New government proposals signal substantial increase in costs following death

In many cases following a death, it is necessary to make an application to the Court for a Grant of Representation (often known as Probate) in order to administer a deceased’s estate. The government has recently announced plans to increase the fees payable to the Court when applying for a Grant.  Previously, the Court has not charged a fee to extract the Grant for estates with a value of less than £5,000 and a fixed fee of either £215 for personal applications or £155 for applications made through a solicitor for all estates over £5,000.

The new proposed fees, which are subject to parliamentary approval, will be based on the value of the estate, rather than any increase in the administrative role and responsibility of the Court.

The planned structure will result in Estates with a value below £50,000, being charge no fee and those valued between £50,000 and £300,000 the fee will increase to £300.  In the case of estates valued between £300,000 and £500,000 the fee will now be £1,000 and between £500,000 and £1 million £4,000.  The increase in fees continues, with estates valued between £1 million and £1.6 million paying £8,000 and between £1.6 million and £2 million £12,000.  Over £2 million the fee is £20,000.

The reform to the fee structure has been met with much disdain from the legal sector, with feelings of this being nothing more than an additional “death tax”.

Practitioners are frustrated with the proposal which will see the estates of more wealthy clients being subjected to a much higher fee for what is largely the same application.  As the level of work required by the Court does not change there seems to be little justification for changing the fees to a value based structure.  It is claimed that it is to bring it in line with the fees charged for other Court applications; in particular civil claims. It seems to be an opportunity to fund the Court system as a whole by charging those who are presumed as being able to afford it.

In many cases an estate (in particular any which involve a property) cannot be administered and assets passed into the hands of beneficiaries without the Grant. Therefore, estates are being charged high Court fees for what is a compulsory application, a principle which is not reflected in many other applications to Courts.

There are also practical difficulties with the hike in fees.  The fee must be paid before the Grant is issued and in many cases, assets in the estate are frozen until the Grant is issued.  This creates a “catch-22” situation of needing the funds to get the Grant but needing the Grant to get the funds.  In response, the Court has suggested that the Court fee be funded by the executors or beneficiaries personally, who will be reimbursed once assets are available.  Some executors or beneficiaries will be unable or unwilling to find these fees in advance.

The proposals add a new burden to the responsibilities of an Executor, and may result in an unwillingness of executors to accept the role.  Furthermore, creditors may see a delay in settlement of debts while funds are made available to apply for the Grant.

For those families that have recently suffered a bereavement and need to obtain a Grant, it would be worth applying to the Court before May this year if the estate is over £50,000.  It is recommended that legal advice is taken on this issue as soon as possible.

Consideration should also be given to structuring assets to enable flexibility to meet the fees rather than relying on an executor or beneficiary to subsidise an estate until there is sufficient liquidity to repay them.  Anyone opposing the new fee structure can sign a Petition at https://petition.parliament.uk/petitions/188175

For further information please contact Charlotte Pritchard & Jennifer Kitchener who are both Solicitors in our Private Client Department.

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