Probate Delays and Pension Charges

BBC Sounds. Music, radio, podcasts. Hello. Welcome to this Moneybox podcast. New research shared exclusively with Moneybox suggests most people don't know how much they're being charged by their pension provider or how to find a cheaper one. And for the first time, most couples in England and Wales who live together are not married or in a civil partnership, and that could mean financial problems in the future. But first...

The probate service is cutting access to its helpline for three months, saying it will divert staff to tackle a backlog of cases. When someone dies and leaves the property in their own name or has significant savings or investments, the executors must apply for...

probate. That's a legal document which gives them the right to deal with the dead person's estate and distribute their assets. But the time taken to grant probate has more than doubled over the last three years, from an average of around seven weeks to... 15. And some bereaved families have been facing delays of nearly a year. Malcolm lives in Derbyshire. He had to wait almost 10 months for probate to be granted after his wife died last year.

I went to my financial advisor and said we need to sort the ISA and I explained what I wanted to do with it. I didn't need the cash but I do have a plan because I have four grandchildren. And I'd like to make sure that they have a little chunk of it each. And he said we need probate. So I think 20th of January last year. And then it just progressed from there. And you get to September before...

actually they confess that they've lost their will. The other thing that was disturbing was that the complacency or the lack of empathy from the people in the probate service about what had happened. Sometimes I had emails where you could feel the frustration. From the 20th of January we go to the 13th of November before we get a certificate.

Fortunately it all ended quite well and my grandchildren's bank accounts are now a little bit better because of it. That's the ultimate object achieved. Malcolm. We contacted the courts and tribunal service which told us we sincerely apologise to him for the delays to his probate application.

Long delays like Malcolm's can cause problems, distributing assets to beneficiaries, perhaps selling property and, if it's due, paying inheritance tax. The Society of Trust and Estate Practitioners, STEP, is a network of legal professionals dealing with estate. and wills. It surveyed its members recently and found that everyone who responded had seen a case of a cancelled house sale due to probate delays and almost 7 out of 10 said they had seen cases where the delays had left beneficiaries in.

financial hardship. Jo Summers is with us. She's a partner at Solicitors Jurate and a member of STEP. Jo Summers, just let's start by saying what is probate and who needs it briefly? Hello. Yes, probate is, as you said earlier, it's the document you need in order to deal with the assets of a deceased. If assets are in a sole name rather than joint, then they're frozen when somebody dies. And the probate grants authority to somebody to deal with those assets.

Now, the court service gets around 200,000 applications for probate in a year. That's only about a third of all deaths, so not everyone needs it. And that figure's remained fairly constant, hasn't it? Why is it now taking so long? That's a very good question. There has been a lot of change at the probate registry.

centralized. So we used to have about 12 local probate registries and you could go to your local registry and speak to the registrar. Now it's all centralized. It's also mostly digitalized, not all applications, but most of them are. And I think just about the same time as they were trialing that new system, we had a massive spike in excess deaths caused by COVID. And that wasn't just people with COVID, but people who hadn't got treatment for heart attacks, strokes, etc.

was about a perfect storm really in creating this massive backlog of applications. And I think at the last count, it was something like 50,000 applications in that backlog. Wow. Now, Katrina got in touch with us to say probate delays were affecting the sale of two houses owned by someone she knew, and they'd been waiting months for a certificate. Why does a delay cause problems with selling a house?

You can't complete a house sale until you've got that probate document. So whilst you could market the property, you can send people round to have a look, you can't actually sign on the dotted line. We tell our clients it's best not to start marketing until you've got probate. because then you know you can go straight ahead when you've found your purchaser. But if you do market before you've got probate, you then have to do...

delay and couldn't sign the completion documents until you've got the probate. Yes and of course that's obviously very difficult and you might lose the sale as we heard from Katrina but also your members said two-thirds of them said They've seen cases of severe financial hardship for beneficiaries. How is hardship caused by these delays?

If you can imagine somebody's died, their bank account has been frozen, maybe there's a rental income going into it or some other money, and you can't access that money. You can't use it to pay bills. You can't use it to pay the utilities. You can imagine what financial hardship there is.

There is actually an emergency probate procedure if it's extreme hardship, if you've literally got no access to money. And that can be done. So it's worth speaking to somebody like a step member to see if that's possible. But you have to pay tax in your inheritance tax. If it's due, it's only a small minority who pay it. But if it's due, you have to pay that within six months, don't you? And if you don't get probate for a year or more than six months, you're going to be paying interest.

That's correct. And unfortunately, HMRC are not willing to extend the deadlines for the payment of inheritance tax to take into account that you may not pay it yet because you haven't got probate. Yes. And of course, they charge interest, I think, seven and three quarter percent at the moment. Yes, yes.

