On 24 February 2017 the Ministry of Justice announced that it intends to proceed with its proposals to increase probate fees from the current flat rate to a banded rate where the fees increase in line with the value of the estate. As a result, the cost of obtaining a Grant of Probate or Letters of Administration, in order to deal with a deceased person’s estate and access the money and assets left to beneficiaries, could increase by hundreds or even thousands of pounds.
The Government has cited the need to invest almost £1 billion in the court and tribunal system to provide a “world class system” that is “just, proportionate and accessible” with “people’s needs and expectations at its heart”.
“Court fees are never popular but they are necessary if we are, as a nation, to live within our means,” said Shaliesh Vara from the Ministry of Justice. “These proposals would raise around an additional £250m a year, which is a critical contribution to cutting the deficit and reducing the burden on the taxpayer of running the courts and tribunals.”
He also made assurances that the new fees would not be as heavy a burden as they might initially appear. “84% of estates would pay £300 or nothing and 94% of estates would pay £1,000 or less,” he said. “The maximum fee of £20,000 would only be paid by the very wealthiest estates, worth more than £2 million.
The current structure
Under the current fee structure, the court fees for probate applications are:
- £155 if the application is made via a solicitor, or
- £215 if made as part of a personal application.
Each year there are around 270,000 applications for a grant of probate, of which just under 40% are currently made by personal applicants. The remainder are made by solicitors.
The new fee structure
The current fees will be replaced by a new banded structure that varies depending upon the value of the estate.
- No fee if the estate value is below £50,000
- £300 if the estate value exceeds £50,000 but not £300,000
- £1,000 if the estate value exceeds £300,000 but not £500,000
- £4,000 if the estate value exceeds £500,000 but not £1m
- £8,000 if the estate value exceeds £1m but not £1.6m
- £12,000 if the estate value exceeds £1.6m but not £2m
- £20,000 if the estate value exceeds £2m
The final band represents a whopping 9,202 per cent increase on the current charge.
Concerns over the fee increase
The decision to proceed with the fee increase comes despite only 13 of the 831 respondents in a consultation issued by the Ministry of Justice actually agreeing with the plans – a mere 1.6 per cent.
The changes are also going ahead despite the experts who responded overwhelmingly rejecting the idea of even changing fees from a flat rate to a rate rising with estate values. Just 8 per cent of respondents agreed that probate fees should reflect the value of the estate.
The main reasons that respondents gave for disagreeing with the proposal were that:
- the size of the fee should be set according to the cost of providing the service;
- the administration involved and therefore cost to the Probate Service is the same, regardless of the value of the estate;
- as the proposed fees would be set above cost recovery levels, they in effect amounted to a form of stealth taxation which is unfair, particularly as many estates incurring the increased fees will already have paid inheritance tax; and
- the fees proposed are excessive.
Lawyers have warned that higher fees could put older people at risk of unnecessary financial pressures when trying to access money left to them by their spouse. Several contributors pointed out that some executors may struggle to pay the fees, particularly in cases where estates are asset rich but cash poor, for example when a property is the only asset.
In most cases, executors will pay the fee using cash in the deceased estate if released by the bank or building society.
Other options include the personal assets of the executor, assistance from beneficiaries of the estate, a bank loan, or the possibility that a solicitor may be willing to pay the fee up front.
People concerned about how their executors will pay the probate fees could leave sufficient funds in a life insurance policy and, provided the policy is written in trust, it can be accessed immediately on death, without the need for probate.
Are there any concessions available if the executor cannot pay the probate court fee?
Whilst probate fees will be removed from the general fee remissions scheme for court fees, it will still be possible to apply to the Lord Chancellor for fee concessions in exceptional circumstances of undue hardship where all reasonable means of paying fees have been exhausted. Also, where there are no liquid funds available to pay the court fees, it will in limited circumstances be possible to apply to the probate registry for a limited grant of representation to enable executors to realise assets for the sole purpose of paying the fees.
When will the changes take effect?
It is anticipated that the fees increase will come into effect in May 2017 and no doubt the coming weeks will see an increase in probate applications, and resultant processing times, as executors and solicitors rush to obtain probate before the fee hike.