Your executor will have to apply for probate and pay a fee, before they can manage your estate. This will be drawn from your estate, reducing how much money you can give your loved ones. It’s wise to plan ahead, to minimise the damage, so Prestige Tax and Trust Services asks: how much does probate cost?
Applying for probate
The executor will need probate to gain the legal right to administer your estate. They will need to apply for a grant of probate, also known as a grant of representation for this. This involves sending application and inheritance tax forms, along with payment, to the local probate registry. They will then be asked to visit this office and swear an oath that they will fulfil their duties as legally required.
The probate fee is currently set at a flat rate of £215, but it is free for estates worth less than £5,000. This charge is reduced to £155, however, when solicitors make the application. This is why it’s advised to let experts such as Prestige Tax and Trust Services, handle this matter. After paying and swearing the oath, you executor will be sent a probate certificate, which they will require to manage the estate.
We should note that probate fees are set to change. According to The Telegraph, from May 2017, the flat fee will be replaced by a sliding scale charge, which will be determined based on the value of your estate. Whitehall has designed this system to ensure that no estate will pay more than 1% of its value in probate fees, which will benefit most people, but could force your estate to pay more.
The good news is that estates worth less than £50,000 will pay no probate fees under this system. It is estimated that the majority (58%) of English and Welsh estates fall into this bracket, so if you are part of this majority, you may have no charges. The scale goes from here:
- Estates worth £50,000 – £300,000: £300 fee.
- Estates worth £300,000 – £500,000: £1,000 fee.
- Estates worth £500,000 – £1 million: £4,000 fee.
- Estates worth £1 million – £1.6 million: £8,000 fee
- Estates worth £1.6 million – £2 million: £12,000 fee.
- Estates worth over £2 million: £20,000 fee.
If your estate forms part of the 42% whose value stretches from £50,000 to £2 million+, as of May 2017 you will be required to pay more in probate fees. This is calculated on the value of your estate before inheritance tax (currently set at a rate of 40% and applicable to estates worth over £325,000), so you should also consider how this will impact how much money you can leave to your loved ones.
Prestige Tax and Trust Services
We understand that you want to ensure that when you pass away, there is as much money as possible in your estate, so your loved ones will be well taken care. The rising probate fee, coupled with potential inheritance tax costs, could deplete your estate, so it’s wise to enlist expert help with estate planning. Here at Prestige Tax and Trust Services, our knowledgeable team can help you with will writing, so you can strategise how to ensure your loved ones benefit as much as possible from your estate.