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Substantial Increase in Probate Fees planned for May 2017

As you may have read, Probate fees are set to increase. Although there was a lot of opposition to the proposal when it was first announced last year, the rise is now set to arrive this coming May. These changes will affect many estates, particularly farming families and business owners.

For an Executor or Personal Representative to obtain a Grant of Probate there is a current flat rate fee of £155 on the application to the Probate Registry, if the application is made by a solicitor. If the application is made by an individual the fee is £215.  

It is proposed that the new probate fees will increase in line with the value of the deceased’s estate. The new fees are as follows:

  • £300 for estates worth more than £50,000 and up to £300,000
  • £1,000 for estates worth more than £300,000 and up to £500,000
  • £4,000 for estates worth more than £500,000 and up to £1m
  • £8,000 for estates worth more than £1m and up to £1.6m
  • £12,000 for estates worth more than £1.6m and up to £2m
  • £20,000 for estates worth more than £2m

Any estates under £50,000 estates would escape Probate fees altogether. This would come as a relief for many families, where the current fee is yet another expense at a time where money is needed most.

However, with agricultural land often valued at £10,000 an acre it is not uncommon for an estate to reach £2m, even though there may be little in the way of cash assets to pay the £20,000 fee. This is also true for many business owners.

The Next Steps

Our concern is that this will leave many individuals unnecessarily exposed.  However, there may be steps you can take to protect your estates against the potentially detrimental charges.

Clients may consider making lifetime gifts or using Trusts to transfer assets out of their estates. The use of protective Trusts can ensure you still retain control of your property, investments, farm or business, though the ownership is in the hands of others –  the Trustees. Most importantly, it is not necessary to obtain Probate to deal with Trusts.   

Unsurprisingly, the law regarding Trusts has become complicated over recent years, not least due to the tax structures introduced to make the use of Trusts unattractive. However, the associated complexities may be preferable for many individuals over the increased Probate fees.

Furthermore, many married couples already have Discretionary or Life Interest Trusts in their Wills.  This can ensure that a surviving spouse has the benefit of the estate of their deceased spouse, while at the same time guaranteeing that the assets do not fall into their ownership. That would effectively decrease the value of the surviving spouse’s estate, and therefore the associated Probate fees.

The above measures are not without risk, and require careful planning and guidance.   This is a brief overview of the challenges ahead and we strongly advise you seek the appropriate advice before undertaking any estate planning.

If you have any queries regarding your Wills, Estate Planning or Inheritance Tax please contact your local Everys office.

Disclaimer: This article is not intended to constitute legal advice.  For legal advice in connection with the above, please contact us directly.

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