Inheritance tax changes could lead to further probate delays, experts warn

Dragging pensions into the inheritance tax net will increase delays and could be costly for grieving families, experts warn

Bereaved families already facing probate delays are set to face even greater hurdles, as new pension tax rules come into force from April 2027, experts warn.

Applying for probate is a vital step in gaining control of a person’s estate after death, allowing executors to access accounts, pay debts, and distribute inheritances. But the process is taking longer than ever.

The number of probate cases taking over a year to be granted has surged by 134 per cent in the last three years, new research has revealed.

Now, experts are warning that the upcoming changes to inheritance tax (IHT), which will make pensions taxable, could worsen delays.

Jon Greer, head of retirement policy at Quilter, said they are already witnessing “large delays”, which is causing “significant stress” for grieving families.

With pensions set to become part of the taxable estate from April 2027, the situation is “likely to worsen”.

He said: “Pension schemes are often unaware of a member’s death immediately, delaying legal and tax processes.

“This means legal personal representatives will face an even greater challenge in gathering information from multiple pension schemes.

“These delays, coupled with additional responsibilities, make an already difficult situation even more complex.”

New research from Canada Life shows how fraught the process already is, with 28 per cent of people surveyed having trouble finding documents like pension or insurance policies.

Another 27 per cent struggled to gather information from companies about debts, assets or bills. A quarter said the probate process took an emotional toll.

The financial cost could rise sharply once the changes come in, Mr Greer said. HMRC proposes charging interest on unpaid IHT after six months – currently at 8.25 per cent – even if delays aren’t the fault of the family.

Currently, on average, probate typically takes four to six weeks, but that’s “certainly” set to increase if more applications require additional checks, Mike Davis, managing director at My Probate Partner, said.

With more estates set to be pulled into the IHT net, experts say the time to prepare is now – before the system becomes even more strained.

Nick Flynn, retirement income director at Canada Life, said: “Testators or owners of wills should have open conversations with their chosen executors – and where possible, seek advice from a financial adviser – to ensure everyone involved is well informed and equipped to navigate the process ahead.”

Mr Greer said being organised can include simple things such as keeping track of your pension savings, as well as using trusts during someone’s lifetime, moving assets out of the estate so that they’re not part of the probate process.

He said: “For example, you can place life insurance policies in trust. Upon death, the life insurance benefits are paid to the trustees and can be distributed, prior to probate, as per the terms of the trust.

“While it is impossible to predict how long you might live, it is never too soon to start thinking about making lifetime gifts.

“This not only removes an asset from your estate for probate purposes, but a gift made seven years prior to your passing may also help reduce any IHT liability.”