Changes being introduced by the government could prove costly for families who haven’t yet dealt with the estate of a family member who died recently.
The issue arises because since 2007, surviving spouses have automatically inherited the unused inheritance tax allowances of their dead partner. This has led some people to delay applying for a grant of probate, the process of administering a person’s will, as they don’t see it as an urgent matter.
This is particularly so when a couple have joint bank accounts and the surviving spouse continues to live in the family home. It can seem as if from a financial and legal point of view, very little has changed.
However, that is about to change significantly because the government is introducing huge rises in probate fees. Currently there is a flat fee of £215, or £155 if a solicitor is involved.
That is to be replaced by a banded system that caps the fee at no more than 0.5% of the value of the estate, up to a maximum of £6,000. The threshold at which estates are exempt from the fee rises from £5,000 to £50,000.
The government says the increase in the exemption threshold means that 25,000 estates will no longer have to pay a fee, and around 80% of estates will pay £750 or less.
The fee increase could prove a major issue for families who haven’t applied for probate following the death of a parent. When the second parent dies, the surviving children will have to make two applications for probate, which will be charged at the higher fees currently being introduced.
The increased fees have proved controversial, but the Ministry of Justice insisted they were fair and were needed to pay for the rising costs of administering the courts system.
The increases are likely to come into force soon. We shall keep clients informed of developments.
People who haven’t yet applied for a grant of probate following the death of a family member may wish to consider doing so as soon as possible.
Please contact us if you would like more information about making a will or applying for probate.