Tony Crocker

Tony Crocker is Director of IWC Estate Planning & Management Ltd. With over 15 years’ experience, he is knowledgeable and proficient in all matters regarding Probate, Will writing, Estate Planning and Inheritance tax avoidance. In addition, he has a wealth of experience in dealing with estate settlements and issues with the capital taxes office in the event of bereavement. As a member of the Society of Will Writers & Estate Planning Practitioners, he is widely respected within the field, having helped many people at difficult points in their lives through complex probate and tax issues. Tony Crocker

Solicitors probate advice in question

Shortly before his surgery in 2007, successful businessman Christopher Swain completed a £5 million management buyout of his company, unhindered by his solicitors who, it is believed, were aware of his ill health.
 
Unfortunately, Mr Swain died following the surgery and it was at this point that his four daughters were hit with a £1 million Inheritance Tax bill.
 
The girls were understandably upset after learning that should their father have not completed the management buyout prior to his death and still be in possession of the shares, they would have not been liable at all for any tax on this portion of his Estate but would have been covered entirely by business property relief.
 
In order to register their dissatisfaction at the advice given to their father by his solicitors (and presumably to try and recoup some of the cost they are now faced with), the girls have taken their case to Court.
 
Although the case is still undergoing and the firm of solicitors has yet to be found guilty or not guilty of misconduct, its seeming reluctance to advise Mr Swain not to go ahead with the buyout or indeed the apparent lack of effective estate planning is questionable.

Civil Partnership Wills

If you have undertaken a formal civil partnership ceremony, the English laws of inheritance, intestacy and Inheritance Tax will now apply to you, too.
 
Currently, should your partner die without having prepared a Will but after having had children, you will only inherit the first £250,000 of their Estate. The rest will be divided between you and your deceased partner’s children if they have any. If there are no children, you’ll receive the first £450,000, plus half of the remaining balance. The rest will be divided up between their surviving relatives.
 
If however, your partner has a Civil Partnership Will drawn up before they die, you will receive their entire Estate, without being liable to pay any Inheritance Tax.
 
Unfortunately, without a civil partnership ceremony having taken place, you will be considered as a “common law” couple, and should your partner die, you will inherit nothing and cannot apply for probate. Instead, your partner’s children, parents or siblings will stand to inherit their Estate.

Inheritance Tax changes in 2012

In an attempt to encourage individuals to leave a legacy to charity within a Will, changes were made during this year’s Budget which will now see Inheritance Tax being charged at 36 percent rather than 40 percent, for those who leave 10 percent or more of their entire Estate to charity.
 
Until recently, English Inheritance Tax law stated that for estates worth more than £325,000, all assets valued above this amount (including any assets transferred in the seven years prior to the person’s death) were to be taxed at 40 percent.
 
This threshold, or “nil rate band” can still be transferred to the remaining spouse on the first individual’s death, thereby increasing the threshold to £650,000.
 
However, having experienced a significant drop in the amount of revenue gained from Inheritance Tax in recent years, the government also announced that it plans to boost this revenue once more by introducing new legislation which could see non-charitable Estates or more valuable Estates being charged a higher rate of tax.

Heir Hunters and Probate Fees – What you Need to Know

You’ve probably seen or heard of the BBC program Heir Hunters, however, all’s not as it seems. There has been frequent media coverage of the extortionate probate fees or finder’s fees charged. Here’s a more in depth look.
 
The Scale of the Problem
 
Some 2 thirds of British people die without making a will. There are approximately 60,000 missing heirs in the UK each year. Around half a million Brits benefit from an inheritance through heir hunting firms every year. This means there’s plenty to go off in this lucrative industry. 
 
It is a highly competitive field – in fact – the process is often described as a race to find the heir. This race is to reach heirs before rival companies and thus secure their fee. Not – as they’d have you believe – a race to find the heir before the Government gets the lot.
 
Shocking Stats
 
The average amount charged by heir locators is 20% of the inheritance. The average estate value is £67,500, therefore probate fees are £13,500 at 20%.
 
Which.co.uk mentions one firm charging as much as 40% plus VAT. “This equates to £120,000 of a £250,000 estate. Yet, the work might have only cost a few thousand pounds if based on the time spent.”
 
Title Research; a firm which tracks down beneficiaries but only on the instruction of solicitors, revealed some shocking truths, “We have received some shocking complaints about probate fees, including one case where the heir hunter charged 33% amounting to £65,000 to find three heirs, plus £12,000 in expenses. We don't think it's fair that missing heirs should receive less than their legal entitlement because the Deceased lost touch with them.”
 
