Probate fee hikes are little more than a ‘tax on death’

News Article

Hefty increases in fees payable to the Probate Registry (‘probate fees’), which have widely been condemned as a ‘tax on death’, are set to place a significant additional financial burden on bereaved families.

Despite opposition to the plans, the Government has announced that the new fees will be rushed in and are due to take effect in just a few weeks’ time, from May 2017.

Currently, a £215 flat fee applies if probate is applied for by friends or family, or £155 if a solicitor completes the process.

The new system will apply a sliding scale based on the value of an estate. Estates below £50,000 will no longer pay probate fees, but estates worth between £50,000 and £300,000 will be required to pay £300, estates worth between £300,000 and £500,000 will be required to pay £1,000 and estates worth between £500,000 and £1 million will be required to pay £4,000 .

Estates worth more than £1million but less than £1.6million will face fees of £8,000, those worth between £1.6 million and £2 million will face fees of £12,000 and those totalling more than £2million will face a £20,000 probate fee – the latter of which represents a 9,000 per cent increase.

Claire Davis, Director of Solicitors for the Elderly (SFE), an independent, national organisation of lawyers, criticised the Government’s decision, saying: “For the 62 per cent of estates that use a solicitor, the Probate Registry performs a purely administrative role, and the value of the estate has no bearing on the work undertaken.

“To burden larger estates with a significantly larger fee is an unfair form of taxation. For people in this situation, their property is often their primary asset, and they have little cash to pay for higher probate fees, on top of other necessities such as inheritance tax (‘IHT’) or the use of a solicitor.

“The increase in probate fees will place a burden on families at a sensitive and distressing time and is likely to put people who are vulnerable and/or elderly at risk. Our fear is that such clients might be persuaded to take steps to avoid probate fees, even if the effect is to leave them with insufficient assets to provide for themselves for the rest of their life.”

Lee McClellan, a Partner with Palmers and member of SFE, who specialises in Wills, Probate and Older Client Services, said: “This is a tax in all but name and it is unfair that the estates of deceased individuals should bear the cost of propping up the rest of the court system. The fees for more valuable estates are entirely disproportionate to the amount of work that is required on the part of the Probate Registry.

“It is sheer arrogance that these plans should be proceeding in the face of objections from almost 98 per cent of those responding to the consultation on these proposals.

“There will now be increased pressure from some family members, as well as companies that make significant sums out of selling asset protection trusts, on vulnerable older people to transfer assets to family members or trusts in order to avoid the need for a Grant.

“As a direct result, the coffers of the government and local authorities are likely to be hit. This is because the number of Grants issued will fall and IHT takings will also fall as a result of returns not being filed where assets with a value which should trigger an IHT liability can be dealt with without the need for a Grant.

“Moreover, more people will claim an entitlement to means tested Local Authority funding for long term care in circumstances where they have gifted assets away, and it will become more difficult for Local Authorities to be able to demonstrate that the reason for the transfer was the avoidance of care fees rather than probate fees.

“Finally, there will be an increase in cases of fraud and abuse as family members or third parties secure control over assets before or after death without the usual controls or formalities.

Those who wish to protest against the decision might wish to add their signature to the online petition which can be found at https://petition.parliament.uk/petitions/188175”