28th February 2017
Private clients need to be aware of the new charges for probate fees
The Ministry of Justice are to dramatically reform fees for grants of probate - these will rise in May 2017 as follows:
Estates worth up to £50,000 will not pay a fee on applications for grant.
Estates worth between £50,000 to £300,000 to now pay £300.
Estates worth between £300,000 to £500,000 to now pay £1000.
Estates worth between £500,000 to £1 million to now pay £4000.
Estates worth between £1 million and £1.6 million to now pay £8000.
Estates worth between £1.6 million and £2 million to now pay £12,000.
Estates above £2 million to now pay £20,000.
This could be viewed as a further tax on death or “tax on the bereaved” and may cause further distress for those who would, on today’s fee structure pay £155 and are now looking at paying probate fees of between £1000 – £20,000. This probate fee does not take into account inheritance tax, and whatever probate fees are encountered in an estate etc. This may act to reduce the overall value of the residuary estate to beneficiaries.
These changes may mean that some clients will think about obtaining legal advice into further tax planning with, as an aim, the view of minimising the estate value as at date of death, and hence limit the exposure to this new additional increased charge.
However unlike inheritance tax where a person has to survive 7 years for asset values to be considered outside the estate for inheritance tax purposes in the main, planning to reduce this probate fee cost could be considered more of a ‘death bed planning’ matter.
For example if, say, Mr X’s estate is worth £2.1m, a saving of some of the probate fee to be charged could be made by gifting £200k before death as long as the gift is “perfected” before death.
There are various matters that individuals may wish to discuss with their solicitor regarding this, as will those dealing with estates as executors, and this will form part of that.
With this in mind please contact the Private Client team at Buss Murton Law LLP who are happy to guide you through the above in further detail.