It has recently been proposed by the Ministry of Justice that there has been a substantial increase in probate fees – although at first glance the proposals appear to be aimed at higher valued estates. The proposals are in a bid to raise extra money to fund the courts and tribunal service where there is currently a huge deficit.
Under the existing rules, the application cost for probate is nil, where an estate is £5,000 or less. All estates valued above the £5,000 threshold pay a fee of £215 or if you instruct a solicitor there is a reduced fee of £155. This means that whether an estate is worth £6,000 or £6 million, the same court fee applies.
The new proposals could see an astronomical rise, with beneficiaries of estates over £2 million paying £20,000 in court fees. This significant increase means estates may be paying 129 times more than they currently would now.
The argument in favour of the increased fees is that it will make it fairer for smaller valued estates. The proposals aim to raise the threshold from £5,000 to £50,000 and only estates over this value will pay the court fee. One example of where this will be particularly effective is in cases where a PI claim is being continued by a family member on behalf of the deceased, where there is nothing in the estate itself. The claim may only be worth just over the £5,000 and the defendants will normally insist on a grant of probate being obtained. This means that the family member will need to initially pay the court fee of £215 and the fees will only be reimbursed if the claim is successful. These claims may continue for a length of time meaning the family member is out of pocket.
On the other hand, although the new system may be deemed fairer by some it must be noted that the work of the probate registries will remain virtually the same. This means for work that they are currently doing for the cost of £215 (or less) they will be charging £20,000 for the same. In addition, there is also the issue of how executors are going to raise the funds for the increased fees. Where money is tied up in property with limited cash readily available, potentially the executors will need to obtain funds for both inheritance tax and probate fees. This only adds to the pressure for those who are administering the estate.
Nothing is set in stone but one thing which is clear is that if the proposals are implemented it will change the process of applying for probate altogether and the higher valued estates will be hit hard under the new rules.