The purpose of this legislation is to raise the limit on the amount of property that certain organisations are permitted to distribute on the death of a member without the necessity for probate or other proof of title or where the deceased has nominated a specific beneficiary.
The Administration of Estates (Small Payments) Act (NI) 1967 is the relevant legislation that falls within the remit of my Department. The legislation applies to certain payments made by industrial and provident societies, credit unions, trade unions, councils and Departments. It allows the organisation to release money to a nominee or beneficiary up to a fixed value to which the deceased or the deceased's personal representative was entitled without that nominee or beneficiary having to prove title or seek a grant of probate through the probate office. The primary legislation vests the power to make this order in my Department. However, as the legislation relates to bodies associated with several other Departments, Executive colleagues were consulted, and they have approved the proposed increase in limit.
The limit was originally set at £500 in 1967. It has been reviewed and increased a number of times since, most recently in 2004, when the limit was raised to the current figure of £10,000. Sixteen years have therefore passed since the last review, and a recent short and targeted consultation revealed that the existing limit is posing problems for affected parties. It is now much more frequent for amounts of a little over £10,000 to be left by a deceased person, meaning that beneficiaries need to seek a grant of probate. That adds costs, which takes away from the amount of the estate that is left to distribute. For those with minimal resources, those additional costs can be significant and can delay access to the estate at the most difficult of times, not least now in the light of the COVID-19 pandemic. In some cases, beneficiaries may have to forgo receiving the whole amount to which they are entitled, because the cost of obtaining a grant of probate is greater than the amount in excess of £10,000 that is available.
Raising the small payment sum will assist with some of the difficulties that beneficiaries may experience with the deceased's estate. It will result in a quicker and more efficient process of the payment of money to nominated persons or beneficiaries. Having had the opportunity to consider those issues, I think that raising the sum to £20,000 is proportionate and takes account of inflation and the concerns that stakeholders raised.
Article 2 of the order, which revokes the 2004 order, therefore increases the small payment limit to £20,000. By virtue of section 6(2) of the 1967 Act, the order applies to deaths occurring or nominations affected after the expiration of a period of one month beginning on the date on which the order comes into operation.
This is a short, technical yet important piece of legislation that will assist many people during difficult times. I therefore recommend that the Administration of Estates (Small Payments) (Increase of Limit) Order (Northern Ireland) 2020 be affirmed.
The Committee considered the policy proposals in the Administration of Estates (Small Payments) (Increase of Limit) Order 2020 at its meeting on 21 October. It considered the benefits of increasing the limit on the amount of money that may be released to the beneficiaries of a deceased person from that person's estate by certain organisations without the need for a grant of probate.
I put on record my thanks to the Irish League of Credit Unions (ILCU) for responding to the Department's consultation. Indeed, it was the only organisation to do so. The ILCU response outlined the difficulties caused by the current limit of £10,000, whereby credit unions required deceased members' families to apply for grants of probate or letters of administration from the court. Such decisions can be difficult for recently bereaved next of kin or personal representatives, because the cost of obtaining a grant of probate can often exceed the remaining estate. The Committee noted that the increase in the limit to £20,000 will enable payments to be made directly to the nominated person without partial payments being made in lieu of waiting for a court-answered grant of probate for the remaining moneys.
I also thank Mr McHugh MLA, who is a member of our Committee, for his assistance in helping the Committee come to its decision on the order. His wide experience of the credit union movement helped the Committee in its deliberations. The Committee considered the statutory rule at its meeting on 2 December and agreed that it be affirmed by the Assembly. Finally, I put on record the Committee's sincere appreciation of the work that credit unions do, much of it on a wholly voluntary basis, in providing responsible and affordable financial services at a local level for the benefit of their members and the communities that they serve. I commend the motion to the House.
