A radical overhaul of probate fees comes into effect from May 2017, so if you have been asked to deal with the estate of someone who has recently died but you have not yet applied for a grant of probate or letters of administration you now have a small period of time in which to apply before the fees are increased.
There are also things you can do personally during your lifetime to reduce the amount of fees and taxes that may be payable when you yourself die.
“You need to apply for probate to be able to deal with the money, property and possessions of most people who have died. The government has decided to scrap the current fee for doing this, which was set at the same level for everyone, and to move to a system where the fee is based on the value of a deceased person’s estate. In simple terms this means that the more an estate is worth the higher the fee will be”, says Rachel.
The old system until May 2017
Currently, if you want to apply to deal with a deceased person’s estate – either as an executor under a grant of probate if they left a Will, or as an administrator under letters of administration if they did not – you will need to pay a fee of £155 if you apply using a solicitor and £215 if you apply yourself. Estates worth less than £5,000 pay nothing. Help with fees is available if you are on a low income or in receipt of certain benefits and do not have much money put away as savings.
The new fee system
From May 2017, probate fees will be as follows:
|Value of estate (before inheritance tax)||Fee payable|
|Up to £50,000||£0|
|£50,001 – £300,000||£300|
|£300,001 – £500,000||£1000|
|£500,001 – £1,000,000||£4,000|
|£1,000,001 – £1,600,000||£8,000|
|£1,600,001 – £2,000,000||£12,000|
|£2,000,001 or more||£20,000|
Help for those on a low income or benefits will no longer be available automatically.
When will the fee be payable?
The fee is payable at the time the application for a grant of probate or letters of administration is made, which will be before the executors or administrators can access any money from the estate.
How does the government expect the fees to be paid?
The government recognises that executors and administrators may struggle to pay the fee if they are unable to use money from the estate. They have therefore suggested that possible ways the fee could be funded include:
- asking a bank or building society which holds money for the deceased to release some money early;
- the executors or administrators paying the fee themselves and then claiming it back from the estate later; or
- asking someone who stands to benefit from the estate (a beneficiary) to loan the executors or administrators the money needed.
In exceptional circumstances an application can be made to the probate registry for a limited grant of authority to access some of the deceased’s money to pay the fee before the formal grant of probate or letters of administration are issued.
Is there anything I can do to reduce the fee payable?
If a relative or loved one has recently died, but you have not yet applied for a grant of probate or letters of administration, you can make your application now before the new fees are introduced.
Thinking forward to the time when your family may need to apply for probate to deal with your estate, there are lots of different things you can do while you are alive to reduce the value of your estate when you die and therefore limit the fee that needs to be paid. There are also things you can do to reduce your likely inheritance tax bill but which still allow you to pass on an inheritance to your loved ones. The options will vary depending on your circumstances.
For help in beating the new probate fee deadline, or for any other Wills, Probate, lifetime inheritance planning or tax mitigation advice, please contact our Wills, Trusts & Probate Team.