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New probate fees spell sizeable expense for bereaved

In November 2018, plans to increase probate fees were reinstated. This was just under two years after they were initially put on hold in response to harsh criticisms.

The earlier proposals promoted much higher fees than those currently under scrutiny. However, after failing to pass through Parliament before the general election in June 2017, they were withdrawn.

For the current proposals to become law, they must be formally approved by both Houses of Parliament.

They proposals have been approved by the House of Lords and will now go before the House of Commons. Should the House of Commons approve the proposals, the new fees are expected to take effect from April 2019.

The new fee structure will consist of a sliding scale of charges (see below). The charge will be determined by the value of the estate, rather than the flat-fee system currently in operation.

The revenue generated as a result will, according to the Government, subsidise the costs associated with running the HM Courts & Tribunals Service.

The proposals are as follows:

 
Value of estate (before Inheritance Tax) and proposed fee

Up to £50,000  (£0)                                                                   
£50,000-£300,000 (£250)                                                              
£300,000-£500,000 (£750)                                                            
£500,000-£1m (£2,500)                                            
£1m-£1.6m (£4,000)                                                                         
£1.6m-£2m (£5,000)                                                                         
More than £2m (£6,000)

           

New probate rules may create problems with cashflow

The ‘fees’ have raised concerns amongst professional bodies, charities and agents, as well as those who are recently bereaved.

The fee will need to be paid upfront, before probate is obtained. As a result, the sliding scale has the potential to cause big cashflow problems for some families.

In a written statement to Parliament, the Ministry of Justice (MoJ) stated that the fees represent ‘a fair and more progressive way to pay for probate services’ and that it does not believe the fees will ever be ‘unaffordable’.

However, it has since become apparent that the Government has not properly assessed the cost to high-value estates of administering probate after April.

Consequently, bereaved families without easy access to their loved one’s assets face the prospect of getting into debt. This will leave many contending with unnecessary pressure, at an already difficult time.

Emily Deane, Technical Counsel at Society Trust & Estate Practitioners (STEP), said: “Recently bereaved families are now having to rapidly calculate whether they would be worse off once the new probate fees come in and, if they are, they are either rushing to apply for probate before April, or else risk paying the higher amount.”

It is not yet clear whether the new rules will apply based on the date of death, or the date of application.

However, with taking the pressure off of bereaved families in mind, STEP suggests that the new probate fees should apply only to those estates where the individual is deceased after the implementation date, rather than to any probate application submitted after this date.

 

The ‘fee vs. tax’ argument

There has been fervent debate about whether the charges are ‘fees’, or whether they are in fact a ‘tax’.

We agree with the many who have labelled the charges a ‘stealth tax’, given that the increases do not correlate with the level of work required to process an application.

The work undertaken, by the Probate registry, does not differ between an estate worth £50,000 and an estate worth £2m.

In fact, more paperwork is sent to the Probate Office for a smaller estate as for larger estates some of the work is carried out by HMRC’s Inheritance Tax office.

 

Will higher probate fees facilitate a more efficient service?

Justice Minister, Lucy Frazer, has said that the increases will help to improve the efficiency of the service.

We have already seen the Government introduce online applications as part of the reforms; a move they believe will make the process quicker and simpler for bereaved families.

This may well be the case initially, but we would argue that it may not always be more efficient in the long-run.

The online system undoubtedly has a place and for simple estates, it may be a great aid, but more complex estates can rapidly become difficult to administer and executors can find themselves personally liable for any mistakes that are made.

 

Why choose GH Probate?

We offer a comprehensive, non-contentious, service without any need to involve a third party. As a result, the whole process is simplified. 

GH Probate Ltd can assist with as many, or as few, functions of the executor role as you wish. Our specialist team have vast experience in this area and we undertake the role with the utmost sensitivity and discretion.

By using GH Probate Ltd, you can rest assured that everything will be carried out correctly, with compassion and discretion, and delays will be minimised. We only charge for what we do; we do not add on a percentage fee based on the value of the estate. Our team work with you and will ensure that you are always kept up-to-date on how an estate is progressing.

We would encourage anybody who is concerned about the fee increases to seek professional advice at the earliest opportunity.

You can find more information about our Probate offering here.

Article authored by Barry Jefferd, Head of GH Probate Limited.
GH Probate is the trading style of GH Probate Limited. Registered in England and Wales number 9630102. Registered Office: St George’s House, George Street, Huntingdon, Cambridgeshire PE29 3GH.
Authorised to carry out the reserved legal activity of non-contentious probate in England and Wales by the Institute of Chartered Accountants in England & Wales.

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