Probate fees to rise

Update: Last month we reported how the fees to obtain a Grant of Probate are set to rise significantly (see below) this month but that no date for the increase had been set.

1 April 2019 was what had been discussed as the date the higher fees would come into effect but the necessary legislation has not been passed yet.  It is not known when the new fees will come in but Executors should not delay in making applications.

The Government has recently announced that the fee paid to the Probate Registry to obtain a Grant of Probate is to rise significantly for estates worth over £50,000.  The exact date of when these increases will come in to effect has not been announced but it might be as soon as April.
 
As the fee difference could be as much as £5,845 for estates worth over £2 million, executors should act quickly to apply for the Grant of Probate to take advantage of the current lower fee.
 
Currently, there is a flat fee of £155 for those applying through a solicitor and there is no fee charged if the estate is worth less than £5,000.  The proposed changes are as follows:
 

Value of Estate before Inheritance Tax (£)

New probate fees (£)

Up to 50,000 are exempt (increase from 5,000)  0
50,000 to 300,000 250
300,000 to 500,000  750
500,000 to 1 million  2,500
1 million to 1.6 million 4,000
1.6 million to 2 million 5,000
Above 2 million 6,000
 
A Grant of Probate is the legal document which gives executors of a deceased's estate authority to collect in the estate assets.  Probate fees are paid before the Grant of Probate is issued and therefore before the executors have access to the estate assets. This will undoubtedly cause problems and delay for administration of estates if funds are not readily available to pay the higher fee.  If and when the new fees do come in, it will need to be a part of lifetime planning that funds are set aside to meet the fee.
 
It is worth noting that the probate fee is not connected to Inheritance Tax.  Assets passing to a surviving spouse will not be subject to Inheritance Tax.  The tax liability will only be an issue for the surviving spouse on their death.  However, the higher probate fee would be payable on the death of the first spouse to transfer assets to the survivor and then again on the death of the surviving spouse to transfer assets to the beneficiaries of that estate. Potentially, the total probate fees for both estates would be £12,000.  There is also no guarantee that the fees will not be increased in future.
 
Another aspect of lifetime planning will be consideration of how assets are held.  If assets can be held jointly they will pass to the survivor automatically on death and be outside the value of the estate for the purposes of the probate fee.
For more information, please contact Katrina Bourton