Families dealing with a bereavement have been warned to apply for probate as soon as possible to avoid the hike in probate fees.
In 2016, the government revealed plans to increase the minimum probate fee – paid when administering someone's estate after they die – from £215 to £250 for estates with assets of less than £500,000.
It will be set at £4,000 for estates valued at more than £1m and £6,000 for estates worth more than £2m. This is additional to inheritance tax.
The rise, which was due to come into force on April 1, has been delayed indefinitely due to ongoing parliamentary discussions over Brexit.
But Dan Garrett, chief executive and co-founder of will-writer and probate dealer Farewill, said the fees could cause substantial difficulties for bereaved families and has called for the increase to be scrapped, not just delayed.
“The hike will hurt cash-strapped beneficiaries inheriting businesses or properties that fall into the top tiers, requiring a £4,000 or £6,000 payout.
“The value of the asset could be tied up in a business or large farm. This may fall in the top tier over £2m, but if it has been left to a group of people who do not have £6,000 to spend, then they are stuck.
“With the increasing cost entwined with dying and the current uncertainty over fees, it is becoming ever more important to assess how to gain transparency and clarity over the cost and processes involved in dying.
“I would advise, and do currently advise, any families facing these costs to go through the process now before the increase is introduced.”
Kay Ingram, director of public policy at LEBC, said the fee increase would not only hurt families whose inheritance was tied up in assets and described the new fee as a ‘catch 22’ for executors.
She said: “Even if people are inheriting money in building societies or bank accounts, they still need to pay the fee upfront to gain probate to access these accounts.
“At the moment, some solicitors just pay the flat rate fee at the start. But they cannot do that after the fee increases, especially for more expensive estates.
“So it’s a catch 22. Executors cannot gain access to the assets of the estate until they have probate. They cannot get probate until they have paid the fee upfront. What if they don’t have that fee?”
Ms Ingram said she would advise those looking at their estate and finances to put money outside the estate that can be used for probate fees and funeral costs.
She added: “This could be in the form of life insurance or a trust. But most importantly, there should be funds accessible before probate.”
The government has also been criticised for treating the probate fee increase as a fee when in the eyes of many, it is a tax.
Ms Ingram said: “It does not cost any more money, as a service, to deal with a wealthy estate than a less wealthy one.
“Therefore, it’s a percentage charge according to wealth — it’s not a fee, it’s a tax.”
Mr Garrett agreed and said the government had “side stepped” the proper parliamentary process and “disguised a stealth tax as a fee”.
In February, MP members of the delegated legislation committee agreed the fee was for the provision of services and not a tax.
If it were considered a tax, the plan to increase the fee would have to be included in the Finance Bill, debated and voted on in parliament. Instead, a fee increase does not have to be voted for by MPs and can be agreed upon by committee.
Since the delay, the probate fee increase will be heard as a ‘statutory instrument’ in parliament. Statutory instruments are usually passed through the house without debate as they have already been decided by committee, but according to Ms Ingram, a selection of Labour and Lib Dem MPs are likely to oppose the fee hike and the matter will be forced to a debate in parliament.
imogen.tew@ft.com
