What is a Grant of Probate?

A grant of probate is an official document that gives a named executor the authority to deal with the property of a deceased person. The term is often used (and will be in this Note) to include a grant of representation which is the equivalent document needed by an administrator if someone dies without a will (an intestacy).

Is a Grant always required?

A grant is generally not needed if:

  • The deceased person leaves less than £5,000;
  • Everything is passed on to a surviving joint owner;
  • The value of the estate is below the inheritance tax limit and the bank or building society that holds the money does not require sight of the grant.

The New Probate Fee Structure

As of May 2017, it is expected that a new fee structure will be implemented on a sliding scale basis, depending on the size of the deceased’s estate:

As it currently stands, requesting a solicitor to apply for a grant of probate on your behalf will cost £155 and applying for the grant personally will cost £215 irrespective of the size of the deceased’s estate.

Was there any point in the Consultation?

The Consultation paper on the proposed fees received 829 responses, over 90% of which were not in favour. And yet this change is happening nonetheless.

There has been much said about this being a ‘stealth tax’ and commentators have a point – the work to issue a grant is not onerous. Nor does its complexity increase if the estate is larger.

Implications

The first step in the process is submitting a tax application with HMRC. Only upon receipt of the tax application can an executor apply for a grant. Currently HMRC are taking up to 8 weeks to process the tax application. Will the executor be penalised if HMRC delays an application beyond 1st May? It is clearly in the government’s interest if HMRC move slowly - on a larger estate, for instance, it will be the difference between a fee of £155 and £20,000.

There are concerns as to how executors will find the cash to fund the fee if the estate comprises a property but little cash. Short term loans will have to be taken out with the consequent costs and delays.

It is thought that executors will try and avoid obtaining a grant and that estates will remain unadministered or transferred to beneficiaries without considering the terms of the properly proved will or intestacy.

What can be done to reduce the size of the fee?

We recommend that you speak to a member of our Private Client department who will be able to assist with various suggested options depending upon your assets and family structure to include the following:

  1. Put assets into joint names either as part of a trust structure or not;
  2. Make gifts, particularly if you know you are dying – these will be ineffective for tax purposes but will reduce your estate for probate.