When someone dies, their estate (property, money and possessions) usually needs to be administered through a legal process known as probate. In England and Wales, probate is the procedure by which the deceased’s will is proven in court and the executors are given authority to distribute the estate. If there is no will, a similar process applies through “letters of administration”.

Although many people instruct solicitors to deal with probate, individuals can apply directly through the courts. This is often referred to as “DIY probate”. While it may seem like a way to save costs, there are several risks that anyone considering this route should be aware of.

What is Probate?

Probate is the official confirmation that a will is valid and that the named executors can deal with the estate. Without a grant of probate (or letters of administration if there is no will), banks, building societies and other institutions will not usually release funds or transfer property.

The law governing probate primarily comes from the Non-Contentious Probate Rules 1987 and the Administration of Estates Act 1925. Applications are made to the HMCTS Probate Service (online in most cases, or by post where required). If the estate is worth over £5,000, the HMCTS application fee is £300; there’s no fee at £5,000 or less.

Why Some People Attempt DIY Probate

There are two main reasons people try to handle probate themselves:

• Cost – those attempting DIY probate seek to avoid paying professional fees.
• Simplicity – In straightforward estates, some executors believe they can manage the process without professional support.

However, even apparently simple estates can have hidden complications.

The Risks of DIY Probate

1. Misunderstanding Inheritance Tax

Executors are personally liable for ensuring inheritance tax (IHT) is calculated and paid correctly. Mistakes can result in penalties and interest being charged by HMRC. Complex rules apply, including allowances, reliefs, and exemptions.

2. Misinterpreting the Will

Legal terminology in wills is not always straightforward. Executors may misunderstand the provisions, leading to incorrect distribution of assets or disputes among beneficiaries.

3. Failing to Identify All Assets and Debts

Executors must ensure that all assets are collected, and all debts are paid before distributing the estate. Overlooking debts or paying beneficiaries too early can make an executor personally liable.

4. Problems with Property

Where the estate includes property, there can be complications such as mortgages, jointly owned property, or an unclear title. These issues often require legal expertise to resolve.

5. Disputes Between Beneficiaries

DIY probate can increase the risk of disputes if beneficiaries feel the estate is being mishandled. Executors can be taken to court for breach of duty.

6. Executor’s Personal Liability

Executors carry significant personal responsibilities. Errors in tax, distribution or administration can result in financial liability, even if the mistakes were unintentional.

When DIY Probate May Be Less Risky

DIY probate might be manageable where:

• The estate is small, and all cash balances are under each institution’s probate threshold (check with each bank/building society)
• There is no property.
• There are a few beneficiaries, all of whom agree on the process.
• There are no tax liabilities or foreign assets.

Even in these cases, care should be taken to follow official guidance.

Balancing Cost and Risk

While solicitors’ fees can seem significant, they can save time, reduce stress and protect executors from costly mistakes. A solicitor can also deal with HMRC and the Probate Registry on your behalf and ensure that the estate is administered in accordance with the law.

Final Thoughts

Probate is a necessary legal process that should not be taken lightly. DIY probate is possible, but the risks can outweigh the savings if the estate is anything other than very simple. Executors should think carefully about whether they have the time, knowledge, and confidence to handle the process themselves.

If you are facing probate, it is always advisable to seek independent legal advice to ensure that the estate is dealt with correctly and to protect yourself from personal liability.

The post DIY Probate in England – Understanding the Risks appeared first on SJP Law.

Despite ongoing pressure from legal and policy bodies, meaningful reform still lags behind. In the meantime, the risks for cohabiting couples remain high, particularly with the persistent myth of the ‘common law marriage’.

Explained Monika Bone, at Stamp Jackson & Procter Limited, based in Hull and York: “There is no such thing in England and Wales and couples who live together without marrying or entering a civil partnership need to be aware they do not have the same legal rights or financial claims.

“That means if a cohabiting couple separates, whether they share children or not, there is no automatic right to the protections that marriage brings – such as maintenance, a share of property, pensions or other assets – regardless of how long a couple have been together.”

