Practitioner perspective: We need to work together to help vulnerable clients

Robin Melley TEPVulnerability is not synonymous with poverty or age, it can happen to anyone, at any time.

While I have been interested in vulnerability for many years, it was the development of my firm’s corporate social responsibility (CSR) policy, with the theme, ‘vulnerability and combating financial abuse,’ that really crystallised my desire to develop my technical knowledge.

The issue was highlighted for me when I started working with NS&I Premium Bond winners, who had each scooped a GPB1 million jackpot. You might not think such a group are people to be concerned about, but I discovered there are sometimes substantial difficulties faced by those who come into ‘sudden wealth’, particularly vulnerable minors and elderly people who have lost mental capacity.

For me, it highlighted the fact that we, as professional advisors, should not try and pigeonhole people as vulnerable, but look at a person’s overall circumstances and make sure we consider potential vulnerabilities for all clients.

Everyone is potentially vulnerable

Importantly for financial planners such as myself, and, I’d think, most STEP members, dealing professionally with vulnerability should be at the core of our work. It is too important an issue to be relegated to a compliance tick-box exercise. The Financial Conduct Authority (FCA) is in the middle of a consultation on vulnerability; and the risk is that advisors fall into the trap of viewing ‘vulnerable clients’ as a defined group of people and focus on complying with a set of regulatory requirements.

In real life, everyone is potentially vulnerable, and the signs of vulnerability are often not immediately obvious. Consequently, the issue of vulnerability has to be embedded in the advice process for all clients.

I believe it’s also vital for chartered financial planners, lawyers, and other professionals to work together. For example, when there is an application to the Court of Protection for gifts to be made, the legal advisor usually needs to demonstrate that the attorneys are acting in the donor’s best interests and fully meeting their obligations under the Mental Capacity Act 2005. A chartered financial planner can provide support by undertaking detailed analysis, incorporating a lifetime cashflow forecast to demonstrate the long-term financial consequences of making gifts at the levels proposed.

Helping our fellow human beings is a basic human instinct and, like many STEP members, I have spent my career helping clients solve some of their problems to satisfy their aspirations for themselves and their families. It has been very gratifying to help them, often supporting them with issues not normally considered part of the financial planner’s responsibilities, and it’s a special feeling to give a safe pair of hands to a client who particularly needs help.

Watch out for abuse

Financial planners who adopt a holistic approach with clients can often spot problems because of the nature of the long-term (and often lifelong) relationship they have with clients, where they are meeting on a regular basis. He or she is well placed to pick up on any cues of possible financial abuse. I have, for instance, become aware of an adult child attempting to persuade an elderly parent to make gifts to them to the detriment of the parent; and have been able to intervene to guide and support the client in what is often an emotional situation.

Why I took the STEP Diploma

I realised I could better help others by deepening my understanding and achieving a higher level of technical competence. The STEP Diploma in Advising Vulnerable Clients offered the most comprehensive professional qualification in this area. I certainly found it a challenge finding the time over the last three years to study, but it has been hugely worthwhile. I have learned so much and it has enabled me to adapt our approach to financial planning to be more closely aligned with the needs of those who find themselves in vulnerable circumstances.

Examples of the improvements include the provision of detailed information and guidance to the parents of minors, to ensure they are clear on their fiduciary duties and obligations, and improving the way in which we refer to and collaborate with legal advisors.

Put simply, I believe that I am a better financial planner because of what I have learned through the attainment of the STEP Diploma and becoming a Full Member of STEP. The biggest beneficiaries are, of course, our clients.

Robin Melley FPFS TEP is a Chartered Financial Planner, at Matrix Capital in Shropshire.

UK Ministry of Justice enacts video-witnessing of wills

Gavel And A Last Will And Testament

The UK Ministry of Justice (MoJ) has today announced the implementation of secondary legislation under the Electronic Communications Act 2000 that can be applied retrospectively to the beginning of the COVID-19 pandemic on 31 January. The new legislation, which only applies in England and Wales, enables individuals to video-witness the execution of their wills if they are unable to observe the normal formalities, and cannot have two independent witnesses present. Therefore if someone is isolating and there is no feasible way to arrange for witnesses to be there, they can video record themselves executing their own will and it will be legally valid.

