An executor is responsible for any outgoings connected with a deceased estate, including probate fees, which have for many years been set at a simple flat rate of £215 for any estate valued at over £5,000. The government have now changed this arrangement and introduced a staggered fee which rises dramatically as the value of the estate increases.
The good news for anyone managing an estate valued at below £50,000 is that there is now no fee to pay at all, but for estates above £300,000 there is a big jump in the cost of probate to £750, a 349% increase, rising to a 2,790% increase for estates valued at over £2million. Some are arguing that this is another stealth tax on top of the 40% Inheritance Tax band for higher value estates. The government have stated that they plan to use the estimated increase in probate income of £145 million, to help bridge a large financial shortfall in Her Majesty’s Court and Tribunal Service.
|Value of estate (before Inheritance tax)||New Fees|
|Up to £50,000 or exempt from requiring a grant of probate||£0|
|£50,000 – £300,000||£250|
|£300,000 – £500,000||£750|
|£500,000 – £1 million||£2,500|
|£1 million – £1.6 million||£4,000|
|£1.6 million – £2 million||£5,000|
|Above £2 million||£6,000|
Christina Blacklaws, President of the Law Society, quoted in the Financial Times in February, says the cost to HMCT of granting probate is the same for all estates, regardless of value, and it is unfair to ask bereaved families to subsidise other unconnected areas of HMCT, particularly when they have no choice other than to use the probate service.
Whatever the reasoning behind the revised probate fee arrangement, it presents a new headache for executors – and an additional pressure to ensure that the value of the estate is properly calculated at the outset. If the value is mistakenly underestimated executors can personally face penalties not just from HMRC but also from the probate service. Whilst a solicitor is protected by professional indemnity insurance if they make a mistake, few lay executors consider indemnity insurance, but executors insurance can offer valuable protection against a variety of possible claims.
About the author
Guy has worked in the insurance profession for over thirty years, initially in the London Insurance market as a broker and subsequently as a Lloyd’s Members’ Agent. He set up private client insurance brokers Castleacre in 2005. Castleacre is the first company in the UK to offer indemnity insurance to lay executors – in direct response to clients who had become executors but could not find suitable cover on the market. If you have would like to know more about executor liability insurance or to contact Guy click here. If you wish to view the Executors Insurance blog click here.