no way to actually request that your probate is dealt with faster.

But you can speed things up yourself by being thorough and ensuring you’ve got all there right paperwork before applying, as any mistakes on your application will slow things down.

You should make sure you have the original will when applying for probate, and make sure HMRC has forwarded your paperwork to the Probate Registry directly, according to legal firm FlintBishop.

Be aware that any disputes over the will can also slow probate down.

You can use a specialist probate lawyer to help you get your application right, but be aware this will usually come with a fee.