The fight against COVID-19 has made the will writing process even more complicated with social distancing and self-isolation throwing up some difficulties for people looking to get their will written. It has been possible to speak to a will writer over the phone or via video conference in order to draft a will; however, to be valid, a will must be signed by two witnesses present at the same time. The witnesses must be independent and cannot be beneficiaries of the will or related to the person that the will applies to.  For some, it may have been possible to enlist neighbours and arrange a situation where all are able to see each other while maintaining the requisite distance, but for others, for example vulnerable people, or people confined to bed or in hospital, this has not been possible.

STEP has been in discussion with the MoJ since the lockdown was enforced and has welcomed the introduction of video conference witnessing of wills, which removes the need for any physical witnesses at all. Of course, not everyone has access to laptops or mobile phones with video facilities, which would exclude a small part of the population, but it can work for the majority. Whilst the government has maintained the current law, it has effectively been condoning gatherings of at least three people from two of more households, and has been putting people at risk of catching or spreading the virus.

We are delighted that the government has responded to our calls to allow will witnessing by video facility. By removing the need for any physical witnesses, wills can continue to be drawn up efficiently, effectively and safely by those isolating. We also endorse the move to apply this retrospectively, which will provide reassurance to anyone who has had no choice but to execute a will in this manner prior to this legislation being enacted.  The legislation is anticipated to come into force in September 2020 and will be in force for two years until 31 January 2022. Practitioners should be aware of the sunset clause and make sure that any remote execution takes place prior to the expiry of the legislation.

STEP has prepared some guidance for members, with thanks to our working group comprising Paul Saunders TEP, Jennie Pratt TEP, Amanda Simmonds TEP, Leigh Sagar TEP, Charlotte John TEP, Charlie Tee TEP and Laura Kermally TEP.  However we are keen to reinforce that the new remote method of witnessing should not be a substitute for the conventional method of physical witnesses. The remote method should only be used in an emergency when conventional witnessing is impossible and extreme caution is required when taking this course of action.

Emily Deane TEP, STEP Technical Counsel

STEP welcomes UK government response to Fifth Anti-Money Laundering Directive consultation

Emily Deane TEPHM Revenue & Customs (HMRC) and HM Treasury (HMT) have published a response to the technical consultation ‘Fifth Money Laundering Directive and Trust Registration Service’. The consultation ran from January to February 2020 and sought views on how the Fifth Money Laundering Directive (5AMLD) should be transposed, and how certain processes could work for the expanded Trust Registration Service (TRS).

STEP submitted a consultation response and has held numerous meetings with HMRC and HMT over the last 18 months, on various issues related to the implementation of 5AMLD.

One of STEP’s outstanding concerns has been in relation to the interpretation of the business relationship point, which could have had an incredibly damaging effect on the use of UK professional service providers if interpreted in the same way as 4AMLD. We have been advising the government on the negative impact that a wide interpretation of the directive could have on the industry, and we are delighted to see that our recommendation has been accepted.

Para 2.15 of the consultation confirms that, ‘the government has opted to take a measured approach and will only require non-UK trusts to register on entering a business relationship with a UK obliged entity if the trust has at least one UK resident trustee. This means that non-UK trusts will not be required to register if their only link to the UK is through a business relationship with a UK based adviser.’

There is also a significant expansion of the categories of trust that will not need to be reported, which will ease the reporting burden on our members, although we were disappointed to note that bare trusts have not been exempted from registration as we would have liked. The government has also recognised that it would not be appropriate to require trusts created by will to register on the TRS if they are wound up within two years of death.

STEP also had concerns over the ‘legitimate interest’ application process, and the consultation confirms that it will aim to ensure that each request will be reviewed on its own merits, and access will be given only where there is evidence of money laundering or terrorist activity. We will continue to engage with the government on this issue.

The government has set a deadline of 10 March 2022 for existing trusts to register on the TRS, or to update their records if they have already done so. A 30-day deadline will be imposed for new trust registrations and updates. The regulations to implement the provisions have now been laid before Parliament for consideration.

We are very pleased that our discussions and papers have been taken into consideration so comprehensively, and we will continue to engage with the government on the remaining policy issues and assist with the development of the guidance.