The Use of Scare Tactics
 
40% of those people found by heir hunters, felt under pressure to pay – Opinium Poll
 
They may also use scare tactics, `the government will take the money if it is not claimed.`  There is some truth in this – the Crown does take possession of the estate – however, this is not until 30 years have passed. It is more than likely that the person has only recently passed away.  So there is no need to be rushed. 
 
Some firms will withhold any details of the long-lost relative and amount of inheritance until the beneficiary has signed an agreement. The small print in this agreement means they’re legally obliged to hand over a massive portion of their inheritance – without even knowing how much the fees will be until it's too late.

Case Studies in the News
 
Jessica Ellacott was owed a share of £145,000 inheritance from the estate of a distant cousin twice removed. She was contacted by heir hunters and subsequently left reeling when they informed her that a third of her entitlement would go towards covering the cost of probate fees.
 
Valerie Challis was coaxed into signing away a third of her inheritance before she was even informed how much she stood to gain. After contacting the Treasury directly she discovered the estate was worth £37,000 – the probate fees would have been at least £10,000. She then discovered that this was to be shared between 24 other relatives.

What to do if you’ve been Contacted
 
If you get a knock at the door one day – don’t sign anything until you find out what’s what! Some less reputable companies will force you to sign a contract giving away anything up to 30% of your inheritance.  You are not obligated to use the heir hunter’s services. After all – it is probably the case that they found details of this lost relative on a publicly accessible government website.
 
Don`t act in haste, a little research may save you thousands; IWC can probably handle your claim for a much lower fee; call us free on 0800 612 6105 to find out more.

Is Fixed Fee Probate The Right Choice For You?

If you have been unfortunate enough to lose a loved one, you may want to be relieved of the burden of dealing with their estate. And that is understandable. Coping with a death in the family is never easy, without the added pressure of dealing with the deceased’s finances.
 
But if you have never been in this situation before, you may feel overwhelmed by the options available. Do you appoint a fixed fee probate service to deal with everything for you? Or do you pay a solicitor to do the work on your behalf, on an hourly or per item rate? Or would you be better off just dealing with the deceased’s estate yourself?
 
Your choice will depend on many things including your circumstances and your ability to cope with the additional stress, as well as the state of your loved one’s financial affairs.

DIY Probate
 
In some circumstances, it can be easier to deal with probate yourself. If your loved one did not leave huge assets, or debts, and they didn’t have a lot of money owing to them, you may want to deal with the estate yourself. It could simply be a matter of applying for a grant of probate to gain access to your loved one’s bank account, then paying any bills they owe.

Using a Solicitor to Deal with Probate
 
If the deceased’s finances are not so straightforward and they have left quite a large amount of assets, you may want to get someone else to deal with probate on your behalf. Solicitors do offer these services, but if you feel up to dealing with financial institutions and taxes, you may still want to do it all yourself. And if you don’t, you can expect a solicitor or legal expert to do the following for you:
  • Apply for probate on your behalf.
  • Deal with financial institutions including banks, stockbrokers, and offshore funds.
  • Pay debts owed by the deceased and collect money owing to the deceased.
  • Deal with the sale of any assets such as properties and businesses.
  • Calculate any inheritance tax owing and deal with HMRC.
  • Distribute the proceeds of the estate.
The amount of work involved will depend on your loved ones estate, and if you appoint a solicitor to deal with everything on your behalf, you can expect to pay either by the hour, per each activity that needs to be done – for example writing a letter, making a phone call, or a percentage of the estate.
 
Using a Fixed Fee Probate Service
 
A fixed fee probate service can do everything that a solicitor does, from applying for probate, to distributing the estate. The main difference is, they will speak to you about the estate then agree to do everything for a fixed total fee. Many people opt for this service to avoid escalating legal costs, particularly if the deceased’s financial matters are complicated and it is not clear how long it will take to deal with the estate.

Intestacy and Letters of Administration

If a loved one has died without making a will, you may have been told that you will need to apply for letters of administration, to enable you to administer the deceased’s estate. All this can be overwhelming, when you have just lost a close family member, but it doesn’t need to be as complicated as it sounds.
 
What are Letters of Administration and Why Do You Need Them?
 
Letters of administration are documents that you need to give to the financial institutions that hold the deceased’s assets, to prove that you are entitled to deal with their estate and access their finances.
 
