You may have seen in the press that probate fees are set to increase in May. The increase, designed to raise money for the Court services, will mean that anyone with an estate worth more than £50,000 will pay a higher court fee than the current fixed fees of £155 or £215. Although there will be no fee for estates below £50,000, those with estates worth between £50,000 and £300,000 will pay £300, rising to a maximum fee of £20,000 for estates valued at over £2million.
Many will view the fee increase as a form of taxation given that fees will be based on the value of an estate. The fee increases could be problematic for asset rich but cash poor clients as it is understood that the fees would be payable upfront.
Many married couples will for various reasons own their house as tenants in common. This means that a half share of the property will form part of the estate of the first spouse to die. For estates worth between £300,000 and £500,000 the Probate Fee would be £1,000 and any estate over £500,000 (up to £1m) the fee jumps up to £4,000. These high fees may result in people reviewing how they own their property and reverting from tenants in common to joint tenants.
Can I avoid the rise in fees?
There is concern among solicitors that many will feel pressured to give away their assets during their lifetime to avoid these high fees. Transferring property to other family members such as children may seem like a straightforward way of avoiding probate fees, however doing so is not without risk. Should those individuals go through divorce, end up in financial difficulty or pass away the property may have to be sold. Placing the property or asset into a Trust is a safer option, but individuals would need to ensure that they obtain professional advice before proceeding.
If you would like any advice or have any concerns about how the Probate fee increases will affect you then please contact a member of the Wills and Probate Team on 0800 138 0458.
Disclaimer: The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice, and the law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice on their own particular circumstances.