 

Emily Deane TEP, STEP Technical Counsel

 

STEP’s first Virtual UK Annual Tax Conference

Robert CaringtonThe first STEP Virtual STEP UK Annual Tax Conference was held on 26 June with over 800 people attending online. The day was a radical departure for STEP, with conventional meetings postponed or cancelled due to COVID-19. While it did include some glitches, attendees have the opportunity to catch up on any material they missed, with presentations available for a full year.

The day saw some outstanding STEP members speaking on topical matters, and we were delighted to host Emma Chamberlain OBE TEP, Robert Jamieson TEP, John Barnett TEP, Dawn Register TEP, Katherine Bullock TEP, John Woolley TEP and Deborah Clark TEP.

Emma Chamberlain presented the first session, giving an update on inheritance tax (IHT), which covered the Barclays Wealth case and the resulting legislation on excluded property settlements; and the definition of charity in IHT after the Routier case and its implications. She noted the work done by the Office of Tax Simplification and the All-Party Parliamentary Group for Inheritance & Intergenerational Fairness (APPG) on IHT reform was something to watch.

Robert Jamieson TEP covered capital gains tax (CGT) main residence relief and the statutory changes in the Finance Bill 2020 relating to residency, in a comprehensive presentation.

John Barnett TEP gave an informative update on Agricultural Property Relief (APR) and Business Property Relief (BPR), covering their structure, key cases such as Gill and Brander; and finishing with predictions on their reform; he noted that the CGT uplift was the most likely to be reformed by any government in the near future.

The afternoon session started with Dawn Register TEP giving advice on dealing with HMRC, covering areas such as its No Safe Havens 2019 programme to ensure offshore tax compliance and its risk assessment process. She also explained changes made due to the COVID-19 pandemic, including the relaxation of some deadlines.

Katherine Bullock TEP followed with a practical session focused on such IHT calculations as chargeable lifetime gifts, how to arrange settlements and when grossing up is necessary.

John Woolley TEP was next with an update on pension transfers and lump sum IHT plans following the Staverley decision in the Supreme Court in May 2019. John covered the advantages and disadvantages of death benefits being paid through either flexi access drawdown or by-pass trusts the protection of funds on divorce or insolvency; and dealing with the valuation issues of the ten-year periodic charge and their impact on loan trusts and discounted gift trusts, as well as any problems that may arise.

The final presentation of the day was from Deborah Clark TEP who spoke on family investment companies and their use. Her presentation covered their structure and funding and asset protection as well as how they were treated by income tax.

  • Our thanks to the event’s sponsors: James’s Place, Fraser and Fraser, National Philanthropic Trust, Octopus Investments, and Remember a Charity.

Robert Carington is Policy Executive at STEP

The five most common reporting errors for trusts to avoid

HM Revenue & Custom’s (HMRC) compliance team has identified the five most common errors made by UK administered trusts which are Financial Institutions (FIs) when fulfilling their obligations under the International Tax Compliance Regulations 2015.

These obligations relate to Automatic Exchange of Information (AEOI) which includes the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA). Any errors should be rectified by submitting amendments using an online HMRC AEOI account, or if relating to the FATCA FFI list, an IRS FATCA online account.

1.Trusts wrongly classified for AEOI purposes

A trust can be either a FI or a non-financial entity. A trust will be classified as an FI where more than 50 per cent of its income is from investing, reinvesting, or trading in financial assets, and another FI has discretionary authority to manage these assets wholly or in part. A trust or settlement is regarded as being managed by an FI where either one or more of the trustees is an FI or the trustees have appointed an FI, such as a discretionary fund manager, to manage the trust’s assets or the trust itself. Trusts that are FIs have to register and submit AEOI returns to HMRC if they have reportable accounts. More information.

2.Due diligence requirements incorrectly carried out

Trusts that are FIs must carry out due diligence on their financial accounts to determine whether any are reportable accounts.  For trusts, financial accounts are the debt or equity interests in the trust. The equity interests are deemed to be held by any person treated as a settlor or beneficiary of all or a portion of the trust, or any other person exercising ultimate effective control, including trustees and protectors.