As I said, the probate office this week has closed its helpline every afternoon. It's only open in the morning. That's for 12 weeks. That won't help people who call, will it? Many people must call not because they need it, but to find out if they do.

That's correct, yes. I mean, there are other sources of information online. The government has quite a lot of information about how to deal with an estate on death. They're Tell Me Once service. It's worth looking through those. But a lot of calls will be to the probate registry to see if they do or don't need probate.

Yes, and of course, presumably, there'll be more in the morning and they might have to wait even longer. Though there is a web chat, I understand, which is open all the time. And these problems are faced by relatives, aren't they? Because they're usually the executors. What can they do if there's a delay?

As I said, there is a probate emergency application which is assessed on its facts if there are really extreme circumstances like you've sold a property and the person's died before they can complete it. question of loans from banks and paying interest on the interest and the tax. All expensive and difficult. And very, very briefly, this is being looked at by a House of Commons committee. In a few words, what changes would you like to see, Joe?

We'd like to see more personnel at the probate registry and more senior personnel who are able to make decisions on complicated legal matters. And we'd like to see more involvement with the professionals to help on that. Joe Summers, thank you. And in response to this, His Majesty's Courts and Tribunal Service told us yesterday that most probate applications are processed within 12 weeks and it's hiring and training more staff to deliver further improvements.

Most people don't know how much, if anything, the charges are... what the charges are being taken from their pension fund. And that's the headline conclusion from a report by People's Partnership, which has been shared exclusively with Moneybox. It surveyed 1,000 people who had transferred their pension in the last two years without financial advice.

nearly three out of four of them didn't know what the fees were on their old pensions or what they were being charged for the new one. One in ten apparently didn't even know there were charges. And of course charges can make a huge difference to the amount you get when you retire. Rimini is in her late 20s. She took part in that survey and she told our reporter Jo Krasner what happened when she transferred her pensions.

I actually seen an advert for a company and I just thought, oh, that'll be quite useful, you know, put them all in one place. I kind of know where they are. I didn't really do any research. I didn't really think that there was that many companies about or it was a big thing. I think I was sort of naive. to what it actually entails.

So what happened? It's only as time went on, I was sort of aware of sort of the percentage and returns and maybe the company that I went with weren't as transparent as I first thought. Leading on from that led me to do... lot more research on sort of pensions and companies and transferring. So you did the research after you'd made the transfer?

I did, yes. And how did that turn out by doing it that way round? I don't think it went in my favour at all. I mean, the option is still there for me to transfer. But I would have saved myself a lot of time and effort if I would have just researched beforehand. But then again, I feel like there's sort of a lack of education and knowledge on pensions in general. Especially around my age group because it was only afterwards I did the transfer and I spoke to my friends.

people like myself and it was like no one really knew no one really knew it was a thing or knew where to research or wasn't aware that there was all these companies available and so it's got sort of like i got grabbed in with this flashy advert and certainly afterwards i'm like okay maybe that isn't the best choice for me. So what are you going to do now?

transferred my pension again already to another company. There was a better return, there was a lot more transparent that I felt gave me a better sort of customer experience. And it gave me that reassurance that that company was a better fit for what I needed.

Remini speaking to Joe Krasner. Well, listening to that is Patrick Heath-Lay. He's chief executive of People's Partnership. It provides the People's Pension. That's a workplace scheme with more than six and a half million members, and they come largely through auto. enrolment. Patrick Heathley, Rimini took part in your survey. She decided to move her pensions without advice, but then she had to move them again. Was she typical of what you found?

Hi, Paul. Yes, I think she is. And actually, typical of quite a number of our members that we speak to who are considering either moving in or out of our scheme. Very much underneath this is a lack of knowledge amongst people of some of the critical factors.

Now, just to give some context to that, I think there's two main reasons people are looking to move their pensions and they're receiving a lot of encouragement to do that. But one is that the system of workplace pension, when you move jobs, your pension stays with your previous employer. They're the one that... selected the scheme. So there's a greater move amongst people to move their historic pensions to their current.

provider a new employer the other one is more an encouragement to to sort of hoover up all their pensions into one place and effectively consolidate them becomes easier to manage easier to think about perhaps you know what they'll have in retirement The things that came out of the research a lot was a lot of assumptions around providers being broadly the same and the schemes that they have. And an overwhelming driver is convenience for people supported by...

you know, sort of encouragement from the advertising they see. And what about charges? Because, you know, you did find many people didn't even know that there were some people didn't know there were charges and most of them didn't know how much they were being charged. Absolutely. And as you said, 70% of people didn't know.

their charges on their scheme or the scheme they were going to. And actually 10% of people didn't know that charges existed. So there's very limited information around for people on the fundamentals of pension schemes, particularly charging. What difference can lower or higher charges make? To bring that to life, average earner in the UK, and I mean average earner, they're going to save around £200,000 over their lifetime. So it's not a small amount of money.

