A LEADING North East law firm is urging homeowners to review their assets to avoid being hit by ‘stealth tax’ probate fee hikes.
In May, new rules will come into force which could see bereaved families facing huge fees to access money and inheritances left to them following the death of a loved one.
Probate fees – the sums charged for processing the necessary paperwork surrounding the administration of a deceased person’s estate – are set to rise from £155 on all estates worth more than £50,000, and will move on to a sliding scale, graded on the value of the estate. This includes any agricultural and business property they may own.
And, although the new rules will only apply to estates valued at more than £50,000, they will hit homeowners the hardest, with fees rising to £300 for estates worth up to £300,000, £1,000 for those valued between £300,000 and £500,000 and £4000 for those valued between £500,000 and £1m. The fees charged for larger estates over £1m are up to £20,000.
Now, probate experts at Durham-based legal firm EMG Solicitors, are advising homeowners to help their loved ones beat the stealth tax by looking at restructuring their estates.
“The new fees mean that a non-taxable estate worth £600,000 – which may include a £400,000 family home and £200,000 of savings and investments – would be hit with a grant of probate fee of £4,000, some 1,760 per cent more than previously. This will be payable even if there is no inheritance tax to pay, for instance, if the will passes assets to a surviving spouse,” said EMG probate expert, Samantha Edward.
“It may be wise for people to look at the way they own assets and see if there is a more favourable way to do so by use of a trust, for example.
“In some cases, it could remove the need to obtain Probate in the first place and prevent their loved ones being faced with the increased fee.”
The new rules, which are being introduced by the Ministry of Justice have been widely criticised as they replace a fixed rate ‘administration fee’ with a banded ‘tax,’ in addition to the inheritance tax already levied according to an estate’s value.
Samantha has warned however that restructuring an estate to avoid or minimise probate is not a catch-all solution as people may need recourse to their assets during their lifetime.
“Because no two circumstances are the same, I would strongly advise anyone considering gifting their property in their lifetime to get in touch so we can ensure it is the most sensible move for them and in their best interests overall,” she said.
“The different considerations between probate fees, inheritance tax and capital gains tax means it is vital, now more than ever, to make sure that you have received specialist advice and made a plan that works from all angles.”
For further information visit www.emgsolicitors.com.