Government’s response to consultation on fee proposals for grants of representation such as a grant of probate or grant of letters of administration

… fees expected to rise in May 2017

Petition against the Governments published response to the Consultation on fee proposals for grants representation.

In February the Government published its response to the Consultation on fee proposals for grants of representation. The response sets out details of the Government’s plans to proceed with changes to probate fees by introducing a banded structure where fees increase in line with the value of the estate, and the reasons behind that decision.

There is currently a fixed fee for obtaining a grant of probate for an estate - £215 if the executor is making a personal application or £155 if solicitors are instructed to apply. However, subject to parliamentary approval, it is expected that the fees will be implemented in line with estate values and these changes will come into effect in May 2017. The new fees will apply to both types of application.

A total of 853 responses were received to the consultation and the respondents included law firms, professional bodies, and the senior judiciary and individual members of the public. The consultation raised a number of questions to which the respondents either agreed or disagreed with each proposal and provided reasons for their decision. About 97.5% of the replies were against the Government proposals.

Government has ignored all comments and has gone ahead with the proposals anyway and they are as follows:

  • The threshold below which no fee is payable for applications for grants of probate will be increased from £5,000 to £50,000.
  • The fees will be implemented on a banded structure, increasing in line with estate values. Estates worth over £50,000 will now pay of £300. Estates over £300,000 will now pay a fee of £1,000 for a Grant of Probate. Estates over £500,000 will pay £4,000 and Estates worth over £2million will have to pay £20,000!
  • Probate fees will be removed from the general fee remissions scheme (“help with fees”) but provision will remain for exceptional fee remissions to be granted at the discretion of the Lord Chancellor, in particular, where the executor shows that they have exhausted all reasonable means of funding the grant of probate application fee and would have caused undue hardship unless a fee remission is granted. The Probate Service will also be able, via a limited grant of probate, to provide limited access for executors to the assets of the estate, for the sole purpose of paying the necessary fee.

The respondents’ main concerns regarding the proposals were that the administration involved and therefore the cost of the probate service is the same regardless of the value of the estate and as the proposed fees would be set above cost recovery levels, this in effect amounted to a form of taxation. Also, as is often the case when applying for a Grant of Representation, the deceased’s accounts are frozen and personal representatives were concerned about how the proposed court fees would be met.

This is, therefore, another form of death duty and like Inheritance Tax, it will need paying upfront.This may result in real hardship, particularly where people are asset rich but cash poor. How can a vulnerable surviving spouse fund these costs?

The consultation paper listed a number of ways including:

  • Cash in the deceased’s estate;
  • Personal assets of the executor;
  • Assistance from beneficiaries of the estate;
  • A loan; or
  • A solicitor or professional probate company.

Other suggestions were made but the consultation paper concluded that these required further consideration:

  • If the deceased had a life insurance policy; or
  • A product developed by providers of funeral packages that built in an element for early release of necessary funds for the grant of probate application fee.

The government’s paper mentions the fact that executors or beneficiaries may have to loan the estate the money necessary to pay the fees. This is commonly the case now, but of course loaning £155 is different to loaning £4,000 or £20,000. If they are elderly they are going to find it impossible to re-mortgage and may have to undertake equity release just to get probate if their estate is mainly comprised of property taking them over the smaller limit just because they need to close say an ISA that was held in spouse’s sole name and everything else was jointly held.

There will, of course, also be the temptation to avoid Probate altogether. This may lead people into making unwise decisions with regards to their assets and estate planning, such as the inappropriate use of trusts, or placing assets into joint names.

If you would like further legal advice concerning any area of Wills, Trusts or Probate please contact Hunt & Coombs on 01733 882800 or email info@hcsolicitors.co.uk.

If you feel strongly against the introduction of these fees you may like to sign the national petition which can be found at www.petition.parliament.uk/petitions/188175.

Authors

Andrea Harrod & Paddy Appleton

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This article has been prepared for general interest and information purposes only; it does not constitute legal advice and should not be relied on as such. While all possible care has been taken in the preparation of this article, no responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by the firm or the authors.