The Government’s new fee structure
The Government has announced that from 1 May 2017, probate court fees will increase dramatically, despite overwhelming objections to the proposals from probate experts including ourselves.
The extent of the increase has shocked the profession and is set to cause thousands of families serious financial distress.
According to the Government, the rationale behind the new fee structure is to ensure there is adequate funding for the Court system. Cynics might argue that it is just another Government stealth tax, intended to replace any fall in revenue from Inheritance Tax.
Claire Davis, Director of SFE (Solicitors for the Elderly – an independent, national organisation of lawyers who provide specialist legal advice for older and vulnerable people, their families and carers) has been quoted as saying:
“SFE is extremely disappointed to see that the consensus to reject the proposed probate fees has been ignored.
To burden larger estates with a significantly larger fee is an unfair form of taxation. For people in this situation, their property is often their primary asset, and they have little cash to pay for higher probate fees.”
What are the new fees?
|Value of the estate (before Inheritance Tax)||Proportion of all estates in England and Wales||Proposed fee|
|£0.00 to £50,000 (or exempt from requiring a grant of representation)||58%||£0.00|
|Exceeds £50,000 but does not exceed £300,000||23%||£300|
|Exceeds £300,000 but does not exceed £500,000||11%||£1,000|
|Exceeds £500,000 but does not exceed £1million||6%||£4,000|
|Exceeds £1million but does not exceed £1.6million||1%||£8,000|
|Exceeds £1.6million but does not exceed £2million||0.3%||£12,000|
What does this mean for our clients?
Currently the probate court fees are £155 for professionals and £215 for individuals. This is payable in all estates valued over £5,000 which require a Grant of Representation.
In practice this means that for estates valued under £50,000 or which do not require a grant of representation, the new fee structure will save personal representatives £155 or £215. This at least is good news for families at the lower end of the scale.
At other points on the scale however the picture is very different. The percentage increases are massive and will impact on the more valuable estates to an unprecedented extent. At the upper end the fee will rise from a mere £155 to an eye watering £20,000.
Why does this matter?
Experts, including ourselves, are particularly concerned about these astronomical increases because for many estates the property is the main asset. This presents a very real and practical problem in that there may simply not be enough liquid funds in an estate to pay the probate court fees.
It is a distressing enough time for families and these extra costs will undoubtedly increase the strain they are under, particularly if there are insufficient cash assets available.
It may also lead to people transferring their homes to friends and relatives to avoid probate court fees when they die. This will in turn give rise to a range of other problems as home owners lose control of their property and leave themselves vulnerable to abuse. Furthermore, with the costs of long term care also being an issue for many older people, this could result in people leaving themselves short of money to provide for their care.
If you are responsible for administering an estate and are concerned about the increases, then please speak to one of our experts today.