Executors of wealthy estates may have to hand over thousands of pounds in probate fees following a review of charges by the Ministry of Justice.
Probate is the legal process for managing the disposal of a dead person’s property, money and other assets.
Instead of a flat rate £215 fee, the government is looking to introduce a sliding scale of charges.
Estates valued at more than £5,000 currently have to go into probate by law if the deceased has no will.
The new charges exempt estates worth up to £50,000 from any charge.
Double tax on estates
Those worth between £1.6 million and £2 million will pay probate fees of £12,000 and those over £2 million will pay £20,000.
Lawyers claim the fees are disproportionate to the administration a probate involves and may lead to the elderly taking risks with their money to try to avoid paying the charges.
Sarah Phillips, partner at Irwin Mitchell Private Wealth, pointed out that beneficiaries may have to take out loans to pay the substantial probate fees.
“Estates will have to pay inheritance tax on the fees as well, which are not deductible from the value of the estate when calculating tax payable,” she said.
“Beneficiaries who are asset-rich but cash-poor would be badly affected by the need to raise such considerable sums to obtain probate. Many will have to go to the expense of a bank loan to pay the fee.”
Fair and progressive fees
“Older people may be pressurised by families to give away assets in their lifetime to avoid the high charges. The risk is many older people may live in houses handed to their children who may not always act in the best interests of their parents.”
The ministry explained raising the probate exemption limit to £50,000 would lead to 30,000 estates not paying a charge.
The measure would raise £250 million for the MoJ which is destined to be spent on the costs of running courts and tribunals.
“The proposals are intended to be fair and progressive,” said the consultation document.
“Court fees are never popular but are necessary if we are, as a nation, to live within our means.”
