As you are probably aware, when someone dies and leaves a valid Will, the executor is usually appointed to deal with the deceased person’s estate – dealing with the distribution of their money, property and possessions etc. However, before the estate can be distributed, the executor must apply for a ‘grant of probate’. This means the executor is then legally allowed to distribute assets from the estate as outlined in the Will. Without probate being granted, the executor has no authority over bank accounts, mortgages or other financial matters and certainly cannot distribute any assets held within the deceased person’s estate. This I am sure we all know already.
Currently, the probate fee is set at a flat rate of £215 for any estate, or a lower fee of £155 for applications made by solicitors. Everything sounds nice and simple, even a fair price.
However, from the start of May 2017, the fees are set to change and become dependent on the size of the estate. And for most people with a reasonable size estate, the changes will certainly be unwelcome. Whilst estates worth under £50,000 will no longer require a probate fee to be paid, estates worth between £50,000 and £300,000 will see the amount rise to £300. Still sounds reasonable in my opinion.
The fee increase becomes much greater for estates worth above this amount
- Estates with a value of £300,000 to £500,000 will incur a probate fee of £1,000
- Estates worth between £500,000 and £1 million will incur a £4,000 fee.
- Estates worth between £1 million and £1.6 million will incur a £8,000 fee.
- Estates worth between £1.6 million and £2 million will incur a £12,000 fee.
- Estates worth of over £2 million will incur a £20,000 fee.
The massive increase in these charges has been met with disapproval from both financial advisers and the legal sector, with many describing it as a new inheritance tax. One of the key criticisms is that as the assets of a Will cannot be released until probate has been granted, executors may be forced to seek financial assistance to begin the process of dealing with the estate of the deceased. How crazy is that.
Lack of clarity
At the moment, it’s unclear whether the changes from 1st May will affect applications for probate submitted or deaths which occur after this date, resulting in calls for further details from the government. For those in the process of applying for grant of probate or who do so in the near future, the most important thing is to seek both legal and financial advice before doing so to ensure you know exactly what you will need to pay before you can begin dealing with the estate left in your charge.
If you or your family would like to talk us about your financial plans for future, please get in touch for a no-obligation meeting. Go to our website www.miadvice.co.uk and contact us via our “Get in touch” form on our home page or Contact Martin Dodd on 01902 742221.
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It is advisable to take advice from a professional financial adviser when making major financial decisions.
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This article has been prepared in good faith and based on Midlands Investment Agency’s understanding of the law and interpretation thereof at the time of creation. The contents should not be regarded as specific advice and we always recommend that specific advice is sort from a qualified professional. No responsibility can be accepted by Martin Dodd or Midlands Investment Agency Ltd., for any loss that may occur by a person acting or refraining from acting on the basis of this article.