The costs of dying are set to go up
5 August 2016 by Stuart Williams
Recently, with great fanfare, the government announced that a surviving spouse will, by 2021, have a potential exemption from inheritance tax of £1,000,000. At the moment this is set at £650,000. They have not been so forthcoming about a proposal to increase probate fees in an attempt to reduce a shortfall in the budget of the Ministry of Justice.
Until now the fees for obtaining a grant of probate have been fixed irrespective of the value of the estate. At present a lay person is required to pay a court fee of £215 when applying for the grant. If the application is made by a solicitor then this fee comes down to £155. The grant is a very important document in that it allows the executors of an estate to call in the assets of the deceased – very often this cannot happen prior to the issuing of the grant.
The government now proposes to link the fee for a grant to the value of the estate of the deceased.
They highlight that, for an estate valued at less than £50,000, there will be no fee at all. In truth, a large number of these smaller estates do not have to go to probate in any event.
The vast majority of estates are valued at between £50,000 and £1,000,000. Here the rise in fees is very marked indeed. For an estate valued at between £50,000 – £300,000 the fee will rise to £300, an increase of 40%; for one valued at between £300,000 and £500,000 the fee will rise to £1,000, an increase of 365% and; and for one valued at between £500,000 to £1,000,000 the fee will increase to £4,000, an increase of 1,760%. For an estate valued at over £2,000,000 the fee required for probate would be an astronomical £20,000.
The reason the above proposal is so problematic is that these fees will need to be paid prior to having access to any of the funds of the estate. Someone else would have to settle the fee and later be reimbursed by the estate. This could present huge obstacles for any executor who may not have sufficient funds of their own, or access to funds, which will allow them to pay the fee. This may result in more executors simply refusing to act when the time comes, which could stall the administration of an estate. This could then result in conflict within a family, something the testator would not have wanted.
If the proposed changes do come into effect then it would be sensible for anyone making a Will to, at the same time, investigate lifetime financial planning advice in an attempt to deal with this potential problem.
For further information please contact a member of our Private Client Team on [email protected].
When the parents have separated and the family has changed there is no denying that deciding on the arrangements fo… https://t.co/7WERdVKcqI8 hours
We had a wonderfully festive day last Sunday at the #Billericay #Christmas Market! #throwback https://t.co/pHYdxoQRyi2 days