Probate Delays Lead to Finance Demand

A backlog of thousands of probate cases, worsened by the COVID-19 pandemic, problems with HM Courts and Tribunal Service’s IT systems, staff shortages and case overload, is causing severe disruption, say legal experts.

“The long delays can cause real problems with property sales, sometimes causing sales to fall through,” says Eleanor Evans at law firm Hugh James. “Beneficiaries have to wait longer to see a conclusion to the estate administration and receive their legacy.” Evans explains that this “can increase the tax compliance requirements for the executors, and the costs and expenses payable by the estate – for example in maintaining a property whilst waiting for probate to be granted, so a sale can complete.”

Delays of up to five months were common during 2021, with average waits stretching up to 12 or 14 weeks throughout the year. “This is unacceptable,” says Stephanie Boyce, president of the Law Society of England and Wales. “The service must be timely and allow executors to settle a loved one’s estate.”

As of 26 January 2022, HM Courts and Tribunal Service (HMCTS) raised the fees for probate to a flat £273, from £215 for self-administered probate or £155 when using a lawyer. The Service argued that probate costs should be covered by these fees, rather than being a burden on the taxpayer (they have recently operated at a loss) and that all users should pay the same fee. HMCTS aims to raise £20 million through this increase.

Probate professionals recognise the need to cover costs, but fear the new rules may do little to resolve delays. “We query why the UK government has decided to increase fees at this time, particularly as the probate service is still facing delays,” says Stephanie Boyce. Probate beneficiaries are still suffering delays of three months or more, according to law firms, and the changes may cause further problems. “The new universal fee may also create extra administration for HMCTS at a time when it’s already under pressure,” says the Society of Trust and Estate Practitioners (STEP). “Probate is a complicated process for families that are dealing with the distress of losing a loved one.”

Having removed the incentive of employing a lawyer to apply for probate, users may make more errors in their applications, leading to more ‘stopped’ probates, where HMCTS has to investigate anomalies or missed paperwork. “With the time taken to process applications increasing – up to five months in some cases – plus a service which is considerably diminished in quality, and negligible cost savings, it is questionable whether the increase in fees which is going ahead now can be justified at all,” says James Buchan from Which? Legal. 

As troubled experiences of the NHS, Post Office and others goes to show, digitisation and the introduction of online services does not always streamline operations as hoped. The stated aim of HMCTS is that higher fees will “fully fund our investment in a first-class digital probate service to ensure shorter waiting times, fewer user and administrative errors and a better experience for families.” Whether more expensive fees will achieve these goals remains to be seen: HMCTS has set a target of March 2022 for probate waiting times to ‘return to normal’, by which it means users waiting between three to four weeks. 

While the new, higher fees will mean a better-resourced probate service, the problem of lengthy waiting times pre-dates the pandemic and has proved a tricky obstacle to overcome. Timescales began to slide in 2018 when HMCTS announced that a tax of up to £20,000 to be levied on beneficiaries inheriting the largest estates. This provoked an immediate and fierce backlash, with the government at first reducing the size of the top rate tax to £6,000 and then dropping it altogether. 

Families responded by rushing to complete their probate grants ahead of this threatened tax, which clogged up the system. At the same time, HMCTS underwent a drastic overhaul, with staff cuts, office closures and a new IT system which added to the delays. Legal professionals are now sceptical than a little extra funding will resolve these longstanding issues. “We suggest that users should be offered reimbursement for delays,” says Stephanie Boyce at the Law Society. “The Ministry of Justice acknowledged this but did not confirm if it’s something they’ll incorporate,” she adds.  

Michael Culver, chair of Solicitors for the Elderly, argues that in early 2022 his members are still waiting an average of six weeks for probate. “We need to see drastic improvement in the probate service, particularly as people are now having to pay considerably more for it,” says Culver.

One upshot of these delays and HMCTS’s inability to speed up its operations is raised demand for loan financing, as beneficiaries and executors are left with properties to sell or maintain, or to bridge the period between someone’s death and the distribution of their estate. 

As Stephen Clark at bridging loan company Finbri explains: “We very often see examples of beneficiaries requiring finance in advance of probate completion. Bridging finance can make the difference between securing a property sale at an advantageous price, or losing tens of thousands of pounds through delays, maintenance and administrative costs.”

Finbri has researched and published a comprehensive guide to probate, taking readers through the entire process and providing valuable tips on how to navigate this complex area of finance and law. “Many of our clients find themselves in line to inherit substantial assets,” says Clark. “This guide has already proved hugely valuable – saving them time and money, and is available for free at Finbri.”