The government have announced that from April 2019, the fees payable to the Probate Registry to obtain a Grant of Probate or Letters of Administration will be changed. Whilst this does mean that a larger number of smaller estates will benefit from no probate fee, for all other estates the fee will increase and, for larger estates, substantially.
Currently, probate application fees are paid on all estates over £5,000 at a flat rate of £155.00 for applications by solicitors and £211.00 for personal applications.
The future fees will be:
|Value of Estate before Inheritance Tax||New Fee|
|Estates worth up to £50,000 are exempt from requiring a grant of probate||£0|
|Estates worth from £50,000 to £300,000||£250|
|Estates worth from £300,000 to £500,000||£750|
|Estates worth from £500,000 to £1 million||£2,500|
|Estates worth from £1 million to £1.6 million||£4,000|
|Estates worth from £1.6 million to £2 million||£5,000|
The Ministry of Justice announcement states that the new probate fees will be no higher than 0.5 per cent of the value of the estate. The government attempted to introduce similar changes in 2017, albeit with even higher fees for larger estates, but there was strong resistance to this on the basis that the proposed fees bore no relevance to the work required by the probate registry and represented a stealth death tax, and the proposals were dropped when the last general election was announced.
Immediate steps you can take:
If you are in the early stages of administering an estate which will require a grant of probate or letters of administration, it may be worthwhile ensuring the application is submitted before the changes take effect, to avoid the cost increases.
How will estates pay the new fees?
The proposed changes may leave some estates struggling to fund the fee as it will have to be paid up front before the grant can be issued but all assets and bank accounts belonging to a deceased are usually frozen upon their death and only released to the executors following the grant being issued. Whilst this has not caused a problem in relation to the current application fees as it is usually possible for the executors to personally fund this relatively modest cost, they may be unable to do so, where the fee is much higher. Banks will currently allow access to a deceased’s accounts to enable payment of inheritance tax prior to the grant application, but there is currently no mechanism in place for payment of the probate fees. We hope that if these changes take effect, that the government will have considered this point and set up the necessary mechanisms in this regard. If not, then the executors may have no choice but to fund these fees personally or try to arrange bridging finance on behalf of the estate, which could be expensive.
Can we help you take steps to ensure the fees have less of an impact?
Some commentators in the legal sector are concerned that the new fees will push people away from making a Will to leave their assets according to their wishes and make estate planning even more complicated.
Individuals may use lifetime gifts to reduce the value of their estate to qualify for lower fees, however this may leave some people financially exposed for the rest of their life.
Survivorship rules for joint property and joint bank accounts may also be considered to reduce the new probate fees. The current survivorship rules ensure property owned as beneficial joint tenants automatically pass to the surviving joint owner on death, rather than via their estate, meaning the value is not included in the value the calculation for the probate fee.
Using survivorship rules can be very effective in some circumstances, such as on first death in a simple estate between a husband and wife. However this automatic inheritance can be lead to inequality between children from previous relationships, misunderstanding as to what the deceased’s wishes were, and means that the opportunity to use a Will for passing your share of the property to anyone else will be lost.
There are steps which can be taken if reducing this fee is a concern for you, but it may be that the effects and costs of some of these actions are disproportionate to the results you are trying to achieve. However, these options can certainly be considered as part of the expert advice we provide in the context of your estate planning as a whole.
If you have any questions regarding the above, we are pleased to assist you, both in relation to planning your Will, dealing with probate issues after death or estate planning. We are on hand to help with any queries you may have in regards to Wills, Probate and Estate Planning issues. Our solicitors are based in Wakefield, Dewsbury, Selby and Horsforth. Feel free to call us on 0330 300 1103 or request a call back.