In January, the House of Lords voted through an increase in probate fees from the current flat rate of £155 to a sliding scale of probate fees depending on the value of the estate. For some estates, the probate fees will rise from £155 to £6,000.
The government has said that it wants the probate fee increases to be brought into force in April 2019. The next step is for the House of Commons to consider the legislation. Those who oppose the increase in probate fees as a ‘’stealth death tax’’ are no doubt hoping that the legislation will be delayed with parliament’s focus on Brexit.
Current Probate Fees
Currently most estates pay a flat rate fee of £155 for a solicitor application for probate or £215 for a personal application for probate. Probate is needed to give the executors of a deceased’s Will the legal authority to administer the assets in an estate.
Campaigners have criticised the massive hike in probate fees from a flat fee to a sliding scale linked to the value of the deceased’s estate because the work carried out by the probate registry is normally the same whether the estate is worth £50,000 or £5 million.
Increase In Probate Fees
You might think that an increase in probate fees will not affect you or your family as the government is ‘’targeting millionaires’’. However, if your relatives have a family home and assets worth from £500,000 to £1 million, the fees will rise from £155 to £2,500 and if the estate is worth from £1 million to £1.6 million, the probate fees will rise to £4,000.
In many parts of Manchester and Cheshire, elderly parents may leave nothing more than the family home to their children but, with house price values, the executors of the Will are going to have to find the money to pay the massive probate fees before they are able to deal with the property and estate. At present, if the estate does not have ready cash in it, it is not normally too much of a problem to find the £155 probate fee but in future, it may be necessary for executors of Wills to take out probate fee loans to cover the upfront cost of the probate application fee. The loan would then be repaid on the eventual sale of the family home. That leaves less for the family and loved ones to inherit. A probate loan can also add to the stress of dealing with the estate for family members who are appointed as executors of a relative’s Will.
What Can You Do About Probate Fees?
What you can do about the increase in probate fees depends on individual circumstances.
If you are the executor of a Will and the estate is worth more than £50,000 then you should act quickly and ensure that the probate application is submitted before April 2019. If you have delayed in dealing with a relative’s estate because it is hard to act when you are coming to terms with a bereavement then put the probate in the hands of a specialist probate solicitor to sort it out for you.
If you are concerned about how the increased probate fees may affect you, your estate, or your loved ones in the future then you should take legal advice now to discuss:
- Wills; and
- Inheritance tax and estate planning; and
- Life time gifting; and
- Lifetime trusts; and
- Joint ownership of assets and survivorship rules; and
- Estate planning.
A discussion about how your estate is structured may not only reduce probate fees but also reduce your estate’s inheritance tax liability.
Is Estate Planning Worth It?
Getting expert legal advice is not as expensive as you might think. A simple Will costs £300 including VAT and a comprehensive estate planning review and report service costs £1,500 including VAT. When you think, what you might be saving your loved ones in probate fees and tax as well as helping your beneficiaries by leaving your affairs in order, estate planning is a sensible and financially prudent option.
For information on estate planning, see our guide https://bit.ly/2CBC1AD .
For information on our transparent pricing policy, see our price guide