The number of cohabiting couples has more than doubled over the past 25 years and now exceeds 3.5 million households according to the latest figures from the Office for National Statistics, but the law has not kept pace with societal change.  While the Law Commission has long advocated for reform to introduce basic financial protections for cohabiting couples who have children or have lived together for a significant period, successive governments have failed to legislate.

In 2022, the Women and Equalities Committee called for urgent action to address the lack of legal protection, and the Labour Party has expressed support for cohabitation reform, but no clear timeline has been set beyond saying a formal consultation will be issued this year ‘to build public consensus on what cohabitation reform should look like’.

“It’s a persistent legal blind spot,” added Monika.  “Cohabiting couples often build long, committed lives together – even raising children or buying homes – but have no automatic legal safety net if things go wrong. Until reforms catch up, couples should get advice early to avoid the risk of unfair outcomes if the worst happens and relationships breakdown.

“For now, the safest approach for cohabiting couples is to act as though there will be no legal safety net – and put the necessary agreements in place. That way, if the worst happens, the outcome doesn’t depend on a legal system still catching up with modern family life.”

Until legal reform happens, the best protection is preparation. Legal experts recommend a few key steps:

• Create a cohabitation agreement: This sets out how property, finances and responsibilities will be handled during the relationship and in the event it ends.

• Sign a declaration of trust: Where a property is jointly owned, this clarifies who owns what share.

• Make a will: Cohabiting partners do not automatically inherit under intestacy laws.

• Consider parental rights: Unmarried fathers are only automatically granted parental responsibility if named on the birth certificate. Legal advice can help clarify child arrangements and support.

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This strategy relates to the Residence Nil Rate Band (RNRB), a valuable relief on inheritance tax that kicks in when individuals pass on the family home to their direct descendants.  It provides an additional threshold of £175,000 per person, or £350,000 for a couple, when combined with the standard nil rate band.

But there’s a catch. For estates worth over £2 million, the RNRB is gradually tapered away at a rate of £1 for every £2 over the threshold.  Once your estate exceeds £2.35 million, or £2.7m where a partner’s allowance has been passed on, the allowance disappears altogether. For high-net worth individuals, this taper can erode a significant benefit intended to protect the family home.

Passing on assets can help reduce the value of an estate, but that’s not an option when you need continued use of them or do not wish to pass them on until death.  But there is a potential workaround, by a legitimate form of last-minute tax planning combined with what’s known as a Potentially Exempt Transfer, or PET.

Under PET rules, a gift made during someone’s lifetime is exempt from inheritance tax if the donor survives for seven years. If they die within that period, the gift is brought back into  account for tax purposes. But, and here’s the crucial detail, PETs are not included when calculating the value of the estate for the RNRB tapering rule.

This means that a gift made shortly before death  will reduce the value of the estate for the purposes of RNRB even if the donor only survives the gift by a very short time.  This can reinstate the full £175,000 tax free allowance – or £350,000 if a partner has passed on their allowance to the survivor – with a potential inheritance tax saving of as much as £140,000 on larger estates over £2.7m.

As ever, expert advice is essential.  Said Monika Bone, tax and estate planning specialist with Hull solicitors SJP Law ltd: “This is one of the few occasions where acting at the last minute can still bring huge benefit to your estate planning. The tax saving can be substantial, but timing, advice and precision are everything and the rules can easily trip up those who aren’t aware of the details.”

For example, a £2.2 million estate would see their Residence Nil Rate Band reduced by £100,000 due to tapering. But a  gift of, say,  £250,000 made shortly before death will bring the estate back under the £2 million threshold so that the full RNRB allowance is available, saving their heirs £40,000 in inheritance tax.

Monika added: “While it may sound surprising, the law allows this route because PETs are deliberately excluded from the RNRB tapering test. In effect, the estate is judged on its value at death, excluding recent gifts, so creating an opportunity for savvy planning at a sensitive moment.”

Some of the other considerations to take into account include:

•             Capital Gains Tax (CGT): Gifting assets such as property or shares may trigger CGT, depending on the circumstances and the asset’s value.

•             Impact on beneficiaries: The recipient of the gift may have tax or financial planning consequences of their own to consider.

