When someone dies and leaves a will, an executor is usually appointed in the will to deal with the deceased person’s estate – their money, property and possessions. Before they’re able to do this however, the executor has to apply for a ‘grant of probate’. This means they are legally allowed to distribute assets from the estate as outlined in the will. Without probate, the executor has no authority over bank accounts, mortgages or other financial matters.
At the moment, 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. However, from the start of May 2017, the fees are set to change and become dependent on the size of the estate. 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.
The increase becomes much greater for estates worth above this amount, however. Estates with a value of £300,000 to £500,000 will incur a probate fee of £1,000; and estates worth between £500,000 and £1 million will incur a £4,000 fee. There will be a fee of £8,000 for estates worth £1 million to £1.6 million, rising again to £12,000 for estates valued between £1.6 million and £2 million. The highest charge will be for estates of over £2 million, where a grant of probate will cost £20,000.
The sharp increase in these charges has been met with disapproval in 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 in order to begin the process of dealing with the estate of the deceased.
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.
At Creative Wealth Management we can help you with all aspects of Inheritance Tax Planning so as to protect the value of your estate and minimise any costs or tax charges. For any help in this important area of Financial Planning, please contact your normal Creative Financial Planner, or email us on firstname.lastname@example.org.