I also support the move. It is common sense, and, having looked through all the evidence at the Committee, I am satisfied that it is the right thing to do. It seems to be needed as a result of progression in inflation throughout the years, and, in most decades, the legislation has been amended. It is therefore common sense and right and proper. When people pass on, their affairs can sometimes be tricky, and you have grieving families and other persons in amongst it all. The order will allow a good bit of latitude for all those financial institutions that deal with this type of thing, so, as a party, we must welcome it.
I speak in support of the motion as someone who has experience, as mentioned by the Chair of the Finance Committee, of credit unions. I was a founder member of Mourne Derg Credit Union in Castlederg in the 1970s, when four of us came together to set up a credit union in order to address the needs of our local people. It not only facilitated them to receive low-interest loans but it encouraged them to be thrifty and to take responsibility for their own affairs.
That is what credit unions represent in so many ways. People could, over time, build up savings in excess of £5,000. You might wonder why I mention that figure. It is a feature of credit unions that, in the event of a death of a member who is under 65 years of age, their shares are doubled and forwarded to their next of kin. That would immediately bring them over that limit of £10,000. I am not one bit surprised that the credit union movement was the only organisation that replied to the consultation, given that this provision is in the interest of all its members. Very often, its members are people who do not have large savings, but those are still their life savings. In the event of their death, particularly if it is untimely, that is all the more reason why those resources should be available to their family without them having to go to the extent of looking for a grant of probate.
I welcome the opportunity to support the motion, because it is at a time like that that those people desperately need to be able to access funding to, for example, cover the cost of a wake and funeral and to maybe purchase a grave and a headstone in memory of the person who died. It is so easy for that figure of £10,000 to be surpassed, and it is only appropriate to have legislation to accommodate that.
I also welcome the motion. Although the proposed change through order is small, its impact should not be understated. A death in the family is a time when we should come together to grieve, support each other and celebrate life; it is not a time to have the added worry about financial difficulty or long and difficult court proceedings.
The Assembly has, rightly, increased the limit of funds that can be released by certain organisations without probate or another proof of title in order to allow families to cover pressing costs like funeral expenses. However, the last increase was 16 years ago. Without going too far off the point, I will say that the cost of funerals is spiralling and has become a burden to everyone, regardless of wealth. It is certainly sensible to increase the limit in order to allow families a small bit of relief at the most difficult of times.
Furthermore, the cost of accessing probate put it out of reach for some of our low-income families. That is not fair, and it should be tackled in the wider context of access to our justice system. In addition, the time that it takes from the application to the granting of probate can be lengthy, which can add stress and worry for families and create financial difficulties for beneficiaries as funeral costs, which I mentioned, mount up. That situation has been exacerbated by the COVID-19 pandemic, with getting access to solicitors to effect probate and to court proceedings incredibly difficult. It should also be noted how stressful it can be going to the courts. It is not a normal activity for a lot of our community, and it is certainly not a burden that should be allowed at a time of grief.
I do not know whether this is a conflict of interest, but I said at the Finance Committee that I am a member of the credit union in Lisburn. On Friday morning, I met Atlas Women's Centre, which is across the road from our credit union. A crowd of people was waiting to get in. That shows that it is much needed and much welcome in our community.
The current limit has had a great impact on the operations of our credit unions. I thank the credit unions for their support for the increase as well as for the good work that they do in general to support our communities at this difficult time.
I thank the Chair of the Committee and all the Committee members who spoke in the debate for their support for the change to the legislation and for their work in analysing the proposition before them. I concur with the views that the Chair and others expressed in relation to the credit union movement. I am a member of a credit union and know that it provides a valuable service, particularly to those who, although they have little, what they have is precious to them; and for assisting families during bereavements. As Members said, the point of the change is to ensure that timely and correct support is available to families.
This is a technical but, nonetheless, useful change to the law, which will greatly assist those in need in our community to access property on a death without the need to seek probate in the circumstances that I have set out. I commend the motion to the House.
Question put and agreed to. Resolved:
That the Administration of Estates (Small Payments) (Increase of Limit) Order (Northern Ireland) 2020 be affirmed.