•             Record-keeping and disclosure: Accurate records and timely professional advice are essential to ensure the gift is treated correctly by HMRC.

Monika added: “For those with estates near or above the £2 million threshold, understanding how lifetime gifts interact with the RNRB can mean the difference between losing a valuable relief and passing on a larger legacy to the next generation.”

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What is agricultural and business property relief?

Agricultural and business property relief applies to qualifying assets eligible for 100% agricultural property relief and 100% business property relief. This means these assets are excluded from Inheritance Tax calculations when their owner dies. This relief is available in addition to the existing nil-rate bands and exemptions. However, from 6^th April 2026, this relief will be capped.

What has changed?

From 6^th April 2026, agricultural property relief and business property relief will be capped at £1 million of qualified assets. The value of assets in excess of £1 million will be taxed at 50% of the current Inheritance Tax (IHT) rate. The UK government has also indicated that the £1 million cap is a combined value of agricultural and business property assets. If the IHT rate remains at 40% at that time, the IHT charge for the value of qualified assets in excess of £1 million will be 20%.

What to consider when carrying out succession planning

You must consider the options available to deal with agricultural and business property as part of the succession planning process. This starts with a discussion on the structure of the business and the valuation of the assets. Then you need to consider some options.

Lifetime gifting and taper relief (the 7-year rule)

Gifting ownership of assets during your lifetime is an effective way of reducing your exposure to Inheritance Tax. However, you should avoid gifts with reservations, where you continue to enjoy the benefits but no longer own the asset. If this is an income-generating asset, you should reduce your income accordingly. If you successfully do this and survive for at least seven years, the gifted asset will no longer form part of your estate for Inheritance Tax purposes.

Splitting ownership

If you own assets in your own name, consider transferring a share in the asset to your spouse. If you split the asset with your spouse, you immediately reduce the asset’s value as part of your estate by the amount you have shared. You might also consider splitting the assets with the next generation and their spouses. This further dilutes your estate, but care should be taken about potential future separation or divorce. You might want to combine any asset split with a post-nuptial agreement.

When you split ownership, in addition to each individual’s allowances, they each have £1 million of agricultural and business property relief.

Life Insurance

You might consider taking out life insurance that is paid outwith your estate and designed to cover all or part of the IHT your estate will face or any IHT payable as a result of a lifetime gift made within seven years of death.

Seek professional advice

Trying do-it-yourself fixes to something as complex as succession planning is not sensible. You should seek professional legal and financial advice and develop strategies that meet your needs. It is also essential to review plans regularly, especially when any changes can impact your decisions.

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Inheritance Tax is payable on an estate with a net value of more than £325,000. Any estate above that figure is charged at a flat rate of 40%. There are, of course, exemptions. For example, no IHT liability for transfers between spouses and civil partners exists. However, leaving your entire estate to your spouse or civil partner might be stoking up a future IHT liability.

This article will discuss the options available through lifetime gifting to minimise your exposure to Inheritance Tax. But before we look at estate planning, we must consider the changes introduced in the Autumn Budget 2024.

What changes did the Autumn Budget 2024 introduce?

Four key changes in the Autumn Budget 2024 impacted Inheritance Tax.

Freeze on nil-rate band

The nil-rate band of £325,000, below which you do not pay IHT, has been frozen until 2030. It had already been frozen by the previous government until 2028. The Chancellor’s Autumn Budget 2024 extended that freeze until 2030. That means if your net estate is over £325,000, it will be subject to IHT.

Unused Pensions to be subject to IHT from April 2027

The Autumn Budget 2024 introduced a new rule regarding unused pensions. Currently, unused pension funds fall outside the estate for IHT purposes. That means they do not count as part of the estate and are not subject to IHT. Some people who did not need to rely on their pension earmarked it for distribution to others after their death as it was help outside their estate and not subject to IHT.

However, from 2027, any unused pension fund will be subject to IHT as part of the estate. The government has launched a technical consultation to determine how this will work in practice.

