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Probate is changing: What does that mean for you?

Revenue will want a lot more information on beneficiaries under new process

Probate is the first step in sorting out who gets what after a death, and the process is changing. Starting this month, Revenue wants to know a whole lot more about beneficiaries before inheritances get the green light. If you are in line for a bequest, that means they want to know more about you.

Taking out probate means getting the Courts Service to certify that a will is valid and that all legal, financial and tax matters are in order so that an estate can be distributed. This is done by applying to the Probate Office in Dublin, or to one of 14 local probate offices.

The process can be notoriously long, with waiting times in Dublin this year stretching to months. If you are anxiously waiting to sell a house to settle debts, to access cash to pay off bills, or if there is dispute brewing amongst beneficiaries, every day of delay can make things harder and tricky relations more strained.

Solicitors say the service has a heart, fast-tracking cases where there is hardship, but that it is understaffed and under-resourced. The new process aims to make things simpler, removing common errors to speed up processing times. But it will entail providing more information too.

Applying for probate

When someone dies, permission must be sought through the probate section of the Courts Service to administer the estate. If there is a will, then the executor does this. If there is no will, or no executor, another administrator like a solicitor may do it.

If the estate is complex, a solicitor is probably best placed to make the application. They will be paid out of the estate and will usually charge around 3 per cent of the value of the estate, or less on very large estates.

If matters are fairly straightforward, the executor or administrator can make a personal application.

Online at last

So what’s changing? Under the new probate system, Revenue says it and the Courts Service have collaborated to modernise the application process by putting the form online. So far, so 20th century. But that undersells the change: it’s not the same process any more and it’s not the same form.

Before the change, the first port of call was a probate office. This is where the applicant sent the former 22-page Inland Revenue Affidavit CA24 form, detailing the deceased's assets.

Under the new system, solicitors and personal applicants will have to first submit the new form, Statement of Affairs (Probate) SA2, via Revenue’s ROS or myaccount services. So all this information on bank, post office, building society accounts, property, assets, stocks, shares and debts now goes to Revenue first.

Revenue then sends applicants a unique number for submission to the probate office, along with the probate application. Once the application is approved, the probate office notifies Revenue. This reactivates the SA2 form on Revenue’s system and beneficiaries are contacted to pay tax on their gain where it’s due.

Additional information

Not only is the routing of information different under the new process, but more information about those benefiting is required too. One significant change is that beneficiaries due smaller sums, who could once fly under the radar somewhat, are no longer able to do so. Under the new rules, any beneficiary receiving €12,000 or more will have to be disclosed. Before, it was €16,750.

"That reduction in threshold means more beneficiaries will be disclosed to Revenue," says succession law specialist Richard Hammond of Mallow-based Hammond Good Solicitors. Revenue says the old figure was linked to Capital Acquisitions Tax (CAT) thresholds and the move to this lower figure, not linked to a threshold, will make it easier for applicants to know whether to include a beneficiary or not.

Revenue wants more information about beneficiaries too. In the past, it required their PPS number, name, address and their relationship to the deceased. The new form has fields for their date of birth and eircode too. And it's unlikely they are asking in order to call you up with congratulations on your birthday or inheritance.

“Presumably this is an internal thing for Revenue tracking: it doesn’t have any significance for probate,” says Hammond. Revenue says date of birth will enable them to verify PPS numbers, reducing time spent following up.

If a beneficiary has received any gifts or inheritances previously, no matter their relationship to the giver, these need to be declared now too, and this is where things can get really messy.

The domicile of beneficiaries is also asked, this is for the purposes of applying Capital Acquisitions Tax, Revenue says. More detail in relation to assets is required too, such as the IBANs of the deceased’s bank accounts. Other new fields include the email addresses of executors and information on charitable bequests not on the old form.

All this means the solicitor or person making the probate application needs to gather even more detail than before. The processing of the probate of application once submitted may or may not be faster, but filling out the application, or rather excavating the information needed to do so, has become more onerous.

Some new responsibilities are also pushed onto applicants. Under the old form, if you didn't know whether Auntie Bridie had received a few pounds from her Nana 30 years ago, that was okay – you could tick a box saying "unknown". Now, you'd better rack your brain, because you can no longer "not know" anymore. "Now you have to have that information before you can sign your declaration at the bottom of the form," says Susan Murphy.

Reluctant beneficiaries

With more information required about beneficiaries, and any previous gifts or inheritances they may have received, might some people fear an inheritance of €12,000 would draw more attention from Revenue that it’s worth?

The more common issue is a beneficiary who has a dispute with the executor or even the deceased, says Hammond. “For a variety of reasons, you will have beneficiaries who refuse to give you information,” he says. Then you have a difficulty, because under the old and the new systems, you need beneficiary information.

A convention of understanding in the old form, however, has become more formalised in the new one. "The applicant or solicitor could give an undertaking to release the benefit to the reluctant beneficiary only when the relevant information had been provided or until Revenue gave clearance," says Hammond. "We've always had that system, but this is the first time it's been properly written down." Some solicitors may be slow to give formalised undertakings, says Murphy.

And a possible speed bump in the new system is that you can only give an undertaking for one reluctant beneficiary per estate.

While reluctant beneficiaries are unusual, when they do crop up, it’s not unusual for there to be more than one in an estate. “It would be unsatisfactory for everybody, including Revenue who need to collect the tax, if one reluctant beneficiary could put the entire thing into limbo,” says Hammond.

Win win?

The new process is likely a win for Revenue who will get more specific information on beneficiaries at the outset. This should enable them to collect any taxes owed more promptly.

“Revenue is notifying the beneficiaries pretty much at the outset that they are going to have a tax liability, they are kind of marking their cards,” says Murphy.

Whether the new system will be any faster remains to be seen. Revenue says the new process will reduce, or completely remove the common errors made completing the current paper form. This should lead to shorter processing times for applications, it says.

“If fewer applications are rejected because of glitches and errors, that will speed things up,” says Hammond. “It will certainly improve the internal efficiency for the Revenue Commissioners. Whether it brings any efficiency for the solicitor or the clients is something we will probably only be able to comment on in a few months time.”

The National Adult Literacy Agency has done a "plain English" review of the form to ensure the language used is simple and can be understood. Where an estate is straightforward in nature, this should give personal applicants the confidence to settle the affairs of the deceased without the need to pay for a solicitor.

Revenue says indications are that customers are finding the new online form user-friendly, with almost 300 forms processed in “a little over a week”, and another 500 forms at varying stages of completion.

If it speeds things up, it will be positive for those wanting to move on from the painful administration of bereavement. For beneficiaries however, it may bring more scrutiny of their affairs.

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