A year ago, we reflected on one of the most unpredictable and uncertain years in our lifetimes due to the onset of the global COVID-19 pandemic. Looking back, most industry news and headlines directly, or indirectly, mentioned the pandemic and the impact it had on our professional and personal lives.
Fast forward to today, and we are still faced with the continued impact of the virus. Let’s take a closer look at some of the top headlines of 2021 – a year of adjustment, adaptation to a new “normal” and sad royal news.
How COVID-19 has affected what to do when someone passes away
In normal times, when someone passes away, the process that follows can be quite daunting. Since the start of the pandemic and the introduction of The Coronavirus Act 2020, some tasks have been simplified and others have, unfortunately, become more challenging. Here are some of the key changes that we have seen being implemented.
- To register a death, Registrars were allowed to conduct the registration remotely, via telephone or electronic channels. Typically, this is something that always happened in person.
- Funeral arrangements were significantly impacted at various points in 2021. From any cultural or funeral rituals that a family requested, for example, washing, dressing, kissing and holding the person’s body, to inviting loved ones to a funeral service, these were all activities that were banned or considerably restricted at one point. Fortunately, as national restrictions eased by mid-2021, families were allowed to gather and mourn their loved ones with fewer limitations.
- For those that kept important documents, such as pension details, insurance policies and bank and building society account statements, at their local bank, locating the papers may have been delayed. Due to lockdown, many banks reduced their hours of operation and appointment availabilities or even remained completely closed, which created a problem of gaining access to secured documents.
- With so many staff working from home and not having the same efficient processes in place as in an office environment, standard turnaround times by the Probate Registry, HMRC, DWP, Banks and Share Registrars were negatively impacted. This was especially difficult for those who opted for a do-it-yourself (DIY) approach to estate administration.
Is an Inheritance Tax increase on the horizon?
Inheritance Tax (IHT) is currently charged at 40% on the value of an estate above the nil rate band, which is currently £325,000 for an individual. A recent survey by Tower Street Finance has uncovered four in 10 people fear an increase in IHT is coming in order to recover some of the costs of the COVID-19 pandemic. A minority (one in 33) worry that IHT could be doubled to 80%, which is what happened after World War II.
It’s a subject that has come up repeatedly in the past, including throughout the pandemic, but is it imminent this time? It’s a topic we will continue to follow into the new year.
Inheritance disputes & homemade Wills
Inheritance disputes have been on the rise for the past few years. Some of the reasons for this have been more people dying intestate (without a valid Will), loved ones being left out of a Will and the increase in blended families. However, in 2021, a new reason joined the list – an increase in homemade Wills.
Last year, research conducted by law firm Richard Nelson showed a surge in various Google searches related to Will making. In the week leading up to the second national lockdown in 2020, there was a rise of over 600% in searches for ‘make a free Will online’. Worryingly, there were also increases of over 100% for ‘Will template’ and ‘how to write a Will’, as well as a startling 1,500% rise in the search for ‘DIY Will’. These statistics spark concern as online Will templates should not be used as a ‘one-size-fits-all’ template. It may be some time until we know the effect of these online DIY Wills on inheritance disputes, but the expectation is that the validity of some of the Wills created during lockdown could be called into question.
Is the probate fee rise imminent ?
In July 2021, the Ministry of Justice (MoJ) announced that the current probate fees do not cover the cost of running the service, therefore, they have proposed a plan that aligns the fees for Grants of Probate to cost recovery. The proposal states that the probate fee in England and Wales would increase from £155 for probate professionals and £215 for personal applicants to one standard fee of £273 for both professionals and individuals. Estates with a value below £5,000 would still be exempt from probate fees. The MoJ conducted a consultation to seek the opinion of the proposal of the new flat fee from various users of the service.
Since 2016, we’ve been monitoring the headlines on potential probate fee increases which have never taken place. However, the latest proposal seems fairer than in the past, so we expect news on this to be imminent.
The new fees are scheduled to take effect in early 2022, subject to the outcome of the consultation.
Video Will witnessing coming to an end… possibly
In response to the difficulties faced by Testators (individuals creating a Will) during the national lockdowns, the MoJ enacted temporary legislation that would legalise video Will witnessing between 31 January 2020 and 31 January 2022. This means the end date is fast approaching.
The MoJ is currently considering an extension of the legislation beyond January 2022. Last month, the Law Society launched a survey to seek the views of legal professionals on the process to help inform the MoJ’s decision.
We will stay on top of any announcements regarding changes to the end date of this legislation.
A royal farewell
A review of 2021 would not be complete without acknowledgement of the sad end of a royal era. On 9 April 2021, the nation mourned the passing of His Royal Highness Prince Philip, Duke of Edinburgh. Media coverage of his death scrutinised the details of his life and legacy, including what would happen to his multi-million pound estate. If plans were in place for Prince Philip’s estate to be inherited by the monarch, the Queen could be exempt from paying Inheritance Tax due to a legal clause agreed in 1993 which allows inheritance to pass from “sovereign to sovereign” or the consort of a sovereign to a reigning monarch.
For the average person, however, official government guidelines state that if “you leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club”, there is no IHT to be paid.
The exact value of Prince Phillip’s estate remains unknown and a recent high court ruling states that his Will will remain private for 90 years, so it will be some time before anyone knows the details. However, what we do know is that if the Duke of Edinburgh decided to leave his bequest to other members of the Royal Family other than the Queen, they could be faced with paying an IHT bill. Alternatively, if he decided to leave his entire estate to one of the hundreds of charities he supported, there would additionally be no IHT payable.