Probate fees: a tax by any other name

Those who rule us, the Government, have been called many things, and I’m guessing that ‘cunning devils’ would fall into the ‘more polite’ category.

At the beginning of last year (2017) the Government announced its plans to increase the costs of applying for probate and from £155 (if the application is made by a legal representative) or £215 (if the application is made by a member of the public) along a sliding scale which reached the heady heights of £20,000 for estates in excess of £2 million.  See below for more details:

Value of estate (before inheritance tax is deducted)	Proposed Probate Fees
Up to £50,000	£0
Over £50,000 but below £300,000	£300
Over £300,000 but below £500,000	£1,000
Over £500,000 but below £1 million	£4,000
Over £1 million but below £1.6 million	£8,000
Over £1.6 million but below £2 million	£12,000
Over £2 million	£20,000

Not surprisingly this resulted in an outcry from many sources and consequently those ‘cunning devils’ have decided to revise the scope of the increases, which will now apply from April 2019 and you will see the new numbers below:

Value of estate (before inheritance tax is deducted)	Proposed Probate Fees
Up to £50,000	£0
Over £50,000 but below £300,000	£250
Over £300,000 but below £500,000	£750
Over £500,000 but below £1 million	£2,500
Over £1 million but below £1.6 million	£4,000
Over £1.6 million but below £2 million	£5,000
Over £2 million	£6,000

Many will see this as a ‘back door tax’ and when you consider that these application fees are in addition to charges levied by solicitors for preparing the documentation, the cost of dying is becoming prohibitively high.  To rub salt into the wound, it costs broadly the same for the government to administer an application for an estate of £200,000 as it does for one of £2 million.

So it would appear that the average person is left with two options. Find a way to live forever (Dorian Gray here I come) or suffer the consequences.

Dementia can severely damage your wealth

We saw a couple recently. The wife had dementia and despite advice, the husband was determined to leave everything to his wife, if he died first.

If that happened and his wife inherited, and then ended up in long term care, their only daughter’s inheritance could be severely depleted, due to the impact of long term care fees.

With the inclusion of some trust wording in the husband’s Will and a change in the way the matrimonial home is owned from joint tenants to tenants in common, we could have guaranteed at least 50% of the value of the property would eventually pass to the daughter.

Without the inclusion of the above trust wording, if the husband dies first and the wife inherits and then ends up in long term care, the whole value of the property may be eaten up in care costs.

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How a stranger can take control of your assets

How would you like to work all month, and then have a total stranger who you have never met, and who you never will meet, dictate how you had to spend your salary?

Sadly, that happens to about 2/3rds of the population, because that is how many die; without a Will. So their life savings – all their assets – will be distributed in accordance with the Laws of Intestacy. In other words, the Government says where your estate goes; and it may not be to the people we want to benefit.

Great. We drag our bones around this planet for the allotted three score years and ten and then a bunch of total strangers demand that our life savings go where they say, not necessarily where we want.

And yet the answer is simple. Make a Will.

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How to Retain Control of Your Assets (Even When You Don’t Have Capacity)

So it goes like this. We work, work, work, work and then we work a little more to achieve a level of comfort/security for ourselves and our loved ones.

And then the unthinkable happens; we have an accident, or a stroke or old age gets the better of us and we are no longer capable of looking after our own finances. In other words, we no longer have mental capacity.

How will our loved ones be able to access our funds, just to continue paying the bills?

If that were to happen and we had not put anything in place to authorise someone to gain access to our accounts etc. the only way our loved ones could take control would be to apply to the Court of Protection. An Application to the Court costs £400. This would be followed by a Hearing fee of £500. There would also be annual preparation and filing fees for accounts the Court requires.  And how long will all this take?

Too long is the answer, and during this time no-one has access to our funds to pay the bills.

Or, as all good Boy Scouts say, we could “be prepared.”  We could draft a Lasting Power of Attorney (LPA). This will cost less than half of the Application and Hearing fees the Court of Protection charges, including the Registration fee with The Office of the Public Guardian. And there are no annual preparation/filing fees. There should also be no delay, as once the LPA is registered, it is effective, so no time wasted waiting for an Application to be processed and a Hearing to take place.

Contact us if you feel an LPA may offer you or a loved one some additional security.

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The importance of making a Will

Well, we are here.  But why are we here?  That is the question.

Well, did anyone hear of the poor woman whose husband died a while ago, without a Will, leaving her and their two young children?

Because of the way their estate was structured, she had to sell their home and pass a significant proportion down to the children – in trust – until they reached 18 years of age.  Left without enough funds to buy a home to live in, they are living in rented accommodation and the only way she can get her hands on her husband’s money is to sue her own children.

That’s why we are here.  To provide a Will writing service to clients where they only have to make it as far as the front door – and then put the kettle on.  No more taking time off work, waiting for public transport or looking for parking spaces and sitting in stuffy offices.  Now it can all be done from the comfort of your own home.

As Descartes said “I think, therefore I am.”  So, what do you think, is it worth making a Will?

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