Consumer warning on pre-paid probate plans

In England, Wales and Northern Ireland, probate is the legal right to deal with someone’s property, money and possessions (their ‘estate’) when they die. It is usually required when the person who died owned property or significant assets in their own name. The equivalent in Scotland is called Confirmation.

We have seen increased marketing of pre-paid probate plans in recent months, including from firms and individuals associated with funeral plan firms that we did not authorise, and whose customers lost money when they collapsed. 

When designed and marketed appropriately, pre-paid probate plans could help people organise administration arrangements ahead of their death. But as we do not regulate pre-paid probate firms, or the pre-payment of probate costs, there are no regulatory protections in place for you.

You should note in particular:

• Pre-paid probate plans are not protected by the Financial Services Compensation Scheme. This means that should the company fail, there is no guarantee that you will receive your money back.
• Commission is often included in the fee you pay. This increases the price of the plan. There is no commission ban on the sale of pre-paid probate plans (as there is for funeral plans).
• Your money may not be safe if the firm should fail as there are no rules requiring the money paid into plans to be held in trust or backed by insurance. 
• The Financial Ombudsman Service cannot help resolve any complaints, but if you think a business has broken the law or acted unfairly, you can report them to Trading Standards[1].

We would also recommend the following:

• Be alert to any cold calls you receive about pre-paid probate plans. High-pressure sales tactics, such as cold calling, can result in you taking out products which are not suitable for your needs.
• Even where plan operators choose to use a trust to manage assets, those trusts could still invest in unsuitable investments, putting your future benefits at risk. We saw cases where this happened with funeral plan trusts before our regulation began.
• The fee for a pre-paid probate plan is usually based on the value of your estate when you purchase the plan. However, the value of your estate may change over time. For example:
  • You may receive an inheritance after you have purchased the plan, which would increase the value of your estate. This would require your family to pay additional probate fees after your death.
  • You may need to pay for care costs, which would reduce the value of the estate. This could mean that probate is not needed, and your family could then find that the probate plan you had paid for was not necessary, and therefore worthless.
• Probate is not always needed, as some banks will pay out a certain amount without the need for applying for probate. Speak to your bank about the amount they will release on the death of an account holder.
• Pre-paid probate plans require your executor to use a specific nominated professional. This means they won’t have any choice about using someone who has been recommended to them.

More information

If you are thinking of buying one of these products, you should consider carefully if the product meets your requirements, and that the provider is reputable, has robust measures in place to ensure your money is safe and is able to deliver the promised service in the future.

Citizens Advice provides information[2] about how to deal with the financial affairs of someone who has died, for each part of the UK, and also advice and help on your rights[2], if things go wrong.

If in doubt, we suggest you compare what the plan covers with what these services would cost now, from a provider such as a solicitor. The MoneyHelper website[3] contains information that you can use to consider whether sorting out your estate is likely to need the services of a probate specialist. MoneyHelper has also published a guide on what to do when someone dies and leaves a will[4]. If your estate is unlikely to need specialist probate services, a probate plan is unlikely to meet your needs.