How Will Rising Probate Costs Affect Your Family’s Future?

By June 19, 2016Estate Planning

The Ministry of Justice has announced a new proposed probate fee system. Instead of the current flat fee of £215 there will be a sliding scale of charges, depending on the value of an estate:

  • For estates worth between £50,000 and £300,000 the probate fee will be £300
  • Those between £300,000 and £500,000 must pay £1,000
  • For estates worth between £500,000 and £1m the fee will be £4,000
  • For those worth between £1m and £1.6m it is going to come to £8,000
  • The charge will be £12,000 for estates worth between £1.6m and £2m
  • Estates valued at over £2m will incur fees of £20,000.

 

The Consequences of Covering Probate Court Costs

The changes have been brought in to help pay for running courts and tribunals.  They are likely to cause a great deal of anxiety, in a climate of rising property prices and, therefore, increased values of estates when they are passed on.

 

When an individual dies and leaves property to their relatives they must apply for probate from the Probate Registry, if the estate is valued at over £5,000. The new proposals will raise this threshold to £50,000, saving anyone from paying fees on estates worth under this amount. However, given average property prices in the UK are now around £200,000, more people are going to be liable to pay the higher fees.

 

The aim is make the probate system simpler but, in doing so, increasing numbers of people are likely to have to pay more money upfront when it comes to settling the affairs of deceased family members.

 

Be Prepared and Trust in Trusts

The key thing is to be well prepared and to discuss all aspects of estate planning with a fully qualified professional. The fact is, over half the adults in the UK don’t actually have a will at all.  This makes their executors and surviving family members far more liable to rising expenses than probate fees alone.

 

Clearly, for a great many people, the first, crucial step is to actually make a will, with the right specialist advice. The probate issue can then be looked at.  Another key area of estates planning is family trusts. Many assets can in fact be held in trust, which then takes them out of probate, reducing the financial burden for surviving family members.

 

Sound estate planning is about looking at all the options, so where probate fee increases are a potential problem, family trusts can offer a solution.

 

If you would like to discuss the options for protecting your family’s wealth, please contact us for more information.

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