Massive increases in Probate fees – The new model
The Government has just announced that probate fees will rise, in some cases by substantial amounts, with the stated aim of helping to fund the modernisation of the courts and tribunals service. The changes are expected to take effect in May 2017 – as yet there is no exact date.
What are probate fees? When someone dies, the people dealing with their affairs may have to obtain a Grant of Probate or a Grant of Letters of Administration from the Probate Registry before they can deal with the deceased’s estate. A fee must be paid to the Probate Registry for dealing with the application for the Grant. The fee is currently charged at a flat rate of £155 if a solicitor makes the application or £215 if made by an individual.
The new fees will be charged on a sliding scale based on the value of the estate (see chart here).
The Government argues that 92% of estates will pay £1,000 or less and that only a small percentage of estates will have to pay more than £4,000. These proposed fees are still, however, significant and are being brought in despite universal opposition. Some commentators describe them as a stealth tax on estates.
The administration of the estate cannot start until the Grant has been issued. There are concerns that the surviving family members will struggle to pay the probate fee required before they can access the deceased’s estate.
For larger estates, in particular, we recommend that you review your succession planning at the earliest opportunity. One solution might be to take out a life insurance policy which, if written in trust, can be accessed immediately on death without the need for a Grant of Probate. The consultation document also proposes changes to the approach of banks and other asset holders to the release of funds without a Grant, and these changes may alleviate the difficulties.
Although the exact date when the new fees will take effect is not yet known, they are expected to apply to applications for probate received after that date, rather than to deaths which occur after that date. To avoid the fee increase, applications must be received by the Probate Registry before the implementation date. If you are in the early stages of dealing with an estate and have not yet applied for the Grant of Probate, we recommend that you act as soon as possible in order to minimise the chance of having to pay the higher fee. Our specialist teams can advise you on what you need to do.
Our specialist teams can also advise on ways to mitigate the impact of these fee increases as part of their work in reviewing your Wills and succession planning.
Update – October 2017
The probate fee increase has been postponed indefinitely. However, it is worth moving forward without delay on high value probates as Parliament could still pass the legislation enforcing the fee increase. Any increase will take effect 21 days after the legislation is passed. At present the flat fee of £215 for all estates over £5,000 (or £155 for those applying through a solicitor) will continue to apply.