Considering the Changes to Probate Fees
A substantial increase in probate fees was planned for April 2019 but is still making its way through Parliament, due to the pressure of other business. Here, we take a look at the probate process and consider how the rise in fees could impact you.
What is probate?
Probate is the process of handling a deceased loved one’s estate in order to make sure that their property, possessions and finances are distributed in accordance with their wishes. The probate process is known as ‘confirmation’ in Scotland, and ‘grant of probate’ in Northern Ireland, and is dealt with separately in those countries; different fees also apply. An individual managing the probate process will be required to gather a range of information relating to the deceased person’s assets. They will also be required to deal with inheritance tax (IHT); correspond with beneficiaries and financial institutions; and keep various records and accounts.
Applying for probate
Executors are required to estimate and report the estate’s value before they apply for probate and, depending on its value, pay IHT. An executor can apply for probate themselves; alternatively, a solicitor or accountant licensed to provide probate services may apply on their behalf. Probate applications can be made online. Executors may apply if they have the original Will; the original death certificate or interim death certificate, as supplied by the coroner; or if they have already reported the estate’s value. A probate fee will be due when making the application.
The government is set to implement a new probate fee structure. The new fee structure no longer applies a flat fee. The threshold at which the new fees become payable will rise from £5,000 to £50,000. Estates which do not reach this threshold will not be required to pay a fee for an application for a grant of probate. The table outlines the new banded fee structure.
|Up to £50,000/exempt individuals||£0|
|Between £50,000 and £300,000||£250|
|Between £300,000 and £500,000||£750|
|Between £500,000 and £1 million||£2,500|
|Between £1 million and £1.6 million||£4,000|
|Between £1.6 million and £2 million||£5,000|
|More than £2 million||£6,000|
While the changes are pending, there is a temporary process in place for applying for probate, and estates will not incur the higher fees if applications are lodged before the fee changes take effect. Probate registries will thus, exceptionally, accept applications for probate before HMRC has processed the necessary IHT account. Applications should contain a note to say that appropriate IHT forms will be submitted ‘shortly’.
The new banded fee structure has received considerable criticism. Experts stated that the rise in fees makes it ‘impossible’ for many families to access assets without falling into debt. Meanwhile, MPs voiced concerns that the increase could disadvantage charities, warning that higher fees could ‘impact on legacies’.
Professional advice should always be sought in regard to issues related to probate. Green & Co are accredited and licensed by the ICAEW to provide probate services. For more information, please contact us.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.