March 9, 2017
Law firm urges MP Raab to resist ‘sledgehammer’ probate fees rise
East Molesey law firm KWW Solicitors has written to MP Dominic Raab asking him to help overturn proposed “sledgehammer” increases in probate fees.
Probate is the legal process whereby a will is ‘proved’ in a court and accepted as a valid public document that is the true last testament of the deceased.
Currently, probate fees are a flat £215 per personal application (or £155 if applications are made through a solicitor). Under the new system, due to come into effect in May, estates with a value of less than £50,000 will be exempt from probate fees altogether (the current threshold is £5,000). However, estates worth more than £50,000 will face probate fees which rise as the value of the estate increases.
For estates worth more than £50,000 but less than £300,000, the new fee will be £300. For estates worth more than £300,000 but less than £500,000, it will be £1,000. For estates worth more than £500,000 but less than £1m, the cost will be £4,000. The new probate fee continues to rise until it reaches £20,000 for estates worth more than £2m. In all cases, the fee is in addition to any inheritance tax due. It is expected to raise around £250m for the Exchequer.
In the letter to Mr Raab, who is a former Justice Minister, Gary Coleman, probate specialist and senior partner at KWW, said the proposals were “draconian” and were based on a crude “sledgehammer approach” that unfairly targeted taxpayers living in a part of the country where property values had risen steeply in recent years. “The Government already stands to benefit from more and more taxpayers being brought into the Inheritance Tax bracket simply because of where they live and with no regard to individual circumstances,” said Mr Coleman.
He pointed out the fees would apply irrespective of who inherited the estate, unlike inheritance tax. So widows and charities would also be expected to pay under the new regime.
“We have particular concerns that elderly, vulnerable widows may encounter genuine hardship in trying to raise the required fee and could be driven to make unwise financial decisions, for example initiating a totally inappropriate equity release scheme or cashing in policies at disadvantageous terms,” said Mr Coleman.
“What is proposed is not so much an increase in fees as a tax on death, conceived to help the Government reduce its borrowing and applied in a cynical and inequitable manner that targets the so-called ‘well off’.”
Mr Coleman expressed astonishment that a fee that costs a minimum of £155 today could cost up to £20,000 in a few weeks. “It is not as if the level of work that the Probate Registry will have to undertake will be 129 times more complex,” he said.
KWW is also concerned that executors are going to have to fund the fee up front. Currently, solicitors tend to pay the fee from their own funds to get the process moving but they are unlikely to bear the burden of paying the new increased fee on behalf of the clients.
“From a solicitor’s point of view, loaning an estate £155 is a long way from a loan of many hundreds or thousands of pounds. Probate clients will most likely have to fund the fees out of their own pockets. Consider the surviving spouse who is asset-rich but cash-poor and already facing the cost of the funeral and the settlement of inheritance tax. The potential for heightened emotional distress is enormous.”
For further information contact:
Tony Cheverall KWW Solicitors
Head of Marketing and Communications
KWW senior partner Gary Coleman has expressed concerns at the scale and the implementation of the new proposed fee