Changes to probate fees are a step closer
Posted on 24th February 2019 at 14:19
Plans to increase probate fees for some to £6,000 have been approved this month, following the most recent meeting of the government committee that was set up to debate the issue.
The Committee members voted by nine votes to eight to approve a statutory instrument (SI) to replace the current flat fee with a sliding scale of charges, based on the value of an estate.
The next stage is in the House of Commons. Unless the majority of the House objects, the changes to probate fees will come into force in April.
What do the changes to probate fees mean?
Under these plans, probate charges will be linked to the size of the estate in future. The new charges will replace the current flat fee for estates of any size of £215, or £155 for applications made through a solicitor.
Estates valued at more than £2million will be charged £6,000 and estates valued at less than £50,000 will be exempt from charges. Previously only estates values at less than £5,000 were exempt.
What are the new probate fees?
When the changes come into effect, the fees will depend on how much the estate is worth:
• less than £50,000 - no fee
• £50,000 up to £300,000 - £250
• £300,000 up to £500,000 - £750
• £500,000 up to £1 million - £2,500
• £1 million up to £1.6 million - £4,000
• £1.6 million up to £2 million - £5,000
• more than £2 million - £6,000
What is probate?
When someone dies, their estate – their remaining property, money and possessions after any bills have been paid – must be distributed according to that person’s Will or, if they don’t have a valid Will, according to the Law of Intestacy.
If there is a Will then a 'grant of probate' is needed to do this. Without a Will their next of kin must apply for a 'grant of letters of administration'.
Following this, a 'grant of representation' will prove the authority of the estate’s executor under a Will or their next of kin to administer the estate.
The term 'probate' is used to cover the process of applying to the court for the grant and the document used to manage the estate.
What the government says
The government says that the new tiered fee structure represents a fair and more progressive way to pay for probate services compared with the current flat fee.
The Minister says that the government is confident the new fees will never be unaffordable. The fee will be paid from the estate and executors will have several options to fund it.
Impact on family businesses
The Institute for Family Business (IFB) is concerned that family businesses will be badly affected by the proposed increases to probate fees.
The IFB says that it’s assumed estates will have immediate access to enough cash to pay the new fees. A farming business, for example, could hold significant assets in land but have very little access to cash. A business owner might have invested all their available cash to fund its future growth.
Bereaved families might then need to consider loans, insurance policies or other special financial vehicles that could affect the future of a business that has been in their family for generations. Alternatively, you can make provision in your will to help ease these concerns for your family.
Please get in touch if you would like to discuss your Will.
Tagged as: Probate
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