The announcement of last week's Budget sparked fury amongst the public as the "death tax", currently a nominal fee, is set to rise by as much as 9,300%.
Currently estates worth over £5,000 pay a £215 fee, or £155 if their Probate is done through a Solicitor. From May, this is set to spike to £20,000 for larger estates. See the table below to see what changes may affect you.
Latest figures revealed by the Budget documents have shown from the changes, the Ministry of Justice (MoJ) is set to make as much as £350 million by year 2022. With the public already finding the Probate process too complicated and lengthy, they feel it doesn't need added stress by increasing the fees, which it seems are being introduced purely to make money.
The increase in fees may come as a blow to the older generation, as they have spent a lifetime working and saving to provide for not only themselves in retirement, but for their family when they pass. Graeme Robb, senior technical manager at Prudential said, "Linking Probate fees to the size of a person's estate is effectively a tax on bereavement. Families with large estates will now start considering ways to reduce the size of their estate before they die."
In their defence, the MoJ have highlighted that the majority of estates fall into the lowest end of the spectrum, meaning 58% of estates will now pay nothing. They stated that the proposed changes would "cut the defecit and reduce the burden on the taxpayer of running the courts and tribunals".
This defence bears small resolve as house prices are still rising. The Land Registry published that in January alone, 530 homes in England and Wales sold for over £1 million.
The Probate fee increase is not the only change that will hit the bereaved. From next month, there are also significant changes to the Widowed Parent's allowance. Read our article "Bereavement Changes Could Leave Widowed Parents with Less Support" for more information.
The main issue for those with extravagant estates is having the funds available to pay for the application. With the way Probate is currently designed, Executors are not granted access to assets until the Grant of Probate has been issued. So how will they pay?
If instructed, some banks can pay the funds directly to the Courts from the deceased's estate, however this will only help those who are cash-rich. For those who have assets, but minimal cash, arrangements may have to be made to fund the fees through bank or personal loans.
What can I do?
Where Probate has not yet been granted, Executors should consider applying before the fees increase in May. Sometimes estimated figures can be used.
Otherwise, people may be able to structure their matters to avoid the impact of the increase. The fees will only apply to assets that fall under the Grant of Probate, so it may be possible to hold assets in a way that would stop them passing under the Grant e.g. gifting assets during your lifetime. It is advisable to research the changes to Inheritance Tax, as changes that are made within 7 years of your death may still count towards Inheritance Tax.