So what’s the fuss all about?
When someone passes away Probate Registry issues a Grant of probate. At the moment this costs you only £215 for a personal application. The government’s plan to bring in a sliding scale grant of probate fee moved a step closer this week when the relevant committee voted to approve the proposed changes to probate fees by nine votes to eight. This was the final stage in the process that started on November 5th last year and will mean that the fees will increase as proposed. So despite universal opposition, it will be introduced in April 2019.
What does this mean for me?
Many believe that the huge increase in fees, that will rise incrementally from £250 up to £6,000, amounts to a tax on death, with the value of your property determining the amount you are liable to pay. It means that your estate will be taxed on its value at the date of your death and not the previous low-cost fixed fee. For an estate (everything you own) valued between £300,000 and £500,000 it will cost you £750 and between £500,000 and £1M it will cost you £2,500! The decision today will mean that the Probate Registry will adopt the new “fee” structure from April this year.
Can anything be done to avoid the new death tax?
Simply put, yes. By placing assets in trust now the new Death Tax can be avoided as the assets are held by the trustees, including you, and are not in your sole personal name. You retain absolute 100% control of your trust fund – it is there to look after you during your lifetime and you retain all the power. In addition, setting up a Trust during your lifetime can have many other benefits, including: –
Avoiding all the stress and delays (6-12 months) of probate and providing your beneficiaries with immediate access to their inheritance after your death.
Avoiding sideways disinheritance where assets end up going down the wrong bloodline, as evidenced in the sad case of Lynda Bellingham recently where her entire estate went to her new husband and her two sons were disinherited.
Making much better provision for your children and grandchildren by avoiding threats including but not limited to marriage and divorce, financial issues, Inheritance tax, unreliability or means-tested benefits.
Mitigating or completely avoiding the impact of long-term care fees on your loved ones’ inheritance.