Earlier this year, the Ministry of Justice (MoJ) published a consultation paper with the view to reform probate fees by introducing a new 'banded' structure.
The proposed changes would see fees rise from a standard charge of £215 for all estates, up to £20,000 for clients inheriting an estate worth £2 million or more. Any estate worth £50,000 or more will pay significantly higher fees under this new system, with estates exceeding £2 million facing the largest increase of 9000%.
The MoJ hopes that the money raised from this increase will help fund the modernisation of HM Courts & Tribunals services and help plug a deficit in its funding. However, the consultation has been heavily criticised with many questioning whether if it is fair for the government to expect estates to bear the burden of these costs.
Executors have no choice but to apply for a grant of probate to be able to access assets from an estate and in most cases, an application for a grant is an administrative process - the size of the estate has no bearing on the work involved. Even based on the current fee rates, the Probate Registry is self-funding.
The proposed fee reforms have been highlighted as another stealth tax - an easy way for the Government to raise funds without generating the negative headlines that an increase in Inheritance Tax (IHT) rates might produce. However, the risk of these proposed changes is that many families may not be aware of the fees until after a death when it will be too late to consider any funding options.
These changes could cause significant financial strain for executors who will have to pay the probate fee before they have access to the estate’s assets. This could lead to some taking on a considerable amount of personal financial risk to raise these funds, which could cause delays with the grant and ultimately the distribution of the assets to the beneficiaries.
Tom Curran, Chief Executive of estate administration specialist Kings Court Trust, commented: "The proposed increase in probate fees could have a significant impact on the clients of financial advisers and other families who have to deal with the loss of a loved one. High value estates will see the greatest increase in fees, with families having to front these costs before the assets of the estate are realised. Kings Court Trust already has plans in place to absorb these costs on behalf of families using our estate administration service so that they are not left out of pocket before any legal work is actually undertaken."
Kings Court Trust works with financial advisers, Will writers and other professionals to support their clients when they are faced with a bereavement. For more information on how you can work with us, visit www.kctrust.co.uk/ifa or email email@example.com.