The debt and equity interests of the trust are reportable accounts if they are held by a reportable person. For example, if a settlor or beneficiary is resident in a reportable jurisdiction (outside of the UK), their equity interest is a reportable account.

The trust that is an FI must apply the due diligence rules in order to determine the identity and residence of its debt and equity interest holders. Please see the due diligence rules.

A trust that has reportable accounts must report the account information and the financial activity for the year in respect of each reportable account. The account information includes the identifying information for each reportable person (such as name, address, jurisdiction of residence, taxpayer identification number, date of birth and account number), and the identifying information of the trust (name and identifying number).

3.Mistakes when reporting discretionary beneficiaries and trustees.

A discretionary beneficiary will only be treated as an account holder in the years in which it receives a distribution from the trust. Other reportable accounts are reportable regardless of whether a distribution is made in the calendar year. More information (para 253).

4.Reporting entities as controlling persons.

Where an equity interest (such as the interest held by a settlor, beneficiary or any other natural person exercising ultimate effective control over the trust) is held by an entity, the equity interest holder will instead be its controlling persons. As such, the trust will be required to look through a settlor, trustee, protector or beneficiary that is an entity to locate the relevant controlling persons. (This obligation corresponds to the obligation to identify the beneficial owners of a trust under anti money-laundering rules). More information (para 253).

5.Errors relating to the IRS FATCA Foreign Financial Institution (FFI) list.

A trust that registers on the IRS FATCA registration website as being a FFI, will receive a Global Intermediary Identification Number (GIIN) from the IRS, upon approval. Some UK administered trusts are incorrectly registered on the FFI list, including trusts that do not meet the definition of being an FFI, or that have already been terminated.

Where FFI registration has been approved but is no longer appropriate, the trust should cancel the agreement. Cancelling a registration agreement that is in approved status will mean it will no longer be published on the FFI List and the GIIN will no longer be valid. The FATCA registration user guide contains guidance on deregistration and cancelling the agreement.

 

Emily Deane TEP, STEP Technical Counsel

Update from HMRC’s Trusts and Estates team

HMRC’s Trusts and Estates team met with the Agents Advisory Group and Capital Taxes Liaison Group in May and provided the following updates:

Operational update

Despite the unique challenges presented by the current COVID-19 situation, inheritance tax and trusts operational areas are currently meeting all key targets and processing post and new accounts within published turnaround times.

A new webchat service was launched in May, which can be used to obtain help when completing the IHT400 forms and schedules, and to answer other inheritance tax and probate questions.

HMRC confirmed that IHT421 forms can now be emailed directly from HMRC to HM Courts and Tribunals Service. HMRC is unable to email customers due to security protocols in place, but will either reply in writing, or add a note to the calculations.

There have been periods when the Trusts Helpline call response times have increased. If you are experiencing problems getting through, you can email HMRC at trustsfeedback@hmrc.gov.uk.

Digital signatures for IHT205

HMRC confirms that the digital signature process now applies to IHT205 forms, as well at IHT400 and IHT100 forms, until further notice. It will accept IHT205 forms that are not physically signed from professional agents, if:

  • the names and personal details of the legal personal representatives are shown on the declaration page;
  • the account has been seen by all the legal personal representatives, and they all agree to be bound by the declaration;
  • the agent includes the following statement:
    ‘As the agent acting on behalf, I confirm that all the people whose names appear on the declaration page of this Inheritance Tax Return have both seen the Inheritance Tax Return and agreed to be bound by the declaration on page 8 of the form IHT205.’

The GOV.UK website has been updated to reflect these changes.

Electronic submission of IHT form update

HMRC is offering Dropbox as a temporary measure to support agents when it is not possible or practical to submit IHT400 and IHT100 accounts by post during the COVID-19 disruption.

HMRC retains full ownership of all information/data that it places in Dropbox and all information/data that an agent submits there. Only the HMRC Dropbox account holder and the HMRC security audit team can access the information.

Time limits and penalties for late filing and payment

HMRC has updated the guidance on reasonable excuse to include occasions where customers have not been able to file their accounts on time due to the impact of COVID-19.

