The Government has recently announced its plans to significantly increase the cost of probate fees from May 2017.
The fees payable to the Probate Court in England and Wales will rise by over 12,000% for the largest estates. These are the fees which have to be paid when applying for Grant of Probate.
At the moment, a flat fee of £155 is payable if the application is made by a solicitor or £215 if by an individual.
From May, the fee will be dependent upon the value of the estate for all applications (i.e. whether made by a solicitor or individual).
There is currently no fee for probate applications if the value of the estate is under £5,000. This exemption will be increased for net estates up to £50,000.
However, if the value of the estate exceeds £50,000, the Court fee payable will rise dramatically. This is even if there is no Inheritance Tax to pay because of exemptions or reliefs, such as spouse exemption, Agricultural Property Relief and Business Property Relief.
The Probate Court fees will be:
Estate administration is likely to become more difficult and certainly more expensive on the whole. Some of the problems envisaged include:
It may be that some lifetime planning should be considered to ensure your family is not left in a difficult position of having to find the fees. Keeping cash in a bank account (not an ISA where a Grant is usually required) will be sensible. Some clients may consider putting assets in trust so that a Grant is not needed to deal with them on death and others may consider giving their assets away. There is no easy answer and as the new rules unfold it will become clearer which approaches work well. One thing is sure, whilst the cost of living has increased over recent years, the cost of dying is now significant too.
For further information, please contact Alison Hall, Partner at Hay & Kilner
Call: 0191 232 8345