If the deceased has assets of over £5000 and you don’t hold joint accounts with the deceased, you will need to apply for letters of administration, before you can access their finances. But the initial application is not as complicated as it sounds.
 
You will need to fill out probate form PA1 and send it off with a cheque of £105. You will also need to pay and additional £1 per copy of the letter to send to each institution.
 
Does the Process Differ From Dealing With an Estate Where a Will Has Been Made?
 
The initial application is not a great deal different whether a will has been made or not. If a will was left, the executor would apply for probate, to gain access to the deceased’s finances, instead of letters of administration.
 
When no will has been left there is no executor, so the law decides who will deal with the finances of the deceased. This depends on what relatives survive the deceased, and the law ranks them in the following order:
  1. Husband or wife; but not a common law partner.
  2. Children.
  3. Grandchildren.
  4. Parents.
  5. Brothers and sisters.
  6. Grandparents.
  7. Uncles and aunts – but not their spouses.
The other major difference is, because a will has not been made the law has clear guidelines on how the estate should be distributed and this can cause complications. For example, if your loved one had a common law partner, he/she may appeal. Also other relatives may appeal, if they feel they are entitled to more of the estate than the law allows.
 
Another major difference is inheritance tax. Inheritance tax allowances are not as generous, when someone dies intestate.
 
If you feel that your loved ones estate may be too complicated to deal with. Or you don’t want the additional pressure, during your time of grief, you are entitled to appoint a probate service to apply for letters of administration and deal with the deceased’s estate on your behalf.

Don’t plan on reaching retirement age!

Admittedly, a somewhat depressing title for a blog, but it seems that following research carried out by insurance provider Scottish Provident, it has found that half  of the claims it received for life insurance in 2011 were for deceased individuals, aged under 55 years old.

Almost £42 million was paid out to deceased clients’ families, with the average age of the deceased person being only 56 and the average claim totalling around £84,744.

Just under 20 percent of its clients were aged 44 or under, with almost one third being aged between 45 and 54 years old when they died.

This serves as stark warning to those who have put off preparing a Will as they feel they are “too young”.  If Scottish Provident’s research is anything to go by, you have only 50 percent chance of reaching 55.

Don’t take any chances.  Make sure you prepare your Will today.

Can I use inheritance to fund my retirement?

In a survey carried out by the National Association of Pension Funds, over four million working adults in England revealed that they do not consider themselves to have adequate savings to see them through retirement; instead relying upon money they hope will be left as an inheritance to fund their retirement years.
 
These statistics add up to one in six adult workers, with most of the indicated responses coming from the 45 to 54 age group.
 
Although these results are shocking, with around a fifth saying that their lifestyle would be dependent on whatever monies were left from their parents when they die, the survey revealed a much worse, increasing trend.
 
Almost 10 percent of those surveyed were not actively planning for retirement, but were hoping for a lottery win to top up their savings. Not exactly a responsible or indeed, realistic approach to safeguarding their future.
 
Less than half the workforce was actively putting money into a pension scheme.
 
With pensioners in the near future set to be less well off, the price of funerals increasing and care home fees forcing many to sell their homes in order to meet the cost, inheritance and lottery fees could soon be as unrealistic as each other.

What should I do with my inheritance?

This is a question asked by many people when they find they have been left a considerable amount of money as a gift of inheritance.
 
Sadly for Mrs Maureen Curry, she made the mistake of entrusting over £60,000 with her niece and great niece for tax purposes, when her brother died.
Instead of safely investing the money in a bank or savings account where it would have earned considerable interest, Mrs Curry instead put her misplaced trust in her relatives.
 
On realising her mistake, the woman asked for the money back but by this time, it had already been spent – on paying off debts and a family holiday, it was alleged.
 
Both women were given a jail sentence and a period of six months to pay the entire amount back, or face another extended jail sentence.

Closing A Discretionary Trust

Although you and your spouse may have been advised to include a trust as part of your wills, these trusts became somewhat unnecessary after the introduction of the transferable nil rate band, in 2007.
 
If you entire estate was valued over £298,000 at this time, then it is likely that you were advised to include a Discretionary Trust within your wills. This would transfer you or your spouse’s nil rate band, giving the surviving partner maximum allowance on the estate. However since then, the introduction of the transferable nil rate band has meant that as a married couple, you can transfer that Inheritance Tax free allowance between each other, so the
surviving partner benefits from two tax free allowances.
 
Closing your Discretionary Trust now may mean paying less tax on the final estate, so you should take this opportunity to contact a will writer to discuss closing the trust and re-writing your wills.

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