Here we are, 2019 ‘Chinese Year of the Pig’ and according to myth, the significance of the pig in the Chinese zodiac legend was that the pig was the last to arrive when the Jade Emperor called for ‘the great race’. The term ‘lazy Pig’ was fashioned when, during the race, the Pig became hungry, promptly stopping for a feast and falling asleep. After the nap the Pig continued the race and was named the 12th (and last) animal of the zodiac cycle.
Not unlike the napping pig of Chinese legend, the much delayed ‘Non-Contentious Probate (Fees) Order 2018’ has been dormant, effectively for the last 2 years, and is expected to finally cross the implementation line this year.
What is the cost of probate? Currently, when someone dies in England and Wales, families pay a one off probate fee of £215 (£155 if processed through a solicitor) on estates of £5,000 or more.
The proposed probate fee increase effects all probate matters in England and Wales (unless you have sign-off from the Chancellor of the Exchequer himself) and will be an extra cost on top of inheritance tax.
What are the new costs of probate?
When will the probate fee increase be implemented?
The draft Order is now awaiting formal approval from the House of Commons. No date has yet been fixed, a by-product of our beloved Brexit, but should it be approved it will come in to force 21 days later.
Approval for an order of this type, a Statutory Instrument, is typically a shoo-in: the last time a vote for a Statutory Instrument failed was in 1978. However, Labour has indicated that they will object, inevitably causing further delay.
Whilst we can expect further delays, the Government seem adamant to push it through and realistically, to coin a phrase from David Gauke – the man tasked with implementing this Probate Fee hike, hoping for the Probate Fee increase to be cancelled would be akin to ‘hoping for Scarlett Johansson to turn up riding a unicorn’.
The pros and cons of the probate fee increase:
What is the justification for the change in probate fees?
An Office for Budget Responsibility report states that the new probate fee structure is expected to generate £155 million a year in additional revenue. The Junior Justice Minister, Lucy Frazer, assures us that these funds will then be ‘ring-fenced’ for the running of the courts and tribunal service.
Echoing the Pig in the Zodiac story’s greed, it would seem that the Government are using this substantial fee hike to subsidise an underfunded court system, usually supported by their tax money.
Ms Frazer went on to say ‘We are also confident these fees will never be unaffordable. The cost of the fee is recoverable from the estate and executors have several options to fund it. Moreover, the Lord Chancellor retains a power to remit a fee if he considers there are exceptional circumstances.’
How to prepare for the changes in probate fees We recommend that people worrying that this may impact them take action now.
If you are not prepared to follow the convoluted path of writing a letter to your local MP, asking for a reduction in the fee, then we start by advising clients to leave sufficient allocations in their life insurance policies. The most efficient way of dealing with probate costs would be to put any life insurance policies in trust, this way the funds can be accessed straight away on death.
It goes without saying: should you have any concerns, please do not hesitate to ask us.
In the meantime, all that’s left is to pull out the popcorn and wait for the Brexit show to fizzle out.