Probate fees have been received with overwhelming condemnation since the Ministry of Justice (MoJ) released the amended law last week; many branding them as a sneaky and deceptive ‘stealth death tax.’
However, it seems as though the 60% of estates that will pay a comparable fee to the current system have been overlooked by the headline £6,000 fee for estates valued over £2 million.
The value of estates that can apply for probate free of charge has also increased from £5,000 to £50,000, increasing the amount of lower income families that will benefit and may be more likely to access legal services as a result.
Neil Fraser from Fraser and Fraser sees this as an encouraging decision which will benefit all. Neil commented: “I however disagree and think that this is a huge positive. To remove the fees from the estates under £50,000 will help protect low value cases.
“The £6,000 headline figure is only for estates over £2m and those are the ones that can afford to pay the fees (0.3% of the value). The old fees meant, for a £5,001 estate the £215 fee would equate to 4.3% of the total estate. The new fees will never be more than 0.5% of the total estate; whereas with current fees, the equivalents of an £43,000 plus estate before fees as a percentage are less than 0.5%.
“There was a 1.6% increase in the number of deaths registered in England and Wales in 2017 (533,253 deaths), up from 525,048 in 2016. Just over a quarter of a million grants of representation were issued in 2017 (259,956), up slightly (2%) on the previous year; but still less than half of all registered deaths. 80% of these being Grants of Probate (where someone has left a will). Of the total applications, 62% were made by solicitors (paying £155) and 38% as personal applications (paying £215).
“You may not need probate if the person who died had: jointly owned land, property, shares or money – these will automatically pass to the surviving owners or only had savings or premium bonds (dependent on the value and bank).
“In almost all the press there are concerns about the new probate fee being unlawful as they would represent a tax, however, in my opinion, this can easily be regarded as a fee especially if the lower value estates receive a discount on the fee rather than the fee increase in banding. As all money generated appears to be ring fenced, being used directly to cover the costs of the courts and tribunal services, I think this is very different than a tax.
“Personally, I don’t view this as an extension of inheritance tax either, although I can understand why some others may, but as fees have always been paid and still need to be, I fail to see the argument.
“The big story should be that an extra 25,000 using the current figures will no longer be charged a fee, in my opinion this number will almost certainly increase and could be almost double the current figures, as one of the main barriers to applications is removed. The Grant of Probate (or letters of administration for persons who do not leave a will) is a basic step to protect vulnerable estates at the present time there is very little accountability for small estates and in my experience, money is often incorrectly distributed. By removing these costs, every estate will benefit from the protection derived from the grant and the knowledge that a lay administrator or executor has had to swear an oath, to follow the 1925 Administration of Estates Act.
“I for one would like to congratulate Lucy Frazer QC Member of Parliament for South East Cambridgeshire for pushing ahead with the fee changes despite the general press only looking at headlines.
“England & Wales are certainly not the first judiciary to introduce such fees a similar structure has been in place in the Isle of Man for several years.”
Even when you focus on the exemptions for low value estates, it can also be argued that the government have increased fees by a staggering 3,771%.
The government have also taken the brave or arrogant decision to ignore the protestations of more than 800 charities, trade bodies and businesses. Of the 831 organisations that responded to the fee changes, 810 opposed the proposals, insisting they were “excessive and unjustified”.
The Law Society said: “It is unfair and discriminatory to expect the bereaved to subsidise other parts of the court and tribunal services.”
Should this be seen as an opportunity to help improve the plight of low values estates? Or, have the government created a tax through the back door that will have a detrimental impact on families, charities and businesses?
