Legacy income is moving more quickly through probate, but 2022 remains an unknown

It’s no secret that there have been some hefty delays at probate in recent years, but the latest figures from HM Courts & Tribunal Service (HMCTS) suggests that the backlog of cases is dropping and that new applications are moving through the system more quickly. This means that families and charities alike should see inheritance and legacy income coming through faster, which is of course welcome news for all those that rely on gifts in Wills.

And yet, how much progress is made in the months ahead depends very much on what Winter has in store. While death rates had been rising steadily in recent years, COVID-19 drastically and tragically changed mortality patterns over the past couple of years and is making life a great deal less predictable for us all.

What is the impact of the delays on charities and where are we now?

For many charities, legacies are their largest source of income – highly treasured donations from supporters who choose to remember them in their Will. By their very nature, legacies aren’t always predictable, but they are becoming increasingly prevalent. In fact, according to the latest NCVO Almanac, legacies now bring in around £1 in every £6 raised by charities across the UK.

When you consider the scale of that income, raising over £3 billion annually, it’s clear this funding can have a heavy bearing on frontline services. And particularly when it comes to the largest bequests, a considerable delay can heavily influence cash flow and project timelines. That income will still filter through, but in the most extreme circumstances it can be the difference between an organisation staying afloat or having to close its doors.

So, delays at probate really do have an impact and it’s important that charities know what’s going on and can make plans or provisions when there’s any sort of hold-up. That’s why we’ve been working in collaboration with the Institute of Legacy Management to ensure that HMCTS and the Probate Registry recognise the impact of the probate delays on charity income. We’ve highlighted the challenges for charities and emphasised the need for improved processes, together with prompt and accurate reporting on output.

The issues began in March 2019, when a new case management system was introduced. This coincided with a surge in applications as a result of planned rises in probate fees. The upshot of this was that by June 2019 almost 40,000 or 8 weeks of applications were held up in the system over and above the usual workflow.

Additional staff and improved processes saw the backlog reduced to more than half that level by early 2020. Unfortunately however, when Covid hit, the workforce at HMCTS faced significant challenges and struggled to keep pace with rising applications brought on by soaring death rates. Subsequently, the build-up of applications went back up 7 or 8 weeks by the middle of 2021.

Since then, HMCTS has expanded the probate team with another 50 recruits, upscaled staff with training and introduced new digital processes has seen the backlog come back down to between 3 and 4 weeks with further improvements reductions expected in the coming months. It’s too soon to be entirely confident that progress will be smooth. Much will depend on the level of deaths and applications in the coming months.

Overall, the service does appear to be becoming more resilient with better trained teams focusing on dealing with longer-running “stopped” cases and providing better telephone support to executors experiencing issues with their applications. In order to reduce the backlog, the team at HMCTS have reduced the number of “stopped” cases by 8,000 and are working closely with HMRC to ensure that Inheritance Tax issues are minimised.

From the sector’s perspective, different charities have had different experiences. Some are reporting no delays whatsoever, while others are still seeing legacy income held up at probate.

Standard grant applications are moving through the system pretty swiftly now, taking an average of 4 weeks, and the new digital system is enabling the team to respond to telephone queries more promptly too.

All being well, the probate team aims to have the backlog down at pre-pandemic levels in the next couple of weeks with further reductions by this Spring. Still, there’s a long way to go before HMCTS halves the current amount of probate cases in its system to reach its target of around 15,000. And this all comes with the caveat that if winter brings another devastating spike in deaths and probate cases, it would inevitably slow things down once more.

Our hope is that the uplift in capacity and considerable improvements made will be sufficient not only to accelerate the probate system in 2022, but to strengthen capacity for the ‘legacy boom’ years that lie ahead.

With legacy giving becoming even more prevalent and donations expected to reach record levels in the coming years, the importance of probate working smoothly and reliably can’t be underestimated. We’ll keep working behind the scenes to monitor how things progress and to update the sector.