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Worried about the upcoming probate increase

9
Nov

2018

The government has announced significant changes to probate fees, which will result in millions of people in England and Wales facing a large rise in probate fees.

Previously a flat fee of £215 was payable when applying for probate, the government is now linking the probate fee to the size of the estate, with fees now ranging from £250 to as much as £6,000.

What is probate? 

If you are named in someone’s Will as an executor, you will need to apply for probate. This is a legal document that gives you the authority to manage someone’s estate (property, money, possessions, etc.) when they die.

How much does it cost to apply for probate? 

If you are applying for probate directly, there is an application fee of £215 payable to HM Courts and Tribunals. For those applying for probate through a solicitor, the flat fee is set at £155. The fee is waived if the estate is valued under £5,000.

What are the new probate fees being proposed? 

Rather than the flat rate of £215 for applying for probate, the government is now introducing a new banded structure which is dependent on the value of the estate. The maximum fee will be £6,000 payable on estates worth more than £2 million. The starting threshold will be increased from £5,000 to £50,000, therefore estates valued at less than £50,000 are exempted. 

Applying for probate - how much will I have to pay? 

Estate valued between up to £50,000 - Fee for probate is now £0, a saving of £215

Estate valued between up to £50,000 - £300,000 - Fee for probate is now £250, an increase of £35.

Estate valued between £300,000 - £500,000 - Fee for probate is now £750, an increase of £535.

Estate valued between £500,000 - £1,000,000 -  Fee for probate is now £2,500, an increase of £2,285.

Estate valued between £1,000,000 - £1,600,000 -  Fee for probate is now £4,0000, an increase of £3,785.

Estate valued between £1,600,000 - £2,000,000 -  Fee for probate is now £5,000, an increase of £4,785.

Estate valued over £2,000,000 -  Fee for probate is now £6,000, an increase of £5,785.

Why are the new probate fees being introduced? 

Secretary of State for Justice Lucy Frazer QC MP, claims the increases are necessary in order to modernise the court system: “Fees are an essential element of funding an effective, modern courts and tribunals service, thereby ensuring and protecting access to justice.

The Government is investing £1 billion to modernise and upgrade the courts system so that it works even better for everyone, including victims, witnesses, litigants, judges and legal professionals.”

In addition to this, it is claimed that the newly proposed system is fairer: “Moreover, by raising the estate value threshold from £5,000 to £50,000, we will be lifting around 25,000 estates annually out of fees altogether. For those who do pay, around 80% of estates will pay £750 or less, and all income raised will be spent on running the courts and tribunal service.”

Can I reduce probate fees through Estate Planning? 

Not everyone agrees with the government’s legislation, branding the increase in fees as a “stealth tax.”  Rachel Griffin, a tax and financial planning expert at investment firm Quilter, stated that although the announcement guaranteed the money raised would be spent on running the courts and tribunal service, it was of cold comfort to those hit by large bills.

She said: "Despite the reassurances, it’s hard not to see this as a stealth tax on those who already pay inheritance tax. Easing the burden on lower estates and lifting 25,000 annually out of probate is admirable, but it still means for others they will face a steep fee during an emotional and challenging time."

She added: These changes will add further complexity to estate planning. Using trusts can help reduce the value of an estate for Inheritance Tax purposes, meaning a lower charge will apply. People concerned about how beneficiaries will pay the probate fees could leave sufficient funds in a life insurance policy and provided the policy is written in trust, it can be accessed immediately on death, without the need for probate.”

The Ministry of Justice has stated that it will publish a guidance document, entitled 'Guidance on Ways to Pay for Probate Fees' before it comes into force in April 2019.

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