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 (for when someone dies intestate).
The new fees would have taken effect last month (May 2017), but the election has put these changes on hold.
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.
Previously, the fees for this application were set at either £155 if probate was applied for by a solicitor or £215 if it was applied for by friends or family. There were no fees if the value of the estate was 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 an increase. Those with the largest estates would see fees of up to £20,000.
The fees 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
These fees would be in addition to inheritance tax.
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 and/or the executor is on a low wage or benefits. Previously they may have been able to apply to get help with the fees. However, the Government may also now remove probate applications from the general fees remissions scheme and financial help could 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. In particular, married couples or those in a civil partnership could consider the nature of any property ownership agreements they hold.
Another way to reduce the cost of probate is to consider setting up a Trust. 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. You will need advice from a qualified advisor to ensure that you are setting one up in the most tax efficient way, so that it doesn’t end up costing you more than you hope to save.
For advice on this or any aspect of planning a Will please call E.L.M Legal Services on 0800 019 4557 or Email: email@example.com