A new tax? Fee increases for grant of probate applications

When a loved one passes away you usually need to obtain a grant of probate to be able to access and distribute the assets in their estate.

A grant of probate is an official document issued by the probate registry. The executors are required to complete an application form, along with inheritance tax forms and to swear an oath.

To assess the application and process the grant, the probate registry charges a fee.  Until now, the sum was fairly reasonable: a flat fee of £215 (or £155 for those applying through a solicitor) payable on estates worth more than £5,000. But in March last year, there was a consultation to overhaul the fee structure completely.

The proposed fees use a sliding scale, increasing in line with the value of the estate which passes under the grant of probate, as detailed below:

About 98 per cent of respondents to the consultation rejected the proposal so it seemed unlikely the change would go ahead. You can imagine our surprise when, last month, the Government said it will proceed anyway. There has since been an enormous backlash and an online petition quickly surpassed the 10,000 signatures required to force a Government response.

The response by the Ministry of Justice claims the reformed fees will bring a “fairer and proportionate tiered structure”. But this claim is wholly untrue when you consider that the value of an estate has no bearing on the work undertaken by the probate office.

Applications for small estates can be extremely complex to assess and, likewise, applications for large estates can be relatively straightforward.

The new fee structure appears to have all the hallmarks of an additional tax, as much of the press has commented. There can be no doubt that to burden larger estates with a significantly larger fee is simply unfair as there may be no additional work required by the probate office.

There is no facility to pay the probate fee by installments, as can be the case with Inheritance Tax. Nor is there any exemption for assets passing to a surviving spouse or to a charity as there is with Inheritance Tax. The executors will need to source the funds to pay both the probate fee and the Inheritance Tax. They may be able to pay directly from cash deposits in the estate but if the estate comprises only property that will not be possible.

Elderly people may feel forced to take steps to avoid probate fees by decreasing the value of their estate before they die, doing so could leave them short of needed funds.  Furthermore, as assets passing by survivorship will not require a grant of probate, decisions to put assets into joint ownership may be entered into without full consideration of the succession issues and Inheritance Tax issues for the estate and family. Professional advice should always be sought so the full impact of any decisions can be assessed.

So, what does all this mean for those currently applying for probate? The truth is, nobody knows.

The changes may be delayed, reformed or even scrapped. As it stands, they are still set to go ahead on May 1 but the battle is not yet lost and the Ministry says the issue will be considered in Parliament after Easter. Watch this space!

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