If you make a selection of a scheme and go from a scheme that's charging, let's say, 0.4% to a scheme that's 0.75%, so those numbers don't sound very big. It actually makes a difference of around £70,000 in the size of pot you might have when you come to retire. And that can mean that you have to continue working for several more years to make up that difference. So it's pretty fundamental to the value that...

that you'll get. Yes, it's extraordinary, isn't it, that 0.35% that you might think is negligible costs you over 70,000 quid by the time you retire. That is quite extraordinary. And you mentioned these charges, maybe 0.4, maybe 0.75. How hard is it to find that basic information? It's incredibly difficult. We've had a look across, and I think we're reflecting on this ourselves.

Very difficult for people to find the information very easily on websites. You have to click through multiple pages. And then when you do find it, you then have this really difficult maths challenge to get over. I mean, it is very hard doing the maths to try and work out where that value is. ask you about your charges i think you charge 0.5 percent why do you do that why not a flat fee for the work you do

Well, we're a little bit different. We're a not-for-profit organisation founded for social good. So our charging practice is to try and alleviate down the impact of charges as you accumulate. Your pension pot. So starting at only £3,000, we will start to reduce the impact of charging by lowering your charge rates. We operate through a series of bands that range between £3,000 and £50,000. So quite nominal in terms of the amounts.

It's really a reflection of the impact of charging on pension pots over time. What would you like to see changed? Well, I think the industry has to step up here. I mean, it's very clear people are not well equipped. by us the industry to really think about what's important when when transferring now there is help out there and money helper service for example the government had

It does have some information on, but I don't think it's as succinct as it could be. I'd like to see the industry moving much quicker to be more transparent and more comparable at scheme level. We should be publishing standardised information that allows people to... really understand the different schemes out there and can help them make that decision. Patrick Heathlay of People's Partnership, thanks. And that website, moneyhelper.org.uk and search Pension Wise.

Now, for the first time, most couples in England and Wales who live together are not married or in a civil partnership. New figures from the Office for National Statistics show that in 2022, a fraction under half were married or in a civil partnership 10 years earlier.

it was slightly more than half. But as we've said before on Moneybox, if you live together in connubial bliss but without being wrapped in that marriage blanket, there could be financial trouble ahead. Our reporter Dan Whitworth spoke to married couples at a service station on the... Paul from North Wales. And who's this? This is Coral. And how long have you two been married? Five years. Important question, important question.

I know that there's benefits to being married for tax reasons and stuff. So it makes sense, doesn't it? If you're happily together, then make it easier. Definitely be of benefit and something you would want, without a doubt. Tom Strickland, 66, from Corby in Northamptonshire. You wear it well, Tom, you wear it well. And who is this and how long have you been married or partnered? Marion, we've been married 42 years.

i'm an accountant so right well brilliant i don't need to explain anything to you then tell me your thoughts on it then please what do you think about the fact you obviously get those rights as a married couple yeah but not if you're living together your thoughts please

Yeah, well, sometimes it's worth getting married just for that reason, isn't it, really? I think some of our friends actually got married very recently after living together for about 40 years, just for that reason, really, because they were selling their business. Yeah, it was the inherent tax benefits. Should there be that difference? Possibly not nowadays. Why should there be? What makes you say that?

Because a lot of people don't want to get married nowadays, do they? But if they're still committed in a relationship and they want to sort their money out the way they want to sort it, it should just maybe be across the board, really. Mark from Liverpool.

Steph from Liverpool. Mark and Steph, are you married? Are you living together? Or are you just random people who bumped into each other here? Married. How long for? Seven years, nearly eight. I'm glad you're last to hear that, mate. It should be for love, not for money. yes and it costs a lot of money as well depending on what you want to do like what type of marriage and

People try and make it bigger and better. Everything's getting more expensive, isn't it? Cost of living. Ibrahim, are you married? Are you with someone? Are you in a partnership? Married. And how long have you been married for? Six years.

couples who just live together they don't get those same benefits what do you think about that i think it's a good incentive for people to get married but then at the same time i can understand how it's not fair and i know if i was to live on my own i'd struggle so it's good having my wife with me The inimitable Dan Whitworth.

finding that married people on the M6, at least, do seem to know there are financial benefits from marriage, even if it's love that keeps them together. Alice Hain is personal finance analyst at Best Invest. She explained the not-so-romantic but important tax...

advantages of marriage married couples and civil partners can transfer assets such as cash investments and property between them without facing tax charges It means couples can maximise two sets of allowances, such as the personal savings allowance applied to interest on cash savings.

or their combined £40,000 ITA allowance. Married couples switching investments or cash between them to fill up ITAs, for example, won't face any capital gains tax or inheritance tax implications. And don't forget about the annual marriage allowance. where a lower earner can transfer part of their annual tax-free personal allowance to their spouse or civil partner to create a tax saving. It might not sound romantic, but it makes financial sense.

