The government’s plan for probate fees comes as something of a shock. Fees are set to rise dramatically. Currently there is a flat fee of £215 charged when an individual dies and leaves property to their relatives. The new, proposed system incurs different charges depending on the size of the estate in monetary terms:
- For estates worth between £500,000 and £1m the new fee will be £4,000
- For those worth between £1m and £1.6m the fee will be £8,000
- The charge will be £12,000 for estates worth between £1.6m and £2m
- Estates valued at over £2m will leave executors facing probate fees of £20,000
Reduced Costs or Higher Charges?
Paul Dodsworth, Managing Director of Estate Planning Solutions, in Wilmslow, observes that behind this is a bid by the government to raise an extra £250 a year. “The Ministry of Justice has said that the charges are part of a drive to reduce the cost to taxpayers of running courts and tribunals”, Paul states. “We all know that property values are continuing to rise, so many families could be hit by the higher charges”.
The Ministry of Justice defends the rise by pointing out that the system of fees will be progressive and the threshold for estates exempt from paying probate fees will rise from its current £5,000 level to £50,000.
Is the Proposed Probate Fees System a Stealth Tax?
Paul points out that the proposed banding system does not accurately reflect the work involved in probate. “Larger estates will be paying far more but the work of the Probate Registry will be pretty much the same whatever the estate size. This is why many people are simply going to see this as a stealth tax”.
“Making the probate system simpler is a noble aim”, Paul remarks. “The proposals will place a lot of pressure on executors when it comes to raising money to pay the probate fees before being issued a grant of representation”.
This is why it is so important that people seek out proper professional estate planning advice well in advance of the probate stage. In the light of these changes, Paul stresses the importance of family trusts in terms of benefits and cost savings.
“The news about probate fees isn’t good, but it should concentrate people’s minds on the benefits of using Estate Planning to mitigate or avoid probate costs and to secure the financial future for their families”
Paul Dodsworth, Estate Planning Solutions
“Many assets can be held in trust“, Paul concludes. “In fact, it is one of the simplest ways of moving money out of a person’s estate and thus reducing the costs of applying for probate and the actual costs of carrying out probate once the grant is issued”, Paul concludes.
If you would like to discuss the ways that you can protect your family’s wealth, please call Estate Planning Solutions on 0800 781 6658 or visit estplan.co.uk.