Back in November 2018, the Government announced there were to be changes in the way probate fees would be calculated in England and Wales. When the changes eventually take place, probate fees will no longer be charged as a flat fee. They will be paid according to a sliding scale based on the value of the estate. These changes were due to come into effect on 1 April 2019 but were delayed due to pressures of the ongoing Brexit negotiations. The Government says it will bring the changes before the House of Commons as soon as Parliamentary scheduling allows. Before we go into detail about these changes, let us take a closer look at what exactly probate is and how it works.
What is probate?
Probate is the legal process of dealing with an estate on behalf of a person who has died. When someone ‘applies’ for probate, they are requesting permission to carry out the wishes documented in a person’s will. However, the term also applies to the whole process of settling someone’s estate. Administering a will involves settling all debts and distributing all assets according to the requests of the deceased. There are separate rules to follow if a person dies without a will, which is known as dying intestate.
Grant of probate
For permission to take on this responsibility, a grant of probate (or grant of confirmation in Scotland) is required. The executor of the will applies for this grant to prove they are legally entitled to access the deceased’s funds, organise their finances, and gather and distribute the deceased person’s assets in the way they wanted. Only the Executor named in the deceased’s Will can apply for probate.
How will probate fees change?
The changes mean there will be no probate fees for estates worth less than £50,000. However, for properties worth more than this, there will be an increase in fees. Probate fees for estates worth over £2 million will rise to almost £6,000.
Currently probate costs:
- £215 if you apply yourself; or
- £155 if you appoint a solicitor to apply for you.
These fees are fixed, regardless of the size of the estate.
Under the proposed new system, the price structure will be as follows:
- Estates valued at less than £50,000 – NO probate fees (the current lower threshold is £5,000)
- Estates valued between £50,000 and £300,000 – £250
- Estates valued between £300,000 to £500,000 – £750
- Estates valued between £500,000 and £1m – £2,500
- Estates valued between £1 million to £1.6 million – £4,000
- Estates worth between £1.6m and £2m – £5,000
- Estates worth more than £2m – £6,000
Not only will families have to pay much higher costs, but executors will have to find the money to pay fees up front, reclaiming it from the estate after probate has been granted. This could mean borrowing in order to pay the fees upfront.
SInce the introduction of the new fee structure is still ongoing, probate registries are accepting applications for probate prior to HMRC processing the account. Applications must include a note to say that the appropriate Inheritance Tax forms will follow shortly. In the meantime however, some bereaved families could avoid the higher fees by applying for probate now, prior to the new cost structure being approved. So if you’re currently dealing with an estate worth over £50,000, it might be a good idea to submit your application as soon as possible before the fees go up.
Why the change?
The Government’s main reason for the new fee regime is to address the large shortfall in the running of the court service in England and Wales. However, the Probate Registry is just one aspect of the court service, a self-funding one at that.
The current fees already cover the administrative costs. In 2017, the Government stated that the new fee structure is expected to “deliver around £300 million in additional income per year – a substantial contribution to the running costs of HMCTS.”