Probate application fees are set to increase dramatically from May 2017 following a recent announcement by the Ministry of Justice. The increases are subject to Parliamentary approval, but we expect them to be confirmed sometime in May. Once they are confirmed, we understand that they will come into effect in a matter of days, and will apply to all probate applications made from that point on.
The current fixed probate fees are £155 for solicitors’ applications and £215 for personal applications. The fee increase will be huge for all but the smallest estates. The new fees will be as follows:
|Value of estate||New fee|
|Up to £50,000||£ 0|
|£50,001 to £300,000||£ 300|
|£300,001 to £500,000||£ 1,000|
|£500,001 to £1,000,001||£ 4,000|
|£1,000,001 to £1,600,000||£ 8,000|
|£1,600,001 to £2,000,000||£ 12,000|
|£2,000,001 and above||£ 20,000|
One practical issue with having to find up to £20,000 on application for the grant is that executors do not have access to an estate’s assets until the grant of probate has been issued. There is therefore the question of how to fund the probate fees. We understand that banks and some other financial institutions may be able to pay the fees direct to the court from the deceased’s funds if instructed. However, this does potentially put those who are asset-rich but cash-poor at risk meaning that their executors may have to make other arrangements to fund the fees through bank and/or personal loans.
What should I do now?
Executors of estates in which probate has not yet been granted should consider applying for a grant urgently before May to beat the hike in fees. Even if some more information is required regarding estate assets, it may be that estimated figures could be used. We can advise if this is appropriate in the circumstances.
What can be done in future?
It may be possible for people to structure their affairs during their lifetime in such a way to mitigate the impact of the increased probate fees. The probate fees will only apply to assets passing under the grant. Therefore, it may be possible to ensure that a lower probate fee is paid by holding assets in a way that means that they do not pass under the grant. For example, giving away assets during lifetime and/or holding them in joint names may be a solution. Such steps may or may not be effective for inheritance tax purposes, particularly if done shortly before death, but they may still help to ensure that the estate falls into a lower fee bracket.