Probate fees to soar from April 2019Posted on: 07 November 2018 by 50connect editorial
Dan Atkinson of EQ Investors considers yesterday’s announcement that the cost of securing legal control over a deceased's estate will soar next April and provides a few options on what people can do.
What is probate?
Obtaining probate is one of the first steps in the process of distributing someone’s estate. It provides a legal document that confirms that you are the person responsible for implementing the requests left in the Will. Part of the process involves working out how much the estate was worth and how much Inheritance Tax (if any) is due. You will normally be expected to pay at least some of any Inheritance Tax due. You cannot start to distribute someone’s estate until you have probate.
As well as the fees that a solicitor might charge, there will be a charge for obtaining probate. In England and Wales this has been £215 (or £155 if you use a solicitor) since 2014. The fee is intended to recover the administrative costs of the Probate Service. The system is slightly different in Scotland and Northern Ireland.
From April 2019 the way the fee works in England and Wales will change. If the value of the estate is less than £50,000 no fee will be charged (at the moment this threshold is set at £5,000). However, for estates larger than this the fees will be higher. The Ministry of Justice has decided that those who are financially able to should make a larger contribution to the running of court services.
What are the changes?
The fee will be based on the value of the estate with estates over £1million experiencing significantly higher fees.
£250 for estates up to £300,000
£750 for estates up to £500,000
£2,500 for estates up to £1 million
£4,000 for estates up to £1.6 million
£5,000 for estates up to £2 million
£6,000 for estates over £2 million
What can you do?
The fees can be paid from the estate if there is sufficient cash. In some circumstances the Probate Service might let you sell assets to fund the fee and guidance will soon be released about this.
Whilst it can be possible to move part of your wealth into a trust to reduce your exposure to IHT (and probate fees), this is unlikely to be suitable for everyone. Their primary purpose is to provide control about where and when your money benefits people.
Far better is to put in place a plan to ensure that cash is readily available to those dealing with your estate. One option to explore is taking out a life assurance policy with the proceeds being paid into a trust. This money could be accessed by your beneficiaries without needing to apply for probate. It could then be used to cover some of the fees, taxes, and costs involved in distributing your wealth in the way you describe it in your Will.
For more information about estate planning, EQ Investors have created a Guide to Inheritance Tax.
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