In response to the announcement made by the Ministry of Justice on Monday regarding the April 2019 implementation of a banded structure for the payment of probate fees, Claire Davis, partner and specialist solicitor in private client and asset management at Howells Solicitors has provided her expert opinion.
Here she gives an explanation as to why, even though the proposed increases have been reduced since initially published, they are still disproportionate and should be considered a stealth tax.
Claire Davis’ Thoughts on the New Probate Fee Bands:
“The news about the rise in probate fees hit us all, unexpectedly, yesterday in a release from Parliamentary Under Secretary for Justice, Lucy Frazer QC MP. She announced a watered-down version of the original proposals from 2017 where the highest level of fees for the largest estates are going to be £20,000.
With a lot of effort and, as the only Welsh Director of Solicitors for the Elderly, our organisation fought hard to have the rise overturned. We believe this is not only unfair, but also illegal - which was supported by a cross party parliamentary committee.
The situation is no different under the revised rise, as we feel that this is still a stealth tax and that, no matter the size of the estate, the work of the Probate Registry does not increase with the size of the estate. None of us, for example, would be happy if we were asked to pay more for our TV licence or passport based on how much we had in our bank account.
The Under Secretary justifies the rise on the basis that the money is needed to modernise the system and that the banded fee model represents a fair and more progressive way to pay for probate services and ensures a properly funded and resourced court system.
The raising of the amount of assets that can be held before probate is needed from £5,000 to £50,000 may be welcomed by many. However, I think this should be tempered with caution as the risk of assets being ‘gifted’ the day before someone dies is bound to rise, and consequently more wishes as set out in wills could be thwarted as a result?
The fees also jump hugely. For instance, where an estate is worth £499,999 the fee will be £750, yet an estate of £500,000 will have a fee of £2,500. Furthermore, the flat fee, at the moment is £215 without a solicitor and £155 using a solicitor.
Unscrupulous advisers may pounce on the vulnerable selling trusts to avoid probate fees, which may end up costing more than the fees themselves. Some of whom could charge many thousands for such trusts.
Although, in many cases the trusts are useful and sensible, it is vital that those thinking about such a drastic measure should take proper legal advice where all the risks and benefits are examined including the saving of probate fees. Clients would also benefit from significantly lower fees in the majority of cases.
Solicitors for the Elderly will be taking a strong stance on this and supporting the Law Society if any formal opposition is made.”
What Are the Changes?
The fees will depend on the amount the estate is worth and not the complexity of the application:
· Estates worth less than £50,000 will pay nothing, meaning estates worth between £5,000 and £50,000 will save £215 compared to the current system.
· Estates worth from £50,000 up to £300,000 will pay £250, an increase of £35.
· Estates worth from £300,000 up to £500,000 will pay £750, an increase of £535.
· Estates worth from £500,000 up to £1 million will pay £2,500, an increase of £2,285.
· Estates worth from £1 million up to £1.6 million will pay £4,000, an increase of £3,785.
· Estates worth from £1.6 million up to £2 million will pay £5,000, an increase of £4,785.
· Estates worth more than £2 million will pay £6,000, an increase of £5,785.
Need Help with Probate?
If you would like to learn more about these fee bands and what these changes mean for you, please get in touch with Claire or our probate solicitors in Cardiff who can help.