Probate fees are currently the subject of some significant proposals for reforms that could most notably impact upon the leaving of charitable legacies in Essex and throughout the UK. With this in mind, Laura Richardson takes you through some of the key points associated with the aforementioned proposed reforms to Probate fees and why they are of particular concern to those that would want to leave charitable legacies in Essex and throughout the UK . . .
Currently there are two flat fees for filing for Probate in Essex, the standard fee £215, or a reduced fee of £155 for those applying through a Solicitor. Under proposals put forward by the Ministry of Justice, these flat fees would be replaced by a sliding scale based on the estate value. Estates worth below £50,000 would be exempt from fees, however the lowest fee, for an estate worth between £50,000 and £300,000 would be £300, rising to £1,000 for an estate worth between £300,000 and £500,000, and £4,000 for estates worth between £500,000 and £1 million. The fees would continue to increase in line with estate worth to a fee of £20,000 on estates worth more than £2 million. The revenue generated is estimated at approximately £250 million annually which would fund the courts and tribunals service. The changes were due to take effect from 1st May 2017, however the plans were reportedly scrapped earlier this year. However, these plans have not been entirely discarded, but rather are “dormant”, meaning that they could be reinstated. Government representatives have thus far given no official comment as to whether the planned changes will go ahead at a future date.
Many critics have coined the changes a “death tax” and there has been debate regarding the legality of the proposed fee hike. However, one group in particular have raised a concern regarding the negative effect that the proposed Probate fee increase would have upon gifts left to a Charity within a Will. The Institute of Legacy Management raised fears that the estimated loss to charitable legacies in Essex and across the UK would be around £18 million each year! The main concern is that in the majority of cases involving a charitable legacy, the bulk of the estate is divided between family members with a residual amount going to charity. With the proposed changes to the Probate fees, it is likely that the increased Probate fee will be extracted from the residual amount of the estate, meaning that in effect the fee will be taken directly from the charitable legacy.
One way to protect the charitable legacy in your Will would be to set up a life insurance policy, including a trust meaning that the funds would be immediately accessible to the trustee upon your death and could thus be used to pay the increased Probate fee. Further estate planning with the use of trusts could also lower the value of your estate in order that the Probate fee would also be lowered.
If you wish to leave any charitable legacies in Essex under the terms of your Will or would like advice regarding the potential increase in Probate fees and how they may serve to impact upon your charitable legacies in Essex and throughout the UK then please contact us at Andrew Douglas Wills and Legal Services today.
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