18/03/24
An IRN Legal report, released in December 2023, has revealed valuable insights into the wills, probate, and trusts market. Here, Jonathan Maskew, Director of CTT’s Partnership Team, shares his thoughts on its findings and what it means for advisers.
As someone dedicated to facilitating the success of individuals and our professional adviser community as a whole, the recent IRN report makes for an exciting and promising read.
Market overview
Figures show the market is not only worth 5.4% more than it was last year, increasing to £2.6bn, but the target market of individuals most interested in creating a will – those over 55 – has also grown, with the majority of UK adults still to draft one. Market value is expected to increase a further 5% this year.
Good news, I think you’ll agree! However, competition within the marketplace is fiercer than ever. Despite a decline in the number of law firms offering advice on wills and probate, there has been a rise in the number of other providers also offering these services including accountants, conveyancers, and online services.
Most firms offering wills and probate advice are doing so alongside other services, putting pressure on those within the estate planning sector to broaden their offering and shout about the merits of their expertise.
The new features available within Legacy software allow our clients to look at ways to broaden and diversify their offering. The Management Information (MI) provides a platform to understand the client data, realise a strategy that is outcome focused, and manages risk.
One approach that’s supported by the software is for advisers to promote life planning as a form of asset protection rather than a conversation about death. The purchase of a house, for example, is an ideal time to invite a client to consider ways of protecting their new asset with a will. This approach removes the age barrier many people associate with life planning and puts it in a more positive light.
Services most in demand are those to register a Lasting Power of Attorney (LPA), which saw a significant increase of 37% in the first half of 2023 compared to the same period for 2022. Based on this data, expectations are for LPA applications to pass a million for 2023. This is thought to be due to an increase in the aging population, and with it, an increased need for LPAs and guardianships for individuals suffering impaired cognitive abilities.
Although we are living longer and getting older as a nation, age should not be a barrier to drafting a will. This trend needs to be acknowledged and the delivery of client services must meet the needs of an older client base. In response to this, the Office of the Public Guardian (OPG) is seeking to deliver a digital solution, which will be expected by clients and offer huge time-saving benefits for advisers as well as yielding useful client data.
Digital POAs
The Powers of Attorney Act, which became effective in September 2023, modifies the Mental Capacity Act 2005, introducing significant alterations to the Lasting Powers of Attorney (LPAs) procedure in England and Wales.
It gives the Office of the Public Guardian (OPG) the authority to introduce a new digital process and improve the current paper system. The Ministry of Justice (MoJ) states the goal is to simplify the procedures for making and registering LPAs, as well as making it easier to obtain certified copies of POAs in England and Wales.
Software that uses data more efficiently means you can identify opportunities to offer value-added services to clients. Instead of scouring their files and arranging numerous meetings and phone calls, you can establish clearer lines of communication while reducing the administrative burden and streamlining the whole process. Clients will increasingly expect this service to be delivered digitally.
Contentious wills, probate, and trusts
There has also been an increase in professional law firms handling enquiries into contentious wills, probate, and trusts.
This is largely due to a generalised increase in the value of estates through growth of wealth – and in particular property, and therefore inevitable. More diverse family dynamics and an increase in blended families adds another level of complexity to the will writing process and raises the chances of a will being contested.
To counter this, wider communication and education is needed to help clients understand the life-planning choices they’re making, and help beneficiaries and those contesting a will to understand the planning that’s in place. By communicating this information digitally, using visual means such as the personalised animations that come with Legacy Portal, the message will be far more effective and easily understood.
This holistic approach to delivering a service through empathetic communication and technology will manage and limit the risks associated with a will being contested in the future.
Trusts
The number of trusts being registered has fallen. This year-on-year trend has continued with a 12.5% decrease in trust registrations between 2017 and 2022.
Starting in April 2024 trusts and estates with income below £500 will no longer be liable for income tax – an increase from the previous £100 exemption. However, if the income of the estate or trust is £501 or more, the entire amount will be subject to taxation.
Currently, the standard rates for the first £1,000 of discretionary trust income stand at 8.75% for dividends and 20% for all other income. From April 2024 onwards, all income, including the initial £1,000, will be taxable at the rates of 39.35% for dividend income and 45% for all other income.
Trusts are still a useful, valuable tool for estate planning purposes, especially with the increased value of estates. Consequently, wider communication and education is needed for clients on the role trusts play in effective estate management and the protection of assets such as property.
Electronic wills
In October 2023 the Law Commission published Making a Will: A Supplementary Consultation Paper which states that electronic wills could become a reality if parliament wishes, the proviso being that they are made as secure as paper wills.
This is in response to the pandemic making digitally signed electronic wills more feasible and a wider review to ensure legislation regarding wills (currently based on Wills Act 1837) meets contemporary needs.
Responses from the Law Society fed back from 895 solicitors specialising in wills and probate, 50% of whom were in support of using technology in the will writing process. Concerns over the risk of fraud and undue influence were also raised.
Despite these concerns, I strongly believe that digitisation is inevitable, and now is the time for change. Clients increasingly expect admin processes to be digital and expect the risks to be managed through the digital route. We as providers must ensure we deliver services that have assessed any risks and mitigated them appropriately. Not to provide a digital offering is simply not a solution.
Digital assets
Increasingly, digital assets, like an online shopping account with credit in it or social media accounts with personal information, are being included in wills alongside physical assets.
Since COVID, we are as a nation more digitally aware and less reluctant, but the result is that we have many more digital assets that need to be both secure and protected and at the appropriate times available to others. Greater awareness is needed therefore about the options available for clients when it comes to protecting and passing on digital assets to beneficiaries in their will.
Probate
In November 2023, the Justice Committee of the House of Commons announced an investigation into the probate process. Waiting times for probate had nearly doubled from April 2022 to April 2023. Reports indicated probate was taking over 11 months in certain instances, with advisers routinely telling clients to anticipate a minimum wait of nine months.
The inquiry will assess capacity, resources, and delays within the probate service. It will also examine the impact of digitisation, centralisation, and the effectiveness of the online probate portal, which was launched by the MoJ in early 2019, enabling both private individuals and probate professionals to digitally submit applications for a grant of representation. It will also look at whether fees and associated thresholds are appropriately established.
In a 2023 survey by the Council of Licensed Conveyancers (CLC), 70% of practitioners reported waiting over 10 weeks for a probate grant, and more than half experienced delays of over 19 weeks. Additionally, 60% expressed dissatisfaction with the online probate service’s handling of complex cases, and 53% faced difficulties seeking guidance from HMCTS staff on intricate matters.
The probate team at CTT has a range of experience available to support clients through what can be a complicated process and often at a distressing, anxious and difficult time. Legacy Software allows greater efficiencies during probate, particularly where we have been involved in the drafting of a will and /or trust.
Sharing financial accounting info
A recent survey published in November 2023 revealed 43% of the 4,000 UK adults surveyed have not shared details of their financial accounts with someone they trust. Reasons included being unaware they needed to brief anyone, not wishing to share the information and not knowing where to start.
With the use of Legacy Portal, the sharing of personal information and conversations around life-planning are made easier, thanks to the app’s ability to store documents securely and allow family members and beneficiaries to access them when they need them.
To conclude
The insights derived from the IRN Legal report foretell substantial transformations within the wills, probate, and trusts market, including shifts in client needs and service expectations.
As these changes unfold, CTT Group remains committed to empowering our members to navigate the evolving market, ensuring they stay at the forefront of industry advancements. To find out more about the benefits of joining CTT Group, get in touch.
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