Probate is the Court application on death in order to release assets. Those of us who work in probate are reeling from the proposed increases in Probate Court Fees. These presently are £155 per application. With an unknown implementation date, widely expected to be May 2017, estates valued at between £500,000 and £1,000,000 will pay £4,000, increasing to £20,000 for estates of £2,000,000 or more.
The Ministry of Justice insists that the plans are fair on the basis that half of all estates will pay no fee whatsoever (i.e., for estates less than £50,000) and 92% will pay no more than fees of £1,000 (being estates less than £50,000).
The difficultly is, for us in the South-East, estates in excess of this figure are quite common and, after the £500,000 banding, fees increase steeply to the maximum of £20,000. From a previous fee of £155 this is a shocking and, dare we say it, unjustifiable increase.
Not only this, but the Probate Court Fees make no allowance that the estate itself, however large it may be, may not actually be subject to Inheritance Tax. For example, where there is a farm interest benefiting from Agricultural Relief and therefore rendering that aspect of the estate tax-free or an entire estate being left to a spouse (which is a very common occurrence) and therefore in its entirety it will pass free of Inheritance Tax, there is no such exemption from Probate Court fees. A widow who inherits a £2,000,000 house but no other cash assets with which to pay the court fee would still be facing a £20,000 fee payable even before the Probate is granted. This makes the increase in probate Court fees not just an additional tax, as many are calling it, but actually an unjustifiable burden on the perceived wealth in the South-East.
It is certainly time to review wills and estate planning in view of these increases and we can assist you with this. Please telephone us for an appointment on 01702 352511.