Probate Fees Increased By Government
Many families are set to pay more in probate fees from April 2019 according to a Government announcement made yesterday.
The Government have claimed that fees are crucial to funding an effective court and tribunals system and have argued that increasing probate fees will enable them to run a fair and efficient court system.
The new legislation will raise the estate value threshold from £5,000 to £50,000 which will exclude around 25,000 estates from probate fees altogether.
However, the remaining estates will have an increased fee with the revised structure ensuring that the value of fess will be more than 0.5% of the estate’s value.
Currently, a flat fee of £215, or £155 if an estate uses a solicitor to apply for probate, is made on all estates over £5,000. From April, estates valued between £50,000 and £300,000 will now pay a fee of £250.
Those between £300,001 and half a million pounds will now pay £750. Estates between £500,001 and a million will pay £2,500. Whilst estates in the enviable position at being priced over £2 million will now pay £6,000 to make a grant of probate application.
The reform to a grant of probate will also allow grieving families to make the application online. The new legislation will also help people lacking computer literacy.
Lucy Frazer QC MP, Parliamentary Under Secretary of State for Justice, said: “Moreover, by raising the estate value threshold from £5,000 to £50,000, we will be lifting around 25,000 estates annually out of fees altogether. For those who do pay, around 80% of estates will pay £750 or less, and all income raised will be spent on running the courts and tribunal service.
“This new banded fee model represents a fair and more progressive way to pay for probate services compared to the current flat fee and reflects our commitment to protecting access to justice by ensuring we have a properly funded and resourced courts system. We are also confident these fees will never be unaffordable. The cost of the fee is recoverable from the estate and executors have several options to fund it. Moreover, the Lord Chancellor retains a power to remit a fee if he considers there are exceptional circumstances.
“We will also publish a guidance document before the Statutory Instrument comes into force, entitled Guidance on Ways to Pay for Probate Fees. This will benefit from external stakeholder input, and will help applicants to choose the option to pay which most suits their circumstances, providing reassurance at a difficult time.”
Lakshmi Turner, Chief Executive of Solicitors for the Elderly (SFE), said: “This stealth tax, although much lower than before, is still unjustifiable as the probate process will not require additional work or resources.
“It’s extremely unclear how the executors will pay the probate fees and there remains a lot of unanswered questions around how the money will be recovered from the estate, as assets are frozen until the executors receive the grant of probate.
“There will be older and vulnerable people with estates or properties that have grown in value over their lifetime, so it seems an unfair system. Some may also have little money in the bank, which could lead to complexities when using a property to cover the fees.
“Whilst it’s good to see that SFE’s campaign against the 2017 probate hike has resulted in a 75% fee drop, not every probate application is simple, so we would highly recommend that people seek specialist legal help at this distressing time.
“We would like to see how the additional funds accrued from the higher fees will be directly supporting people who cannot access the legal services they need.”
Although the Government will argue that this system will help those with less to access the courts and save vital money they do not have, those with an estate valued over £50,000, which is not a lot in the current market, may also be left reeling and struggling to find this additional money under the new legislation.
Will this system work for those that are less well off? When so many of those affected will also have inheritance tax obligations, is this increase fair?