Before the snap General Election, the Government was planning to introduce a new fee structure for applications for Grant of Probate or Letters of Administration (under intestacy), which would have taken effect from 1st May.
When somebody dies, the Executors must apply for a Grant of Probate from the probate registry. This needs to be done to allow them to administer the estate according to the terms of the Will.
Currently, the fees for this application are set at either £155 if probate is applied for by a solicitor, or £215 if applied for by family or friends. There are no fees if the value of the estate is less than £5,000.
If the Government were to now make the fee changes as planned, the first change would be that estates below £50,000 would no longer have to pay any probate fee. This significantly increases the number of estates exempt from the fees. Unfortunately, everyone else would see a substantial increase, and those with the largest estates would see an increase of over 9,200%!
The fees would be in addition to inheritance tax, and would be tiered depending on the value of the estate:
£50k – £300k – £300
£300k – £500k – £1,000
£500k – £1M – £4,000
£1M – £1.6M – £8,000
£1.6M – £2M – £12,000
Above £2M – £20,000
The probate fees need to be paid up front. It may be difficult if the Executor is not able to release cash from the deceased’s bank account, or has no funds they could use themselves, or if they are on a low wage or benefits. Currently they are able to apply to get help with the fees. However, the Government is also now likely to remove probate applications from the ‘general fees remissions scheme’, meaning financial help would no longer be available if all the scheduled changes were to go ahead.
If these changes were to happen, there are things to consider which may reduce the amount of probate needing to be paid, depending on the provisions of your Will. In particular, if you own property jointly with someone you would wish to inherit outright on your death, you should consider ‘how’ you own the property, and whether this may need to be reviewed or amended.
Another potential solution to reduce the cost of probate might be to consider setting up a Trust to hold your assets. This may lower the value of the estate (from a probate point of view) and drop it from a higher tier rate to a lower one. Trust law is complex though, and you will need advice from a qualified advisor to ensure what you are setting up will really work the way you need it to, otherwise it may end up costing you more than you hope to save.
If however, the main objective of your Will is to protect assets for future generations against unwanted third parties – be they replacement spouses or the survivor’s car fees, it is important not to inadvertently undo the careful long-term planning you have put in place, by making changes to give short-term financial relief.
Heir Tight Wills helps clients put in place robust provisions and valid documents, to protect their loved ones and their assets both during their lifetime and after their death. For a FREE Consultation to discuss writing or updating your Will & estate planning provisions, contact Rachael Rodgers on 0845 519 7585, or CONTACT US via email.