Grieving families may be forced to take loans as the death tax rises by up to 9,202%

Grieving families may be forced to take loans as the death tax rises by up to 9,202%  main image

From May, grieving families could be forced to take out short-term loans in order to implement the probate process suggests Government analysis, following an increase to fees. This is on top of families already struggling to find the money to pay for funeral arrangements with, as we reported last year, many turning to payday loans.

What is probate?

When someone dies, probate is the legal process for dealing with the estate and is the responsibility of the executors named in their will. In most cases, these will be family or friends of the deceased, or a solicitor.

The probate fees - currently costing £215 if applied for by friends or family, or £155 if a solicitor completes the process - must be paid for up front.

From May, however, sliding scale rates will apply, with probate fees being charged on the value of an estate, up to a maximum fee of £20,000. This is despite opposition from law firms, professional bodies, the Senior Judiciary and individual members of the public who were involved at the consultation stage.

How much will probate fees cost?

The new fees will be as follows (source: The table also shows the proportion of homes in England and Wales that will be affected in each ban

Value of Estate (before interitance tax)

Proportion of all estates in England & Wales

Proposed Fee
Up to £50,000 or exempt 58% £0
£50,000 up to £300,000 23% £300
£300,000 up to £500,000 11% £1,000
£500,000 up to £1m 6% £4,000
£1m up to £1.6m 1% £8,000
£1.6m up to £2m 0.3% £12,000
Above £2m 0.5% £20,000

These price rises represent an increase from 40% up to 9,202% on current probate fees depending on the size of the estate.

The Daily Mail cites an example of how much probate fees could be for 11% of the English and Welsh population, as well as the price increase on current probate fees:

An individual leaving a house worth £500,000 and investments and bonds of £530,000 would see the probate fee rise to £8,000 – a 3,621% increase on the current fee.

Putting a strain on grieving families

As we touched on briefly above, the other worry with probate is that the fees are payable upfront with the application, so anyone applying directly will need to pay these monies within weeks of their loved one’s death. This is on top of having to find the monies for the funeral arrangements  - typically costing an average of £3,675.

A Ministry of Justice spokesperson said: “We are introducing a fairer banded system of probate fees which will mean more than half of estates will pay nothing … The probate fee will always be recoverable from the estate, so executors will not end up personally out of pocket”.

But as the fees need to be paid upfront and winning probate can take 6 weeks or longer depending on the complexity of the estate, this means that families not only need to find the probate fee (on top of funeral costs) but could be out of pocket for 6 or more weeks. (Unless the deceased had previously put a prepaid probate plan in to place, where the majority of probate costs would be covered).

The death tax is expected to boost The Treasury’s coffers by £350 million a year between now and 2022 - an increase of £115 million.

Don't miss out...

Sign up to our monthly newsletter for the latest updates