Bereaved families are set to be hard hit by a new “death tax” of up to £20,000 according to experts at Tees Valley law firm Latimer Hinks…
Changes to the probate fee system will add to the confusion already caused by an earlier Inheritance Tax (IHT) shake-up.
Proposed changes mean fees for obtaining a grant of probate, which are currently set at a flat rate of £215 for personal applications and £155 where a solicitor is instructed, will escalate depending on an estate’s value.
The Probate application is processed by the Government Probate Service and, under the new proposals, increased fees will kick in for estates worth £50,000 or more.
But the fees will rise by 40% for estates worth more than £50,000 and up to £300,000.
Those who have estates worth more than £300,000 and up to £500,000 will pay 365% more, with a £1,000 fee. Those who have estates in the £500,000 to £1m-mark will pay £4,000, a 1760% increase.
The steepest increase will be a 9200% rise to a £20,000 probate fee for those with estates worth more than £2m.
While £20,000 may seem a comparatively small charge for those with estates worth more than £2m, for those in the £1m to £2m bracket, the rises are steep.
Taking into account property values, it really doesn’t take much until you have to pay the £1,000 or the £4,000 fee instead of the current £215 or £155 fee assuming a solicitor is involved.
Anyone who inherits even a modest house in the future, along with a deceased’s other assets, is likely to fall into this bracket.
And, of course, on top of this, IHT may be payable. We are seeing the new IHT proposals for the family home leading to confusion and unfairness, in particular for single people and couples without children.
Add a new probate system and bereaved families will be left feeling even more bewildered about what they have to pay and what they can do to try to make sure as much as possible of their loved one’s estate is kept for their family and friends.
Ministers say the changes to the system of probate fees, which must be paid before access to a deceased’s assets can be secured, will be fairer to poorer families, and a further 30,000 people will be exempt from paying a fee at all.
These new fees will inevitably increase the cost of dying. While any increase in such fees is unwelcome, fees can, in certain circumstances, be mitigated.
Given the complexity of all the new legislation on IHT added to these proposals, it is even more important to have a current and up-to-date will and to have your affairs in order.
Latimer Hinks Private Client Team