Bereaved families face probate fee hike
People who have lost a family member but are putting off applying for probate are being urged to do so before the end of March to avoid a massive fee increase for large estates, warns city Manchester office of law firm Clarke Willmott LLP.
The Government is introducing a new banded fee structure, which means estates valued at more than £2m will pay almost £6,000 more, a rise of 3,771% on current charges. At present probate court fees are £155 on all estates over £5,000 if they apply through a solicitor.
Paul Davies, who heads Clarke Willmott’s private capital team, said: “People who are coming to terms with a bereavement may understandably put off dealing with probate until things have settled down and they are more able to attend to such necessities.
“However, with the new banded fee structure coming into force in just a few weeks’ time, a delay in applying for probate could mean a staggering increase of almost £6,000 in extra probate court fees. So, it’s important not to delay.
“Although there is no time limit on the probate application itself – inheritance tax should be paid six months from the end of the month of death, and payment must be made before probate courts will issue a grant of probate.”
The amount payable is now dependent on the estate’s value. An estate valued at under £50,000 will be exempt from any fee, an estate worth between £50,000 – £300,000 will be £250, an estate with assets valued as exceeding £2 million, up to £6000.
Mr Davies says the new fee structure is estimated to hit around 230,000 families a year.
“The new threshold means that a large number of estates – boosted by property values in places such as London and the South East – will be in the top end of the fee-levying scale,” added Mr Davies.
“It could hit those people who are asset rich but cash poor who may find it hard to cover the cost of the probate registry charge, which is payable on application for the grant before access can be obtained to the estate’s assets.”
The change in levy has been branded a ‘stealth tax’ and a ‘misuse of power’ by the Lords Legislation Scrutiny Committee because, whether the estate is worth £50,000 or £50 million, it will involve the same amount of administration work by the Probate Registry
Probate is the process of obtaining the legal right to manage a deceased person’s estate which includes property, money and possessions.
A grant of probate or letters of administration is required in many estates to prove that the personal representatives are entitled to deal with the estate – to collect in the deceased’s assets and distribute the estate to its beneficiaries.
As well as being a solicitor, Paul Davies is a member of the Society of Trust and Estate Practitioners, a chartered tax adviser, and a chartered accountant. He is currently the deputy-chair of the Manchester district branch of the Chartered Institute of Taxation.