Changes to Probate Fee Structure

Posted 7th June 2021

Written by Frances Maxwell - Solicitor

Budget News

Since 2016, the government has made several attempts to make changes to probate fees in favour of a banded system, where larger estates pay significantly more, and a greater swathe of smaller estates pay nothing at all. Probate fees refer to the Grant of Probate necessary to carry out the deceased’s Will. The new probate fee structure proposals in 2016 and 2019 were deemed a ‘tax on the bereaved’ and abolished. In this article, we’ll take a closer at what happens when probate is granted and the reasons behind the numerous attempts from the government to change probate fees over the years.

 

What is Grant of Probate?

A Grant of Probate gives an Executor or personal representative in a deceased’s estate evidence of their authority (which derives from the Will or by the statutory trusts in an intestacy) to collect in the assets of an estate.

It is not always necessary to obtain a Grant of Probate. A grant will typically be required, amongst other reasons, in the following circumstances:

  • To release funds from investments or held in banks and building societies over a certain limit;
  • To sell or transfer shareholdings;
  • To sell or transfer property if owned as tenants in common (rather than the right of survivorship applying – many jointly owned properties are held as tenants in common where each individual owns their own share) or in the deceased’s sole name.

The fee payable on an application for a Grant of Probate must be paid upfront and funded by the Executor or family if there is no available cash in the estate (for example, if the estate mainly comprises property that needs to be sold).

What Does It Mean When Probate Is Granted?

Once probate has been granted, the deceased’s personal representative can carry out the Will and administrative tasks like closing bank accounts, cashing in any life insurance or pensions, and settling debts. Essentially, the personal representative is given the legal right and authority to ensure that the instructions in the Will are carried out.

 

History of Probate Fee Structures

The original new probate fee structure was announced in 2016 and due to come into effect in May 2017. Below is what the proposed payments were for the size of the estate (after settling debts and funeral costs).

Value of estate Fee required
0-£50,000 Nil
£50,001-£300,000 £300
£300,001-£500,000 £1000
£500,001-£1,000,000 £4000
£1,000,001-£1,600,000 £8000
£1,600,001-£2,000,000 £12,000
£2,000,001 or more £20,000

 

In a government consultation carried out in February 2017, it was clear that the overwhelming response to the proposal was negative. However, some respondents did say that they agreed with the banded structure, just not the rates.

The proposal was revisited in 2019, with the banding system revived, but the figures drastically lowered (as seen below). Nonetheless, the necessary paperwork was not set before Parliament in time for the changes to probate fees to take effect, and the new probate fee structure plans were scrapped once again.

Value of estate Fee required
0-£50,000 Nil
£50,001-£300,000 £250
£300,001-£500,000 £750
£500,001-£1,000,000 £2,500
£1,000,001-£1,600,000 £4,000
£1,600,001-£2,000,000 £5,000
£2,000,001 or more £6,000

 

Since May 2020, the new probate fee structure has remained at the 2016 flat rate of £215 for citizens and £155 for professional probate practitioners, with a £1.50 charge for copies of the grant (including a copy of the Will).

 

Why Were the New Probate Fee Structures Rejected?

One of the problems with the proposed changes to probate fees was that in some cases, there could be a vulnerable surviving spouse living in their home, which could have a value that puts the application fee into a higher bracket. However, if they are not cash-rich, this puts pressure on the surviving spouse and family at a difficult time to fund a substantial fee (which bears no relation to the amount of work involved in producing a Grant of Probate).

Another issue was that farms and small businesses, which may be asset rich but cash poor, would have to find the funds for the new probate fee structures if the owner died. Farmers or businesses could have found themselves having to sell land and assets to meet the changes to probate fees and may have needed to borrow money in the meantime, as a Grant of Probate is required in order to sell.

There could also have been a temptation to avoid the need for a Grant of Probate at all, meaning possible unwise decisions could have been made about property and assets. This could have included the inappropriate use of trusts, placing assets into joint names or pressure to gift property or assets which may still be needed.

 

If you have suffered a bereavement, been named as personal representative of a deceased person or would like any further advice about structuring your estate, the use of trusts and the changes to probate fees, Newtons Solicitors are here to help. Please contact our Wills, Probates and Trusts team on 0800 038 5500 or fill in our online contact form today.