Claim time limits for IHT reliefs

HMRC has enquired about deadlines for IHT relief claims that may be impacted by the present disruption customers are facing. The three areas which have been raised are the time limits for: relief on property sales, relief on sale of shares and instruments of variation. HMRC is continuing to monitor the position.

STEP will continue to monitor the developments and update members accordingly.

Emily Deane TEP, STEP Technical Counsel

Belonging to a supportive organisation like STEP come into its own in such difficult times

Denese MolyneuxWhen writing this blog, usually the first thing I do is to refer to my previous one I posted to comment or update England and Wales members on items mentioned. Not this time.

The worldwide COVID-19 pandemic has affected everyone, whether they have contracted the virus or not. It is in such circumstances that the benefits of being a member of a supportive organisation really come into their own.

Mark Walley and the team at STEP Head Office are to be congratulated on keeping things on an even keel throughout this period of immense upheaval. While managing the logistics of moving to home working, the staff have pulled together resources to help members keep fully updated, starting with the COVID-19 Technical Hub on the STEP website. After that there are any number of links to new information, from holding virtual meetings; changes to examinations; rescheduled conferences; maintaining CPD and just about any other subject of relevance. The Communications team has excelled itself in managing the STEP online offering to best support the membership.

Life goes on and in other non-COVID news, The All Party Parliamentary Group for Inheritance Tax and Intergenerational Fairness was launched on 28 January to positive media coverage. STEP’s involvement with this initiative has served to enhance our reputation and strengthened stakeholder relationships in this vital area.

The Legal Services Board is currently reviewing how to ensure that legal professionals remain competent throughout their careers. The call for evidence deadline has been extended to 26 June, and STEP will be making a submission to that review.

HMRC is keen to raise standards in the tax advice market and has called for evidence to support the UK Government’s crackdown on promoters of tax avoidance schemes. It is also conducting a review to give taxpayers assurance that advice received from professionals is reliable. Again STEP will be giving a response.

As we emerge from the unusual circumstances in which we find ourselves it will be interesting to see which parts of our lives revert to existence pre-COVID. By the time of my next blog in December, I hope we will have had the England and Wales Branch Chairs Assembly – maybe via video conference. I look forward to hearing your own experiences and sharing some new, and quite probably unforeseen, best practice.

 

Denese Molyneux TEP, Chair, STEP England and Wales Regional Committee

STEP joins Anti-Money Laundering Europe webinar on the future of the EU’s fight against money laundering

Robert CaringtonOn 3 June, STEP joined a webinar hosted by Anti-Money Laundering Europe (AME) on the future of the European Union’s fight against money laundering.

John Riches TEP, Chair of STEP’s Public Policy Committee, was joined on the panel by Jérôme Deslandes, Cabinet of the Executive Vice President of the European Commission; and Piers Haben, Director for Banking Markets, Innovation and Consumers at the European Banking Authority (EBA). The chair was Mike Savarese, AME.

The webinar discussed the European Commission’s package on anti-money laundering (AML) published on 7 May.

Its main item was an action plan, accompanied by a list of high-risk third countries, and a methodology describing how these were chosen. The action plan aimed to address the weaknesses identified in research from 2019 and was based on the following six pillars:

  1. Better implementation of rules – This will be achieved by a number of tools particularly interconnection of beneficial ownership registers, more powers for the EBA and a focus on country-specific recommendations. The eventual aim is for an EU supervisory body responsible for conducting on-site examination on the effectiveness of the AML framework.
  2. Harmonised rulebook – This will be achieved by sharing information, integrating the latest Financial Action Task Force (FATF) standards and building on the good examples of member states.
  3. EU level supervision – This integrated AML system will need to be jointly run by the EU and national authorities.
  4. Coordination and support mechanisms for FIUs (Financial Intelligence Units) –Through common templates and tools, standards on feedback, support of joint analysis and training.
  5. Law enforcement and information sharing – New tools such as criminalisation of money laundering, a Directive on the use of financial information and rules on asset recovery (including mutual recognition of freezing orders) will be used.
  6. EU’s global role – This will be achieved through the new methodology and the list of high-risk third party jurisdictions that pose a threat to the EU’s financial system.

