Consumer warning on pre-paid probate plans

Pre-paid probate plans are unregulated in the UK. We strongly advise that you consider carefully whether these products meet your needs and offer value before buying as there are no regulatory protections in place for you.

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 authorize, and whose customers lost money when they collapsed.

When designed and marketed appropriately, pre-paid probate plans could help people organize 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.
The 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.
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 that 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.

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