The Government is introducing a new fee structure that will affect the cost of accessing an estate when someone dies.
Fees for Applications for Grant of Probate or Letters of Administration (for when someone dies intestate) will be changing and could eventually impact you and your family when you’re no longer around.
The new fees will take effect from May 2017. At the moment, the fees are set at either £155 if probate is applied for by a Solicitor or £215 if it is applied for by friends or family. There are no fees if the value of the estate is less than £5,000.
The first change is that estates below £50,000 will no longer have to pay any probate fee. This significantly increases the number of estates exempt from the fees. Unfortunately, everyone one else will see an increase, with those with the largest estates seeing fees of up to £20,000.
The fees are tiered depending on the value of the estate:
- £50k – £300k = £300 fee
- £300k – £500k = £1,000 fee
- £500k – £1M = £4,000 fee
- £1M – £1.6M = £8,000 fee
- £1.6M – £2M = £12,000 fee
- Above £2M = £20,000 fee
These fees are in addition to inheritance tax (IHT).
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. These 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 is also removing probate applications from the general fees remissions scheme and financial help will no longer be available.
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 should 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 specialist to ensure 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 Estate Planning or Will Writing, please call Finance North Estate Planning Services on 0161 771 2056, or complete the enquiry form below for more information.