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4 April 2016 | Comment | Article by Eleanor Evans TEP

Probate fees consultation – our response

Eleanor summarises Hugh James’s response to the government’s probate fees consultation.

To recap, as the court system currently runs at a deficit, the government proposes to introduce a new banded fee structure for probate applications, to address this deficit. The intention is to remove the current flat fees of £155 for probate applications made by solicitors and £215 for applications made by individuals, and replace them with the following fees:

[[Table 1: Proposed fee structure Value of estate (before inheritance tax) Proportion of all estates in England and Wales Proposed Fee Up to £50,000 or exempt from requiring a grant of probate57%£0Exceeds £50,000 but does not exceed £300,00027%£300Exceeds £300,000 but does not exceed £500,00010%£1,000Exceeds £500,000 but does not exceed £1m5%£4,000Exceeds £1m but does not exceed £1.6m1%£8,000Exceeds £1.6m but does not exceed £2m0.2%£12,000Above £2m0.4%£20,000]] -Table

As one of the biggest probate providers in the UK, these proposed changes will impact upon thousands of our clients. We have therefore submitted a response to the consultation, which the government will take into consideration, along with other responses received, before a decision is reached about the proposed changes.

A summary of our response is as follows:

  • We do not disagree in principle with a fee scale that is proportionate to the value of the estate.
  • We believe that the proposed increase to the threshold for probate fees from £5,000 to £50,000 is sensible.
  • We believe any fee of over £1,000 for issuing a grant of probate is disproportionately high for what is, in most cases, a fairly straightforward service.
  • We are concerned that there will be a huge volume of cases that will not be caught by inheritance tax under the current laws, but will have to pay disproportionately high probate fees. These include high value cases that are spouse exempt or charity exempt, and estates of the second to die in married couples that are valued up to £650,000. This seems inconsistent with the principles in our taxation laws.
  • We do not believe it is fair to expect deceased persons’ estates to subsidise the whole of the court system.
  • We believe it is likely that banks will agree to release funds pre-grant of probate to pay probate registry fees (as they do currently for funeral expenses and inheritance tax).
  • We have serious concerns about what will happen in estates that are asset-rich but cash-poor. These are more likely to be estates in the higher brackets (such as agricultural estates). It may be necessary for executors to try and seek bridging loans, which can be difficult to secure. There are no proposals for any kind of instalment or deferral arrangement to assist in such cases.
  • We are concerned that, in due course, individuals will start to undertake lifetime planning to try and avoid paying probate registry fees when they die. This sort of planning might involve transferring properties into joint names, to their children or to trusts. This is concerning, as people may need to have recourse to their assets in later life to pay for care or other expenses, they may change their minds about how they wish to leave their estates, or it may not be in their best interests to relinquish control of their assets to others.
  • The increases in the fees between each band are huge, so, for example, an estate valued at £499,999 will pay a fee of £1,000 and an estate of £500,000 will pay a fee of £4,000.
  • The proposals do not include details of increases to fees charged by the probate registry for other services, such as searches, settling documents and caveats. Our view is that it would be justifiable to increase fees for these services.
  • We believe there should be fee remissions available to assist in certain cases, such as estates with properties but limited or no cash, which have been left on trust for disabled or vulnerable beneficiaries, or on life interest trusts, where it is intended the beneficiary or life tenant continues living in the property.
  • We are also of the view that there should be an exemption or remission for estates passing to spouses or charities, to avoid inconsistency with taxation laws.

To see our full response to the consultation, please click here.

Author bio

Eleanor is Head of the Trusts and Estates Administration Department, a large team dealing with estates and trusts administration on behalf of financial institution and trust corporation clients.  Eleanor is a specialist in wills, probate, tax and trusts, and is a full member of STEP (the Society of Trusts and Estates Practitioners).  She is also a committee member of the STEP Wales branch.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.

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