1 May 2019 | Firm news | Article by Eleanor Evans TEP
Probate or estate administration can be a long process. It is necessary for personal representatives to value all the assets of the estate before preparing the required inheritance tax return and submitting an application for a grant of representation to the probate registry. Once the grant is received, the personal representatives can begin to sell the estate assets, before paying the estate’s liabilities and finally making payments to the beneficiaries under the will or intestacy. There are many factors that may delay this process which include, but are not limited to, selling estate properties, dealing with any claims against the estate, and dealing with any overseas assets.
In cases that are required to submit a full inheritance tax return (form IHT400) to HM Revenue and Customs (HMRC), under usual circumstances HMRC will issue a receipted form IHT421 within two to three weeks, enabling the application for the grant of representation to be made to the probate registry. The probate registry usually takes between two to three weeks to issue the grant of representation.
Currently, personal representatives and probate solicitors are experiencing delays at HMRC of up to six weeks before a receipted IHT421 is issued. There are also delays of between five to twelve weeks at the probate registry, between the submission of a grant application, and the issue of a grant of representation.
This means that a process that usually takes between two to six weeks (depending on whether an IHT400 is required), is currently taking between five to eighteen weeks.
Reasons for probate registry delays
There are a number of reasons for the delays, which we understand to be as follows:
- Volume of work caused by the proposed probate fees increase which has not yet taken place (this was originally due to take effect in April). HMRC and the probate registries experienced an influx of applications before April, so estates could benefit from the old fees structure before the change.
- Changes at the probate registry to include introduction of a new online application system for personal representatives, and the introduction of new styles of grants of probate. The Law Society Gazette has reported that there have been IT glitches and printing problems following the introduction of the new systems.
- An announcement of a re-structure of the probate registries. Next year, all the probate registries will be centralised into Birmingham with an administrative function in Stoke on Trent.
- Staff at HMRC being redeployed onto Brexit-related projects.
Impact of probate registry delays
The delays have the following impact on personal representatives and beneficiaries of estates:
- An increase in the overall timescale of estate administration cases. A typical estate will usually take between nine to twelve months to fully administer, assuming there are no complicating factors which will increase that timescale. The current delays could add up to three to five months to the overall timescale.
- Potential problems with agreed sales of estate properties. Where property sales have been agreed, these cannot progress to exchange of contracts until grants of representation have been received. There is the danger that property sales may fall through if there are long delays in receiving grants.
- Delays in estate debts being paid. It is not possible to access estate funds until the grant of representation has been received. This means that creditors will have to wait longer for payment.
It is believed that the delays are partially caused by the influx of grant applications before the planned fees increase in April. This should mean that, once HMRC and the probate registries have been able to clear the bottleneck of applications, there should be an improvement in timescales. In the meantime, personal representatives and probate solicitors will need to do all they can to keep their estate beneficiaries, conveyancing solicitors and estate creditors up to date.