Significant Raise in Probate Fees Unveiled for April 2019
Find Out How The Probate Structure is Changing and How it Could Impact You
Significant Increase In Probate Fees
It has been announced that there will be a significant increase in the fees that are charged by the Probate Registry for the processing of applications for grants of representations. This change is taking effect from April 2019.
A Grant Of Representation, Probate, and Inheritance Tax
A grant of representation is a legal document which allows the Executor(s) the authority to deal with the deceased person’s assets (i.e. property, money and belongings). It allows families to access the money that has been left for them and to sell properties and other assets. Probate fees are separate to Inheritance Tax, and must be paid even in instances where an entire Estate is left to a spouse and there is no Inheritance Tax to pay.
The Current Probate Fee
Probate fees are currently a £215 flat fee if applied for by the friends or family of the deceased, or £155 if a solicitor makes the application. The fees are currently charged on any estate worth more than £5,000.
The New Probate Fee Structure
The new fee structure will be a sliding scale based on the value of the deceased’s estate as follows:
|Value of estate (before inheritance tax)||Proposed Fee|
|Up to £50,000 or exempt from requiring a grant of probate||£0|
|Exceeds £50,000 but does not exceed £300,000||£250|
|Exceeds £300,000 but does not exceed £500,000||£750|
|Exceeds £500,000 but does not exceed £1m||£2,500|
|Exceeds £500,000 but does not exceed £1m||£4,000|
|Exceeds £1.6m but does not exceed £2m||£5,000|
The initial threshold being raised to £50,000 means that approximately 57% of estates will pay nothing in respect of probate fees. However, anyone whose estate is worth more than £50,000 will pay significantly more. These fees are payable before the estate is distributed to the beneficiaries so this could mean that some people will need to borrow in order to have sufficient funds to pay. It has been stated that a guidance document entitled Guidance on Ways to Pay for Probate Fees will be published before the new rules come into force in order to help Executors.
Advice Surrounding the New Probate Fee Structure
This rise in fees could have an effect on people who have Life Interest Trusts or Discretionary Will Trusts in their Wills as their property will be owned as Tenants in Common. This means the trust will have to be set up on first death and so probate will be required. Nevertheless, trusts can be used to help reduce the value of an estate for Inheritance Tax purposes, meaning that a lower probate fee charge will apply.
People who are worried about how their families will pay their probate fees could leave sufficient funds in a life insurance policy that is written in trust, which can be accessed immediately on death without probate being required.