A woman goes into the local newspaper office to make sure the obituary for her recently deceased husband is published. The editor informs her that the fee for the obituary is £1 per word. The woman pauses, reflects, and settles on ‘Fred Brown died’. Disturbed at the woman’s miserly attitude, the editor stammers, “There’s a 7-word minimum for all obituaries”. The woman pauses again, counts on her fingers and changes it to, “Fred Brown died: used motorbike for sale.”
Money, that’s what’s behind this rise in Probate Fees.
Death costs money, and it seems the Government via HMRC and MOJ are hell-bent on squeezing more and more of it from you – and that includes when you’re gone.
The Ministry of Justice (MOJ) has announced it will raise probate fees in May to as much as £20,000 for those with the biggest estates, in England and Wales. For clarity, for MOJ read Government and HMRC.
At the moment such fees are fixed at either £155 or £215, so the rise in fees is enormous for those with larger estates. But that’s a headline that hides another – which is, fees will almost double for those with small estates (£50k to £300k).
MOJ says those under the £50k bracket would pay nothing. That seems disingenuous of MOJ though, because Probate was often not required in the smallest estates, so many were already doing exactly that! With price inflation pushing average house prices higher and higher, that’s also likely to have an increasing effect at the lower end.
Apparently the rise is designed to raise money for the court services. But, as is so often the case, the Government would make MONEY from it.
Probate – what is it?
Grant of probate gives executors the right to distribute the proceeds of someone’s will.
Probate fees are separate to inheritance tax, which is levied at 40% above the nil rate band of £325k (although married couples can double this up). Even in instances where an estate is left entirely to a spouse and there is no inheritance tax to pay, probate fees must be paid
Under the new rules, the less wealthy pay less, and statistically there will be more of them – meaning more would pay less (notwithstanding what I said above, in regards to many already paying nothing). Currently the fee is chargeable on any estate worth more than £5k; that threshold will rise to £50k, meaning that around 57% of estates will pay nothing (in theory).
BUT, anyone with an estate worth more than £50k will pay considerably more. Those worth between £50k and £300k will pay £300, with fees rising to a maximum of £20k for an estate worth more than £2m. For perspective, and a reality check, those rises represent between 40% and 9,202% of a hike!
The truth is that these fees are for processing forms and administration. £20’000 for that would be handsomely profitable!
The plans were pushed through despite being largely opposed in the short consultation.
- In fact, only 13 of the 831 respondents actually agreed with the MOJ consultation – a mere 1.6%.
- Only 8% agreed the fees should reflect the size of the estate. Those consulted were legal experts and solicitors.
The Government could raise more than £250m a year from rises in probate fees. Just like the Banks once did, the Government and HMRC are increasingly mistaking themselves for being a business.
So who will pay what?
- Those inheriting estates worth more than £300k up to £500k pay £1,000 – a 365% rise.
- For estates of £500k to £1million – £4000 (1,760% rise).
- For estates of £1million to £1.6million, £8000.
- Estates from £1.6million to £2million, £12’000.
- Above £2million will see probate fees of £20,000 (9,202% rise). This would also come on top of a potential £540k inheritance tax bill on a £2million estate from a married couple where the last surviving partner inherited their spouse’s nil rate-band.
Among areas of concern are that this puts older people at risk of unnecessary financial pressures when trying to access money left to them by their spouse; and that it hits property owners who are asset-rich but cash-poor, and rural families with small farms.
It really sounds like another Stealth Tax doesn’t it?
The existing fees (£215) fully met the cost of the Probate service which is a largely administrative function. £20,000 for example would be totally disproportionate for that. Indeed the consensus is that the value of the work has no bearing on the value of the estate.
But MOJ know it’s a vital one as without it executors can’t obtain the grant of probate to enable them to administer a deceased person’s estate. Even a surviving spouse whose dead partner left the family home and all other assets to them free of inheritance tax has to pay probate fees from the estate
Also, the new rules could cause executors of estates problems as fees will need to be paid up front. Whilst executors can access funds in frozen bank accounts of estates to fund those fees in most cases, this assumes that there are funds available – if they’re not, or can’t be accessed, the Government seems to expect executors or beneficiaries to fund the probate fees themselves.
So for everyone who’s done well in life; and for everyone who admires a parent or loved one who has done well in life, it’s a slap in the face from a sneaky, penny-grabbing government. They’ll get you in life, and they’ll get you after it too!
Don’t be passive – claim PPI for any deceased person at www.maplefinancial.co.uk – contact us for help.
Get what’s yours – and keep what’s yours!
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