Agriculture and Business Property Relief changes

Farmers and businesses are entitled to 100% relief on their business assets, which means these assets are not subject to IHT. However, starting in April 2026, any agricultural or business assets over £1 million will be subject to IHT at a reduced rate of 50% of the current rate. That means IHT will be charged on those assets over £1 million at a rate of 20%.

Residency-based IHT for former “non-doms”

The Autumn Budget 2024 abolished the “non-dom” status and moved to a residence-based taxation position. A foreign national who resides in the UK for at least 10 out of 20 tax years will be considered a “long-term resident”. Once this status has been established, their worldwide assets will be subject to UK IHT. Before this budget, their foreign assets were excluded from any IHT calculations. This will also impact offshore trusts, where any assets placed in an offshore trust, whilst the long-term resident held non-dom status, can now be included in the estate for IHT purposes.

Using Gifting to reduce your exposure to Inheritance Tax

Estate planning always considers lifetime giving as part of mitigating against IHT. When you dispose of assets through gifting, you potentially reduce your exposure to IHT. However, there are certain conditions you must fulfil if your estate is to avoid paying IHT.

Taper Relief (the 7-year rule)

It is generally known that if you gift property, assets or investments more than seven years before you die, these will no longer be considered part of your estate. All such gifts are considered potentially exempt transfers because they must meet specific criteria to be excluded from IHT calculations.

Potentially exempt transfers

HMRC define a potentially exempt transfer as a lifetime transfer of value that satisfies three conditions:

• It is a transfer by an individual made on or after 18 March 1986
• It would be a chargeable transfer apart from Section 3A of the Inheritance Tax Act 1984  (or, if only partly chargeable, is a potentially exempt transfer to the extent that it would be chargeable), and
• It is a gift to another individual or a specified trust.

This means the transfer must be for value to an individual or a specified trust where the transfer would be subject to IHT. Transfers between spouses do not count because they are exempt from IHT.

This means that if the gift donor survives for more than seven years, the gift’s value falls outside the estate and is not subject to IHT. However, the donor must divest themselves of the gift entirely.

Gifts with reservations

Gifts with reservations occur when the gift donor makes the gift but retains an interest in or benefits from it. A good example of this is when a parent transfers ownership of the family home to the children but remains living in it rent-free. While the donor has made a gift of the ownership, the donor benefits from the gifted property by continuing to live in it. In such circumstances, the house’s value would be included in the estate for IHT purposes.

Additional gift exemptions

There are also annual gift exemptions everyone enjoys. You can make annual gifts totalling £3,000 to anyone you want. If a child is getting married, you can give them a gift of £5,000. You can also make a wedding gift of £2,500 to a grandchild and £1,000 to anyone else.

In addition, you can make as many small gifts of £250 as you like.

Gifts to charities

Any gift you make to charity is exempt from IHT. This applies during your lifetime and on death. In addition, if you leave 10% or more of your estate to charity, the rate of IHT your estate will pay will be reduced from 40% to 36%. This can lead to substantial savings in very large estates.

Estate Planning following the Autumn Budget 2024

The overall rules about making gifts have not changed. However, the budget brought assets into the estate that previously were outside it and not subject to IHT.

Your tactics may need to change to address this. Regular lifetime giving provided it is not a gift with reservations, probably remains the most straightforward way of reducing the value of your estate.

If you have an unused pension, depending on your personal tax situation, it may be beneficial to withdraw some of the fund and gift it to others. This would still be subject to an immediate income tax charge but might be IHT-efficient.

Dealing with the changes to agricultural and business property relief can be challenging as these are integral assets for your business. You will need to consider family involvement in the business and the basis of ownership of the assets. If you transfer ownership but continue in the business, it will likely be viewed as a gift with reservations.

The UK government has argued that allowances available to set against agricultural and business property are up to £3 million. However, that level of relief can only be achieved in limited circumstances.

Seek legal and financial advice before doing anything

Whatever you do, you must take legal and financial advice if you intend to take steps to mitigate your IHT exposure. Failure to carry out any estate planning and lifetime giving correctly can lead to the value of property, assets, and investments being added back into your estate’s value and subject to IHT.

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