How new probate rules could cost you an extra £5,785
As Benjamin Franklin once wrote, “In this world nothing can be said to be certain, except death and taxes.”
That’s why, if we are smart, we take time to draw up our wills and make sure our money, assets and possessions are left to the people we choose.
It’s also why, now I’m in my mid 40s, I have been named as executor in the Wills of some of my older relatives.
Fortunately, this is a duty I’ve yet to carry out; and I hope I don’t have to for many years yet. However, if you are currently Executor of another person’s Will, it’s worth knowing that the cost of probate is going to change dramatically from April 2019 – and in many cases it will cost you a whole lot more.
Current probate costs
Before we take a look at costs, let’s quickly clear up what’s meant by ‘probate’.
If you are the Executor of a Will, you need to apply for a ‘grant of probate’. If the person hasn’t made a Will, then you need to apply for ‘letters of administration’ instead.
Both routes normally lead to you being granted ‘letters of administration’, which give you the authority to administer the deceased’s estate, pay their debts, wind up their affairs and distribute their remaining assets to their chosen heirs.
All of these steps are customarily referred to under the umbrella term ‘probate’ and applications currently cost a flat rate of £215 (or £155 if you apply via a solicitor). This fee is charged only on estates valued over £5,000 and is waived for those worth less than this sum.
New probate costs
From April 2019 (the exact date has yet to be confirmed), probate fees will be charged on a sliding scale, depending on how much the deceased’s estate is worth.
The good news is that, if an estate is valued at less than £50,000, probate will cost nothing.
That means that you will now save £215 if the estate is worth between £5,000 and £50,000.
The bad news is that estates worth more than £50,000 will now attract larger fees, with the cost going up substantially for the most valuable ones. The amounts payable with increases over current in brackets are:
- Estates worth £50,000 – £300,000: a fee of £250 (+£35)
- Estates worth £300,000 – £500,000: a fee of £750 (+£535)
- Estates worth £500,000 – £1m: a fee of £2,500 (+£2,285)
- Estates worth £1m – £1.6m: a fee of £4,000 (+£3,785)
- Estates worth £1.6m – £2m: a fee of £5,000 (+£4,785)
- Estates worth £2m or more: a fee of £6,000 (+£5,785)
As you can see, the more the estate is worth, the heftier the increase you have to pay for probate.
Can I avoid the rise in probate fees?
The short answer to this question is, ‘probably not’.
However, if you are the Executor of someone who has recently died, it’s a good idea to apply for probate before the rules change in April. The fee you pay is based on the date you apply, so if you’ve been putting off applying for probate for an estate worth more than £50,000 you should do it now. On the other hand, if the estate is worth less than £50,000, you can save money by applying after the rules have changed.
That said, the Lord Chancellor retains the power under both systems to remit a fee under exceptional circumstances. If you feel this may apply to you, we suggest you seek proper legal advice.
When will I know the exact date the changes are introduced?
This is the big question.
While the new system is supposed to be introduced in April, the new fees still have to be approved by the House of Commons. Given the current wranglings over the Brexit deal and proposed amendments, it’s not hard to see the changes being delayed.
But if you’re executor to someone who had recently died and you’re likely to save under the current regime, get that probate application in fast – it could save you up to £5,785.
Probate Advice with THP
Here at THP Chartered Accountants we can assist you in dealing with all the procedures concerned with administering a person’s estate through our probate service, we can also help with the probate of your own will through our Wills, Trust and Legacy Planning services. Come and talk to us at one of our offices in Cheam, Chelmsford, Wanstead, and Saffron Walden. or call us at our head office on 020 8989 5147.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.