This is seen by many as a stealth tax, because the existing Probate Fees more than cover the Probate Section’ s administrative costs in dealing with an application for a Grant. The new fees will be based upon the value of the estate, despite the fact the estate value is irrelevant to the simple administrative procedure that the court undertakes to issue a Grant. The new fees will not therefore relate to the amount of work undertaken by the court to process their specific application. The reality is that any estate over £50,000 will be subsidising the courts costs in other areas of law than the probate, be it family law, commercial law, criminal law, to name a few.
What is probate?
When someone dies their property, money, possessions, investments and liabilities – all of which make up their estate – are organised by an executor or administrator and the net estate is distributed accordingly to any beneficiaries.
If the deceased had appointed an executor in their will, that person will need to get what is known as a ‘grant of probate’. However, if there is no will, the Rules of Intestacy set out who has right to apply for what is known as a ‘grant of letters of administration’.They would be known as an administrator
The executor or administrator may well then need to get a ‘grant of representation’, which proves their authority to administer the estate. The process of applying to the court for the grant and the document used to manage the estate is often generically referred to as ‘probate’ – and incurs probate fees.
Not all estate will require a Grant, as it will depend on the nature and value of the assets, but many will require the Grant.
Under the previous payment structure individuals have paid a flat £215, or £155 when applying through a solicitor, on estates of over £5,000. The changes will see that the threshold at which probate fees need to be paid is raised to £50,000, with a sliding scale fee thereafter depending on how much an estate is worth, rather than a flat fee.
|Value of estate (before inheritance tax)||New Fee|
|Up to £50,000 or exempt from requiring a grant of probate||£0|
|£50,000 – £300,000||£250|
|£300,000 – £500,000||£750|
|£500,000 – £1 million||£2,500|
|£1 million – £1.6 million||£4,000|
|£1.6 million – £2 million||£5,000|
|Above £2 million||£6,000|
Who will be affected?
People seeking to administer a deceased’s estate will be affected by this new system.
According to the Ministry of Justice, the changes will mean that an extra 25,000 estates annually will be paying no fees as all.
However, there have been arguments that whereas the previous £155 (or, at most £215) was a fairly small amount of money to raise, this new fee of up to £6,000 will be harder for many people to afford at a time when the estate assets will not be accessible until after the Grant is obtained. Also, it is not unusual for people to appoint as executors friends or relatives who are not beneficiaries under the will. Taking up the role of executor may then open them up to paying the money from their own pocket, when they cannot be reimbursed until the estate assets are sold, which may be many months later depending on the circumstances
If you’d like further advice on the changes to probate fees, or if you are seeking trusted legal advice in general, we at Hanne & Co are happy to assist you. Get in contact with our expert Wills and Probate and Trusts team today.