Well, those are the pluses, but what about the minuses of living together in unmarried bliss? Melinda Giles is a partner at Solicitors Giles Wilson Law. Melinda Giles, most couples... live together now without legal protection. What's the biggest financial risk they run? The biggest financial risk is in terms of if they were to break up.

during their lifetime and one party owned the property, for example, and the other didn't, the partner who didn't own the property would have very little rights potentially over that property and their home. Yes, and of course a lot of marriages break up, never mind unmarried couples, don't they? And what about if one of them dies? Because sadly that does happen. That can be pretty catastrophic. We've already spoken about the inheritance tax implications.

But there's also the fact that if an unmarried person dies without a will, then we're subjected to the intestacy rules which would give them no rights at all, potentially without claiming in court a dependency claim, for example. Yeah, so you've actually got to go to court to establish a right. You get nothing automatic. Marriage and indeed civil partnership give you automatic rights. That's the important thing. If you're not married...

You may or may not get them and you may have to spend money and worry a lot about it. And what about people who are living together, who are listening, who share the rent, maybe the mortgage payments? What should they be thinking about to make things better for them? It is better to talk about this and perhaps take legal advice at the outset, although it's not very romantic, but a cohabitation agreement can define the rights.

If you own differing shares or have contributed differently to the ownership of the property, you can have a declaration of trust that defines what you expect if the relationship breaks down in terms of the value of the property.

People do find it a bit difficult, though, don't they, when they're getting together to say, well, hang on a minute, there's a long document here for you to sign, or at least we'll go and talk to a solicitor. But do you think that's really important, particularly if you've got...

I think it's hugely important and hopefully they find it easier than at the time they're breaking up. And so that's definitely the time to do it. No, definitely not. Of course, some people think, don't they, that if we live together for long enough, maybe we have children.

where somehow they often call it a sort of common law marriage. Yes, there is no such thing as a common law marriage. If you have children, the landscape is slightly different potentially, young children. It's also important, as you've mentioned, there's no difference between civil partnership and marriage. marriage, but make your decision as to how you're going to live with somebody with the knowledge, I would say, is my biggest tip. Yes, and if there are children, much more complicated.

It can be much more complicated, but also you really do want to ensure that you know your rights and how you would end up financially in any scenario. Yes, you have to sort of prepare for the worst, really. And we've talked before on the programme about the benefits now that are given, the bereavement payment that is given to parents who aren't married if one of them dies. Doesn't apply, of course, if you don't have children, does it? No, not at all.

So is that something, I mean, that would be £4,300 if you were married, but nothing if you're not. And similarly, potentially with pension rights or death in service benefits, there's often the opportunity to nominate those in favour of somebody. You have to take positive steps to benefit your partner. Right. If you're married or civil partner, that would happen almost automatically. But if you're not, you can nominate a partner. Usually so, yes. And just sort of finally.

There will be people listening. They're couples. They don't want to get married or civil partnered. It doesn't suit them. Just watch briefly. What should they do? Well, they should talk about what would happen if one of them died. make a will for certain, look at their nominations for death benefits and sadly they should also talk about the possibility of breaking up and what they would want for each other.

Especially if they have assets. Thank you very much. Especially if they have children as well. Melinda Giles of Giles-Wilmson Law. Thanks. Now, the Ministry of Justice says it is reviewing the laws around marriage and divorce.

After that, it will look at cohabiting couples, so no changes in a minute. And I should add that the inheritance and separation rules for unmarried couples, though not the tax rules, are slightly different and better in Scotland. On Wednesday, Felicity Hanna will be here with Moneybox Live.

looking specifically at the finances of parents who are separating. Always a difficult time, especially when there are children, so how do you make sure money and possessions and housing and indeed care of children are split? fairly. Send your questions, experiences to our experts. Moneybox at bbc.co.uk And emails are coming in on this. Dan's here, Dan.

Well, Heather told us how her dad died mid-December 1997. Probate granted the following month. Her mum died last year and it took 14 weeks. Also, Peter said many areas of public administration are working well, though. And a last one on... tax breaks for married couples but not cohabiting ones martin said simply the law needs to catch up with society indeed

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BBC Sounds, and now from love to hate. Hi, I'm Marianna Spring, the BBC's disinformation and social media correspondent. And I've learned firsthand that the online world can be a breeding ground for hate. But why do some people behave the way they do on social media? For BBC Radio 4, I'm meeting the people at the heart of some extraordinary online conflicts. to see if understanding even forgiveness is ever possible. Listen to Why Do You Hate Me on BBC Sounds.