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Is the government about to increase probate fees?

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The government is pressing ahead with proposals to make the cost of obtaining a ‘grant of probate’ proportionate to the value of the estate. Harrison Drury’s James Dickinson explores what this means for executors of wills.

In February 2016 the government launched a two-month consultation period on the issue of the fee for obtaining a Grant of Representation, commonly known as a Grant of Probate.

Twelve months later the government has collated 853 responses and is pressing ahead with its proposals.

What is a Grant of Representation (Probate)?

A Grant comes into play after your death. It is an official document which allows your executors to carry out the terms of your will or your administrators to act if you have intestacy.

The Grant is obtained from the Probate Registry by making an application to them either
independently or through a solicitor.

Without a Grant you will not be able to carry out the functions of an executor, for instance: sell a property, close and encash bank accounts, transfer shares etc. Effectively, without a Grant you are unable to administer the estate. It is a fundamental document.

What is the current cost of obtaining a Grant?

There are currently three sets of flat fees which an executor will pay to obtain a Grant:

  • If you are using a Solicitor to obtain the Grant – £155.00
  • Personal application – £215.00
  • Estate worth less than £5,000 – £0.00

No matter the value of the estate above £5,000 the fee remains the same.

What are the fees likely to be?

In the government’s consultation the question asked was as follows:

Do you agree that it would be fairer to charge a fee that is proportionate to the value of the estate compared with charging a fixed fee for all applications for a grant of probate?

829 responses were received to this question; respondents included law firms, professional bodies, the senior judiciary and individual members of the public.

695 of the respondents disagreed that it would be fair to charge a proportionate value of the estate as fee for obtaining the Grant. This is around 83% of the respondents. Only 63 respondents agreed with the question.

It would appear that such response went unheard, effectively rendering the consultation an exercise in box-ticking as opposed to taking the views of the consultation seriously.

Probate fees are therefore set to increase rather dramatically and are summarised in the table below:

Value of Estate (before inheritance tax) Proposed Fee
Up to £50,000 £0.00
Exceeds £50,000 but doesn’t exceed £300,000 £300.00
Exceeds £300,000 but doesn’t exceed £500,000 £1,000.00
Exceeds £500,000 but doesn’t exceed £1 million £4,000.00
Exceeds £1 million but doesn’t exceed £1.6 million £8,000.00
Exceeds £1.6 million but doesn’t exceed £2 million £12,000.00
Exceeds £2 million £20,000.00

 

When you look at the figures, it may seem reasonable enough. Taking an estate worth over £2 million you may think therefore it will be easy to pay £20,000 for the probate fee (not forgetting that this is a 9,200% increase from current fees). However, this will not be the case.

That’s because access to funds in an estate only become available once a Grant has been obtained. Certain circumstances such as payment of funerals and payment of Inheritance Tax are sometimes allowed prior to the Grant being obtained, but this is far from set in stone.

So as an Executor how do you pay the probate fees? Perhaps you can approach the bank to see if they will release funds for payment of the fee – there are no assurances given by the government or the banking industry as to whether this will be allowed. In reality, it will be completely at the discretion of the bank in question.

There are a few other proposals set forward by the government, including:

  • Using personal assets of the executor – after all you will only be out pocket temporarily!
  • Asking the beneficiaries of the estate for financial assistance
  • Obtaining a loan, depending on the credit status of the executor – such loan will undoubtedly attract interest and arrangement fees
    Appointing a different executor who has a better credit rating or personal assets in order for them to be able borrow or pay the fee
  • Asking a Solicitor or Probate company if they will pay the fee up front (at a rate of £155.00 this was acceptable practice, at £20,000 it is very unlikely that this even qualifies as an option).

Even the lower value estates, take for instance the bracket £500,000 – £1 million bracket, are to be subject to huge rises. It is not uncommon for an estate to fall into this bracket given the current state of the housing market.

The £4,000 fee in this bracket could be a tremendous burden on executors.

Unfortunately, this is not a voluntary fee. Probate always needs to be dealt with. You can choose to sue someone in court and incur court fees that way; you cannot choose whether or not to apply for probate.

The guise that is being used to justify such rises is that there will be and currently is increased administration in dealing with applications for Grants. The reality is that there is no increased administration whether the estate is worth £50,000 or £50million.

Effectively the increased fees could be considered a further tax on an estate.

While these fees are not yet in effect, it appears that with the publication of the government’s response to the consultation that the increases are likely to hit in the very near future.

For more information on obtaining Grants and how the proposed increases in costs may affect you, contact our Private Client Department on 01772 258321.


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