An increase in Probate fees: to be, or not to be? Act II

For those keen readers of the Leonard Gray “News & Downloads” section of the website you may recall my article from May 2017, “An increase in Probate fees: to be, or not to be?” and the proposed changes to Probate fees by a draft Order at that time which was dubbed widely in the media as a “stealth tax”.

The 2017 draft Order was initially passed by the Commons committee but there was not enough time for the Order to complete its passage through Parliament due to the General Election called by Theresa May in June 2017.

It appears that, sadly, despite all the current Brexit issues, Probate fees are still appearing on the Government’s agenda.

The lady doth protest too much, methinks.

On 5th November 2018, the junior Justice Minister, Lucy Frazer QC MP, provided the following statement:

I have today laid before Parliament new legislation to implement a new, banded structure of fees for a grant of representation, commonly known as a grant of probate.

Fees are an essential element of funding an effective, modern courts and tribunals service, thereby ensuring and protecting access to justice.

The Government is investing £1 billion to modernise and upgrade the courts system so that it works even better for everyone, including victims, witnesses, litigants, judges and legal professionals. This includes introducing changes to our Probate Service, who offer an important service to those who are bereaved.

The reform of the service allows people to apply for a grant of probate online, access assisted digital support for those who many not necessarily have the skills or access to engage digitally and empowers individuals to make applications themselves instead of needing to instruct and pay for solicitors. This aims to reduce the burden on applicants, by providing a more efficient and simpler application process.

But such a courts system is simply not possible without proper funding. Since the previous Government set out its intentions to introduce a banded fee structure for grants of probate in February 2017, a number of concerns were raised. We have listened to these very carefully, and under today’s proposal we have revised fees so they will never be more than 0.5% of the value of the estate.

Moreover, by raising the estate value threshold from £5,000 to £50,000, we will be lifting around 25,000 estates annually out of fees altogether. For those who do pay, around 80% of estates will pay £750 or less, and all income raised will be spent on running the courts and tribunal service.

It has long been the case that the users of our courts make a contribution to its costs, and we believe this remains both relevant and reasonable – minimising the burden on other taxpayers. Crucially, by asking those who use the courts to pay more, where they can afford to do so, we are able to fund areas where we charge no fees to vulnerable victims and users, including for example domestic violence and non-molestation orders, and for cases before the First-tier Tribunal concerning mental health.

This new banded fee model represents a fair and more progressive way to pay for probate services compared to the current flat fee and reflects our commitment to protecting access to justice by ensuring we have a properly funded and resourced courts system. We are also confident these fees will never be unaffordable. The cost of the fee is recoverable from the estate and executors have several options to fund it. Moreover, the Lord Chancellor retains a power to remit a fee if he considers there are exceptional circumstances.

We will also publish a guidance document before the Statutory Instrument comes into force, entitled Guidance on Ways to Pay for Probate Fees. This will benefit from external stakeholder input, and will help applicants to choose the option to pay which most suits their circumstances, providing reassurance at a difficult time.”

What are the proposed Probate fees?

The new proposed fee structure under the draft Non-Contentious Probate (Fees) Order 2018 will be as is set out below:

On an application for a grant where the assessed value of the estate: Fee
(a) exceeds £50,000 but does not exceed £300,000; £250
(b) exceeds £300,000 but does not exceed £500,000; £750
(c) exceeds £500,000 but does not exceed £1,000,000; £2,500
(d) exceeds £1,000,000 but does not exceed £1,600,000; £4,000
(e) exceeds £1,600,000 but does not exceed £2,000,000; £5,000
(f) exceeds £2,000,000 £6,000

The current Probate fee is a flat fee of £155 so, other than for estates below £50,000, this will mean an increase in Probate fees. In particular, the Probate fees for estates in excess of £300,000 will be five times higher and for estates in excess of £500,000, a whopping sixteen times higher!

At the very top end of the scale, for estates exceeding £2m, the Probate fee will be around 39 times more.

This will, of course, add further complexity to Probate work generally as the Probate fee needs to be paid along with an initial instalment of Inheritance Tax (if relevant) before Executors can even obtain the Grant of Probate. Finding the fee or releasing funds for the fee may prove difficult in some estates.

Is this the Final Act?

Whether the 2018 draft Order will pass through both Houses of Parliament and become law in 2019 remains to be seen.

Will this simply be another case of much ado about nothing?

Chris is an experienced, friendly and professional Solicitor with our "Wills, Probate, Later Years" team. Chris is partner of Leonard Gray and a member of the Society of Trust and Estate Practitioners (STEP), which is the leading professional body for practitioners in the fields of trusts and estates. He is also a Trustee/Director of Age UK Essex and a Dementia Friend.