With the news that the Government is set to go ahead with proposals to increase probate fees, what impact will this have for those thinking about their own will and estate and what are the implications if you are an executor?
Our blog back in March 2017 first touched on the plans which will see the £155 flat fee that executors must pay to the Probate Court in order to obtain a grant of representation replaced with a sliding scale directly linked to the value of the estate. This is a grant of probate if there is a will or a grant of letters of administration if there is no will. It had originally been proposed that estates worth more than £2m would need to find £20,000 in fees in order for the grant to be issued. Following criticism, the system was reviewed and the top bracket has been capped at £6,000.
The breakdown of proposed probate fees is as follows:
£0 (estates worth £0 to £50,000)
£250 (estates worth £50,001 to £300,000)
£750 (estates worth £300,001 to £500,000)
£2,500 (estates worth £500,001 to £1,000,000)
£4,000 (estates worth £1,000,001 to £1,600,000)
£5,000 (estates worth £1,600,001 to £2,000,000)
£6,000 (estates worth more than £2,000,001)
The new fees are being positioned by the Ministry of Justice as “a fair and more progressive way to pay for probate services compared to the current flat fee, and reflects our commitment to protecting access to justice by ensuring we have a properly funded and resourced courts system.”
While the rationale behind the change is legitimate, the fees are problematic and do not take into account some key issues. The good news is that the rise in threshold where fees need to be paid will increase from £5,000 to £50,000, meaning that an estimated 25,000 estates will not have to pay anything at all. However, for a large proportion of estates, and in light of rising housing prices, there will be some form of increased fee. Indeed, the Society of Trust and Estate Practitioners said 85% of estates would have been liable for higher fees, based on 2014-5 figures.
Concern has been raised that the increased fees are an extra financial burden for families and loved ones during what is an already difficult time, emotionally and financially. There will need to be a system in place to help with the upfront payment of the proposed fees, such as providing access to money from the estate, in the same way that funds are able to be released for the payment of funeral expenses and Inheritance Tax.
Despite the changes, and some scaremongering in the media, we want to reassure people that there is no need to panic. The new sliding scale fee structure is expected to come in from April 2019 and still needs parliamentary approval so there is time to make sure you have received good advice and that, crucially, you have a will that is up to date.
The key thing is that there is no need to rush into taking action. We have already seen organisations looking to take advantage of the news by offering expensive and overly complex packages designed to avoid the proposed fee. Whilst planning to mitigate the proposed fees is something to be considered, it is more important to think about the way that your will and personal finances are structured. This will help ensure your best interests are served during your lifetime as well as the beneficiaries of your future estate.
If you need any further information, please speak to one of BPE’s Private Wealth team who will be more than happy to help.
These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.