Government plans to scrap the flat-rate fee for probate and replace it with a new system of tiered charges, have come under fire from the Law Society. It has said the government should not treat the probate service as a profit centre by charging ‘excessive fees’ to vulnerable and bereaved people.
So, what exactly are these proposed changes? Well, the Ministry of Justice wants to replace the flat £215 fee with a new system of tiered charges. That in itself is not the issue however; what is concerningis that the changes could result in some relatives paying as much as £20,000 in fees for estates worth more than £2m. However, the Ministry of Justice has said the measures would actually mean that estates worth less than £50,000 – 57 per cent of the total – would pay no fees, while a further 27 per cent would incur a “modest” increase of £85 to £300.
Under the new system for estates worth between £500,000 and £1m the new fee will be £4,000: this would rise to £8,000 for estates worth between £1m and £1.6m, and £12,000 for those valued at between £1.6m and £2m. The problem is because of the sharp rise in the value of property in many parts of the UK in recent years, many families could find themselves hit by the higher charges after a loved one passes away.
In its response to the Ministry of Justice’s proposals, the Law Society also cautioned against plans to stop charging a reduced fee for solicitors applying for probate. It said this may encourage more people to undertake probate themselves, ‘when there are many good reasons why people should take legal advice or instruct a solicitor to undertake the probate process, which presently can be quite complex’. The Society also said it may be ‘pre-emptive’ to remove the reduced fees for solicitor applications ahead of any improvements or simplification to the probate system.
While the Law Society said it agreed with charging probate fees based on the value of the estate, it described the proposed top fee as ‘excessively inflated’ and said it amounted to a significant tax imposition; arguing the proposed rise could leave beneficiaries of the most valuable estates – worth over £2m – paying £20,000 – almost 129 times more than current levels.
In its response the Law Society said:
‘It is unfair and discriminatory to expect the bereaved to fund/subsidise other parts of the court and tribunals service. Court fees are a necessary source of funding but should not be charged over and above the cost of the specific service.’
It suggested any fees should be based on the value of estates after inheritance tax has been paid. The Society said while some solicitors firms currently assist executors by paying probate fees as a disbursement, if the fee increases were introduced, firms might have to withdraw this ‘goodwill gesture’.
The Society also noted that HM Courts & Tribunals Service should already be raising significant funds through court fee increases imposed in the past 12 months and the sale of court buildings, adding:
‘Court closures and court fee increases in recent years have produced income and savings, but we have yet to see any tangible improvement to the court systems. Fees obtained by the probate service should be designed to cover the cost of running and improving the probate service and should not be siphoned off to fund other areas of the court system.’