News & Articles

Probate and IHT: Helping families avoid the financial trap


The certainties of death and taxes, as famously articulated by Benjamin Franklin, point to the fact that everyone is likely to experience grief at some point in their lives.

How we react is deeply personal, but there are said to be five principal emotional ‘stages’: denial, anger, bargaining, depression and acceptance.

In recent years, many people in this situation will also be familiar with feelings of frustration as a result of well-documented delays in the probate system.

Probate, in a nutshell, is the official approval to manage the process of distributing the assets, belongings and wealth of someone who has died – known as their estate. In many cases, this process will be carried out by one or more executors according to the wishes set out in the deceased’s will.

However, probate can only be entered into after an application has been approved by the Probate Service, run by HM Courts and Tribunals Service, and this system has been beset by delays.

Tackling probate delays

Between April 2022 and April 2023, the waiting time for probate almost doubled. This led to probate specialists to advise clients that the approval process, expected to be completed within 16 weeks, was taking at least nine months and could be closer to a year in some cases.

This situation prompted the Justice Committee to launch an inquiry. Chair of the cross-party group, Sir Bob Neill, said it would explore the reasons behind probate delays and look to see how the system could be improved “for people who are already coming to terms with the loss of a loved one”.

Following increases to staffing and streamlining of processes, the government reported that the situation had eased early in 2024. However, with a backlog of applications still in the system, the timeframe for approvals continues to be a cause for concern, both for families and also charities, who receive vital funding in the form of legacy gifts.

Executors and beneficiaries of a will, including close family members of the deceased, can do nothing to influence or accelerate this situation. Levels of frustration will be particularly high among those who stand to inherit from estates where a large proportion of wealth is tied up in assets such as property.

Prioritising payment of IHT

Here, beneficiaries can be locked in something of a ‘chicken and egg’ situation when Inheritance Tax (IHT) comes into play, since this charge must typically be paid before probate can be granted. IHT is payable at a rate of 40% on the part of the deceased’s estate that’s above either the Nil Rate Band (currently £325,000) or, in cases where your home is being given away to children or grandchildren, the Residence Nil Rate Band (currently £175,000, making a total of £500,000).

As such, surviving members of a family can find themselves in a financially difficult situation after the death of a loved one, with an immediate demand to fulfil IHT obligations alongside any ongoing costs for the upkeep of properties held within an estate.

Even if this IHT charge will ultimately be covered through the eventual sale of assets, it is not possible to realise the value of those assets in the short term without entering probate, and probate cannot be granted without the IHT charge being paid.

What’s more, late payment of the IHT charge or inaccurate valuation of assets can attract a penalty charge from the government, with fines increasing in recent years as more families fall within the requirements of IHT.

Anyone struggling in the face of IHT payment obligations can apply for ‘grant on credit’ from HMRC. In the Spring Budget, the Chancellor announced that changes to this process would be introduced from 1 April 2024 with a view to making it less onerous.

Strategies to support liquidity

With the right financial plans in place, however, individuals can prevent family members being caught in this situation or ease the difficulties they might face.

One approach, for example, is to consider writing life cover into trust. With the appropriate policy and if managed correctly, placing life insurance in trust can allow any money paid out on death to be excluded from your estate. This has the potential of reducing the overall estate valuation, upon which the IHT charge is calculated, while also providing beneficiaries with additional liquidity to resolve an IHT charge.

It is important to understand the full implications of such a decision. For example, once you’ve written your life insurance in trust, the decision can’t be reversed, and there are also aspects of taxation that can apply. As such, it is sensible to seek out advice from regulated professionals to ensure you fully understand what writing your life insurance in trust would mean for you.

But for some families, such an approach can help avoid some of the frustration, stress and anxiety that can arise at a time that is already emotionally challenging enough.


The information contained within this communication does not constitute financial advice and is provided for general information purposes only. No warranty, whether express or implied is given in relation to such information. Vintage Wealth Management or any of its associated representatives shall not be liable for any technical, editorial, typographical or other errors or omissions within the content of this communication.