Will April 2019’s new probate fees result in a re-think for wills and probate specialists?

Posted Feb 28, 2019.
As widely reported in both the mainstream and financial press, April 2019 will see the introduction of a new range of probate fees in the UK. The current probate application fees are pretty much ‘one size fits all’, with the fee payable being £215 if the application is made by an individual, or £155 if it is made by a solicitor. However, under the new scheme the fees will be calculated as follows:

 

 

Value of Estate (before taxes)

Fee payable

Up to £50,000

No Fee

£50,001 to £300,000

£250

£300,001 to £500,000

£750

£500,001 to £1,000,000

£2,500

£1,000,001 to £1,600,000

£4,000

£1,600,001 to £2,000,000

£5,000

Over £2,000,000

£6,000


 

Even though the new structure will be of benefit to smaller estates of less than £50,000, it is clear that the new fees will represent a significant additional cost, particularly bearing in mind the UK’s current high property values (property value is often the largest component of an estate’s overall value). The Governments own research suggests that 80% of applicants will pay £750 or less, so it seems likely that the majority will be paying hundreds of pounds more than they would do under the current scheme. 

Ways to mitigate probate fee increases


The advent of the new fee structure means that solicitors and financial planners will need to consider ways to mitigate the costs involved in a probate application. Two areas that are likely to help with this are:

1 – Lifetime Gifts
When calculating the value of an estate, the calculation does not take into account assets that have been given away or gifted during the individual's lifetime. If a gift of assets is made and the individual lives for seven or more years after making the gift,  their overall estate value upon their death will be less, and there would be a likely saving in any inheritance tax due.  An individual does not, however, need to survive the seven or more years to make such planning worthwhile. Deathbed gifts (or gifts within seven years of death) are usually not advised, because such gifts are not effective for inheritance tax purposes. This is because, if an individual dies within seven years of a gift, the gift will be treated for inheritance tax purposes as if it never left the estate of the deceased and it will be taxed as part of the deceased's estate. As far as the probate rules are concerned, however, those assets have left the estate and are therefore not included in the probate calculation.

2 – Joint tenancies
When calculating the value of an individual's estate, executors should not take into account any assets the deceased held as a joint tenant, as these assets will pass to the surviving joint tenant(s) automatically without the need for a grant of probate, and irrespective of what the deceased had put into their will. Such assets would typically include any joint bank accounts and the the marital home. So for individuals who own their home as joint tenants - as opposed to tenants in common - the impact of the new probate fees may be reduced. 

Seek professional advice

If you need help with probate, a will or a lasting power of attorney, Bakers Solicitors have friendly and approachable experts who are here to help. Call now on 

(01252) 744637

 and speak to Simon, our Estate Planning Manager, or email 

simon.speed@bakerssolicitors.com

.