Probate fees increase for high-value estates

14 / 03 / 2017

Disappointingly, the Ministry of Justice has confirmed that it is going ahead with its controversial proposals to increase the costs of applying for grant of probate under which the maximum fee will rise from £215 to a staggering £20,000.

At present, the cost of applying for a grant of probate is a flat fee (£155 for an application through a solicitor; £215 for a personal application) and is not linked to the value of the estate. Under the new regime, the fee will move to a banded system according to the net value of the deceased’s estate subject to the grant. The new fee bands are:

Value of estate (before deduction of inheritance tax)

New fees as from May 2017 (date to be confirmed)

Up to £50,000 (or not requiring a grant of probate)

£0

Exceeds £50,000 but not exceeding £300,000

£300

Exceeds £300,000 but not exceeding £500,000

£1,000

Exceeds £500,000 but not exceeding £1 million

£4,000

Exceeds £1 million but not exceeding £1.6 million

£8,000

Exceeds £1.6 million but not exceeding £2 million

£12,000

Exceeds £2 million

£20,000

The Ministry of Justice’s principal reason for the new fee regime is to fund the running of the court service in England and Wales (estimated to cost £1 billion a year and these reforms are estimated to bring in £300 million). The Probate Registry is just one aspect of the court service and is self-funding. The unfairness of this situation, as well as the magnitude of the fee hike, was picked up in the 853 consultation responses (of which 695 were against increasing the fees in line with the size of the estate). Wedlake Bell responded and opposed the fee proposals, click here to view our response.

When will the new fees take effect?

It is unclear what date the new fees will take effect, but the Probate Registry has indicated that it will be in May 2017, once the appropriate statutory instrument has been passed, and will apply to applications received after that date, not deaths. Unfortunately this means that estates where the deceased died before the new regime was confirmed could be subject to the new fees if the application cannot be finalised and submitted before the relevant start date.

Executors who have not yet submitted a grant of probate application can avoid the new fees if they submit their application before the implementation date in May, but will need to act quickly.

Planning for the new fees during your lifetime

Clients whose estates exceed £2 million will need to start considering their options, including how their estate will fund the fee if applicable on death. There is no exemption on the first death of spouses and civil partners, making it feasible that the families of such couples could face the £20,000 fee both on the first and second death, £40,000 in total. This is before inheritance tax has been taken into account. It is not hard to see why these fees are being criticised as a stealth tax on estates. The fees are particularly painful for those with larger estates who are also excluded from benefitting from the new “residence nil rate band” for inheritance tax purposes (on which you can read more here).

Those affected will want to start thinking about options they can implement during their lifetimes to make it easier for their families to manage the fee on their death. Such considerations will need to be treated as part of your estate planning alongside making a Will, and we can discuss the options with you.

Final word?

A petition has been started to require the government to reconsider the increase in fees, which if successful could force the government to respond to the petition and the issue considered for debate in Parliament. You can respond to the petition here.

For more information on our probate and trust administration services, please click here.

For more information on the new probate fees or to discuss planning options, please contact Jenny Cutts or your usual Wedlake Bell adviser.