John Riches’ view on these developments from a private sector perspective, was that due to the rapid development of the EU’s AML framework, member states appear to have struggled to implement past incarnations of AML. He observed that there seemed to be an inconsistency in approach between states, resulting from a lack of clarity and practical guidance.

His main concerns were over beneficial ownership registers and transparency, and how this lack of clarity had made implementation of trust registers difficult, and also potentially unfair. He noted that the uncertainty over some of the provisions in the Fifth Anti-Money Laundering Directive showed a lack of understanding on how trusts work. He also voiced major concerns over the potential conflict of public registers versus privacy rights.

The panel heard that the EU is aiming to be assessed as a single jurisdiction, with a single supervisor and rule book, within five years, so will be recognised as such by FATF. This single approach is seen as being cheaper and more efficient, and a more effective way of achieving a stronger, more unified and robust system.

The event ended with John Riches stressing that the EC consultation should be much more than a box-ticking exercise, and something more meaningful, which will benefit everyone.

Robert Carington is Policy Executive at STEP

The COVID-19 crisis prompts a rash of philanthropic giving

Robert CaringtonOn 13 May 2020 the STEP Philanthropy Special Interest Group (SIG) in partnership with Philanthropy Impact hosted the first of its 2020 Philanthropy Programme series of events with a webinar entitled ‘Core Components of a Professional Philanthropy Advisory Practice’.

The event attracted a number of delegates from 18 different jurisdictions, and discussed a range of issues for philanthropy advisors. It was ably hosted by George King IV, Partner, MASECO Private Wealth; with Jo Bateson TEP, Partner, KPMG; Cath Dovey, Co-founder, Beacon Collaborative; and Alana Petraske, Partner, Withers Worldwide LLP, on the panel.

The current COVID-19 crisis and the deep and radical changes in society it has brought has prompted an increase in people wishing to give, and brought about a more important role for the philanthropy advisor. This means it is essential for advisors to have the right tools in place, and to be aware of clients’ shift in attitudes towards philanthropic giving, and what it involves.

Advisors need to feel comfortable about providing advice, especially while getting used to new ways of working. While much work can be done online, there are still concerns over physical actions, like signing cheques for clients, although on a positive note, many regulators have taken a pragmatic approach, recognising the need to work remotely.

A number of reasons were given for the increase in charitable giving. Clients want to be seen to be doing something, or they are using the increased ‘spare time’ to reflect on their place in society and how they could better themselves, with charitable giving being a solution. Many are acting in response to the current situation with a sense of urgency, and want to donate as quickly as possible.

During the first two weeks of the crisis, established infrastructure funds were able to utilise pre-existing networks and donate immediately and strategically. Subsequently there was a broader response, with non-regular clients and new donors emerging. Many of these had used the first few weeks to get their own affairs in order, and then wanted to act with speed. Anecdotal evidence showed that donors range from those with structures in place, to those who need preliminary hand-holding.

Even though the crisis is a generation-defining moment and clients want to donate quickly, several on the panel urged advisors to recommend clients should hold fire, and instead research their charities of interest, with a view to deploying their wealth strategically over a longer period (6 -12 months). It’s vital to manage clients’ anxiety and also assess the risk factors, as charities will be in distress for some time, and many will not survive at all. Reports show that in the UK, 40-70 per cent of charities may be dissolved in the next 12 months.

Another key, and indeed quite obvious issue is whether the client has sufficient money to give. The outbreak has brought out basic level survival instincts (such as the run on loo paper) and if someone feels under attack from the virus, they may not want to give, or feel they can’t.

The panel also suggested advisors be mindful of their own businesses, and review what they expect to happen in the next 6 months – 2 years. Points to consider include: where their work comes from, what will future working will look like, and what clients will be seeking from them. However, now is the perfect moment for advisors to be the philanthropy champion at work and integrate philanthropy into wealth planning.

The event ended with the panel highlighting what they felt were the key skills required for advisors in the industry:

  • Collaboration and the importance of building up a community which you can utilise and engage with.
  • Honesty regarding your skills, and being prepared to practice and train those who need further improvement.
  • To focus on a useful knowledge base, such as understanding what grant makers and other key players are doing.

