If you thought that the impending changes to inheritance tax law represented uncomplicated good news, you'd better think again.
This is because far from making the process of inheritance tax fairer and more straightforward as the government has promised, it is likely that the changes will, to some extent, only add to the confusion and, potentially, the liability of those who are not in receipt of good inheritance tax advice.
For example, as of April next year a new "family home allowance" will increase the tax-free liability of many families by adding £175,000 to the existing £325,000 tax-free threshold of each individual. However, the allowance will apply only to "direct descendants" and will be subject to a yearly phase-in, with the final stage to be implemented in 2020-21.
In fact, some media outlets have gone so far as to claim that the legal profession is "rubbing its hands in anticipation of a surge in fees". It is easy to see why some might gain this impression; a 2016 Legal Services Board survey found that only 16% of legal firms displayed their prices online. Of course, this is hardly a cardinal sin in itself and there are doubtless many good reasons why some lawyers don't, yet failing to display prices only adds to the consumer's experience of confusion and disempowerment.
This is because it is highly probable that all but the most legally versed of families will need additional legal advice and representation to help them negotiate the process of winding up an estate, ascertaining its liabilities and, ultimately, paying out to entitled beneficiaries.
The difficulty is only compounded for those families who are unable to obtain clarity and transparency regarding their lawyers' charges and it will be imperative that executors and other interested parties receive clear advice about which costing arrangement works best for them during the probate process, whether it is hourly fees, fixed rates or some other kind of agreement.
Fortunately, there are many good probate lawyers out there who specialise in this field. Unfortunately, it can be very hard to find them, and it is clear that consumers need a straightforward platform to help them sort the wheat from the chaff, a process that is currently made even more difficult by the wide and sometimes staggering variance in both hourly and fixed rate fees. For example, the Legal Services Sector survey found that at some firms the hourly rate can be as little as £50, while at others it can be in excess of £370. For the uninitiated, it can be hard to fathom out what constitutes good value amongst this disparity of pricing.
It is also not unreasonable to consider the situation of those associated with more valuable estates. Quite simply, some lawyers may consider these to be a "cash cow", with estates worth £1m and £2m frequently subject to "settlement fees" of £60,000 or more. This can hardly be right; a good probate lawyer should not seek to effectively "tax" the client for being better off than other clients. Rather, it should surely be the complexity of the probate case which determines the size of fees. So, the concern is that with the rules becoming more complex, there will be an overarching increase in legal fees.
But make no mistake: no party should be dissuaded from seeking the advice of a probate lawyer. For example, from April 2017 beneficiaries of a £2.2 million estate that does not qualify for residence allowance will be left to shoulder an 80 percent tax bill; a situation which, with the right advice over the long-term, might otherwise be avoidable. Whatever reservations a person might have about instructing a lawyer, it is rarely advisable to try to take on the probate process alone.
In the first six months of 2016, 37% of executors decided to manage the process themselves, a 9% rise on the previous year's figure. However, even in the simplest of cases, self-probate can prove a false economy – in the vast majority of cases it is a far better idea to carefully research a probate lawyer and his or her credentials, ascertain a price for the work and then let a qualified practitioner handle the legal process correctly and efficiently.
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