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    From Ros Altmann:economist and pensions,
    investment and retirement policy expert

  • pensionsandsavings.com

    Probate fee changes

    Probate fee changes

    • Probate fee changes – understandable concerns but maybe criticism a little too harsh.
    • New system will be fairer to small estates and Government has listened to criticisms of its previous proposed changes.
    • Ring-fencing receipts will help Courts protect more vulnerable people in our justice system.

    Government has listened to concerns about previous probate proposals: I am delighted that the Government has taken note of serious concerns raised by its previous proposals to increase probate fees enormously, to a maximum of £20,000. I felt that this was an unfair burden on many estates, but the new rates seem much more reasonable to me. Even the most valuable estates will only pay a fraction of a percent in probate fees. Professionals generally charge up to help with probate, so the Court fees will be tiny in comparison.

    Estate value Current system

    (without a solicitor)

    Previous proposal New proposal
    Under £5,000 £0 £0 £0
    £5,000 – £50,000 £215 £0 £0
    £50,000 – £300,000 £215 £300 £250
    £300,000 – £500,000 £215 £1000 £750
    £500,000 – £1m £215 £4000 £2500
    £1m – £1.6m £215 £8,000 £4000
    Over £2m £215 £20000 £6000

     

    Understandable concerns but these measures deserve support: The Government has just announced changes to the fee structure for probate. Understandably, this has attracted critical comment and raised concerns about fairness. It has been called a stealth death tax and been condemned by campaigners. There are some valid concerns about finding the funds needed and about charities receiving lower donations, but I have to say that I am not convinced that the Government’s decision is wrong. Indeed, perhaps the measures could have been announced alongside the Budget, but there are many reasons why I believe the changes can be supported.

    New fees help the poorest and take 25,000 estates a year out of probate fee altogether: The new system will now mean anyone leaving an estate worth under £50,000 will not pay any Probate fee at all. Under the old system, only people leaving less than £5,000 could receive free probate. Therefore, in future, those 25,000 estates a year that are worth between £5,000 and £50,000 will now not pay any Probate fee. This will help the poorest in society.

    Fees will be ring-fenced to support justice for more vulnerable and poorer people: The Courts and Tribunals system must to be kept up to date. The probate fees will only be used to fund the court and tribunals services, not for general public spending. Access to justice is a fundamental British value, but has to be paid for. The Government is investing £1billion to modernise the system, but more is needed and imposing a higher fee on some estates will help the Government provide justice for more poorer and vulnerable people. These fees are an essential part of being able to provide the modern and effective justice system that the public rightly expects. For example, social security and child support cases are free for users, there is no fee for access to justice for domestic violence victims, mental health review tribunals, social security and child support cases, forced marriage and female genital mutilation protection orders.

    Probate fees still tiny relative to professional costs: These new probate fees, that will help fund the Courts and Tribunals system, are obviously much higher than existing fees, but do not seem unreasonable, especially in light of the huge costs charged by solicitors, banks or probate brokers who usually base their costs on a percentage of the estate value. While the maximum percentage paid in the new probate fees will never exceed 0.5%, banks and solicitors often charge 2-4% of assets which goes to those firms, rather than being reinvested in the Court system. Consumer Group Which? has published a table of estimated costs for probate on its excellent website. This shows the following:

    Estate value £100,000 estate £500,000 estate
    Bank charges (4%) £4,000 £20,000
    Solicitor charges (2%) £2,000 £10,000
    New proposed Probate fee £250 £750

    Source: https://www.which.co.uk/money/wills-and-probate/probate/probate-solicitors-a4p4b0d2yu4g

    Probate fees are paid out of the estate but if executors need help to find the money it is available: There are concerns that Executors who apply for Probate may have to pay these fees themselves, before being able to recover the money from the estate. However, there are mechanisms to help with these costs. Most banks and building societies will release money to pay for Probate and it is also possible to get a limited grant of probate that can allow the money for the fee to be released from the estate. Many lawyers might be able to cover the costs in their billing structure, knowing that they will recover the fees on distribution of assets. Ways to pay will all be explained in the Guidance to be issued, including that the Lord Chancellor can waive the fee in certain exceptional circumstances if needed.

    60% of estates will pay £250 (similar to current fee): Under these new proposals, the majority of estates will pay less than or similar amounts as under the existing system. 60% of estates will pay under £250 and 80% will pay less than £750. That means only one in five estates, those of the highest value, will pay more than this. It is understandable that none of us like to pay more in official fees and charges, but there are so many calls on taxpayer resources and these new proposed fees do seem to have struck a reasonable balance.


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