 

 

Robert Carington is Policy Executive at STEP

HMCTS announces interim operational arrangements

emily-deane-tep-2018-v2Update 11 June 2020: HM Courts & Tribunal Service (HMCTS) has published the attached FAQ document (pdf) for professional users of the Probate Service to support professionals with online applications. HMCRS has confirmed that this is a working document which it intends to continually update as the process continues to evolve.

If you have any feedback on the FAQs please send your comments to policy@org.uk.

Update 1 May 2020: HMCTS met with STEP, the Law Society, SFE and ICAEW this week for its regular Probate Service meeting. The following updates were provided:

  • The combined form is timetabled for approximately two weeks’ time and a formal notification will be provided.
  • Partners who are Executors are now able to make online applications.
  • Trust corporations and others which are currently unable to apply online will be added to the process over the next couple of months.
  • HMRC intends to start sending IHT421 forms directly to the Probate Registry within 15 days of issue. A formal notification will follow when this has been implemented.

We have requested an additional meeting in the next ten days to discuss specific form issues with HMCTS and the Probate Registrar. Please contact us at policy@step.org if you have issues that you would like to be reported.

HMCTS has also enquired whether firms are struggling to get the original wills to the Probate Registry during remote working. Please do let us know if this is the case.

Original blog: HMCTS has announced some interim operational arrangements that it will be making in light of the COVID-19 restrictions. The key changes will relate to the following areas:

  • acceptance of statements of truth in place of affidavits,
  • guidance on the signing/witnessing of renunciations and powers of attorney,
  • Statutory Instrument 2020 No 33: The Administration of Estates Act 1925 (Fixed Net Sum) Order,
  • probate practitioner forms and electronic signatures.

Acceptance of statements of truth in place of affidavits 

Statements of truth can be accepted in place of affidavits in the following circumstances:

  • identity of executor,
  • misrecital of date of will in codicil (if rectification not required under S20 Administration of Justice Act 1982),
  • Rule 41 – amendment of grant,
  • Rule 41 – revocation of grant,
  • Rules 30(1) (a),(b) and (c),
  • Rule 35(4),
  • Rule 13 (knowledge of content of will),
  • Rule 14 (alterations in will),
  • Rule 15 (attempted revocation of will).

HMCTS is awaiting further advice in relation to the acceptance of statements of truth for use in applications that specify evidence must be submitted by affidavit.

Guidance on the signing/witnessing of renunciations and powers of attorney 

Documents including renunciations and powers of attorney that are required to be signed as a deed before a disinterested witness may be effected in the usual way using any method of signing/witnessing that can be achieved under the safe distancing measures currently specified by the government. HMCTS will not look beyond any document that is submitted that is signed and witnessed in the usual way, including the use of electronic signatures.

Statutory Instrument 2020 No 33: The Administration of Estates Act 1925 (Fixed Net Sum) Order 

With effect from 6 February 2020 the fixed net sum for spouses and civil partners of persons who have died after that date without leaving a will has been increased to GBP270,000. If you have been issued with a grant of Letters of Administration since 6 February 2020 and you believe the entitlement to the estate may have been affected by this, you are advised not to administer the estate and, if you are a personal applicant, to seek legal advice.

Probate practitioner forms and electronic signatures 

HMCTS has received queries from practitioners in respect of whether the new forms are for use by practitioners and personal applicants. These forms will become a combined form for use by both at the end of the transitional period and will be uploaded as a combined form on the gov.uk website.

For clarity, the links to all the relevant paper forms for probate professional practitioners only to use are:

You can find where to send your forms at the Directory of probate registries and appointment venues (PA4SOT).

Please note: All forms for practitioner use contain the following statement in the title for probate professional practitioners only. If this statement is not included, the application is only for the use of personal applicants at this stage.

‘HMCTS advises that any new work which is undertaken should now be completed by either using the new paper application forms (electronic signatures including typed signatures will be accepted) or you could alternatively apply online. HMCTS is actively encouraging the use of online applications as this enables us to maintain the service whilst many of our staff are also remote working.’

For further information on how to apply online, please use HMCTS online services for legal professionals.

STEP will continue to keep you apprised of any changes to the service made by HMCTS.

Emily Deane TEP, STEP Technical Counsel