Probate fee hike could have serious implications for the elderly and vulnerable

Since the announcement of the probate fee increase, the implications of the change have been a hot topic for practitioners in the private client field. As more consideration has been given to those potential implications, the consequences for the elderly has also sparked concerns.

The changes

At the moment there is a flat probate fee of £215 or £155 if a probate application is processed through a solicitor.

Under the proposed new system which is due to come into force in April 2019, probate charges will be linked to the size of the estate, on a sliding scale.

Although there will be no charge for estates valued at less than £50,000, which the Ministry of Justice has suggested will mean that an extra 25,000 estates per year will pay no fee at all, according to estimates it is understood that one in five families will be paying at least £2,500.

The concerns

There has been significant debate about the policy reasons behind the proposal and any criticisms, it seems, are largely borne out of the perception that the increase is little more than a “stealth” or “back door” tax. Indeed, some probate practitioners have suggested that the fee rises are effectively a tax raid on high-value homes, since there is sometimes little difference in the amount of work involved in processing a grant application in estates of different value.

Lakshmi Turner, Chief Executive of Solicitors for the Elderly (SFE), said: “This stealth tax, although much lower than before, is still unjustifiable as the probate process will not require additional work or resources.

“There will be older and vulnerable people with estates or properties that have grown in value over their lifetime, so it seems an unfair system. Some may also have little money in the bank, which could lead to complexities when using a property to cover the fees.”

The implications

As is the case with any other tax that the government impose, individuals look for ways to try and mitigate or avoid it and it is anticipated that the probate fee will be no different.

Campaigners have suggested that the change will be of concern to those individuals who are keen to establish exactly what will happen to their estate on their death and for the families of those individuals who will eventually inherit and this was also recently reported in The Times.

Indeed, there has already been significant press coverage recently regarding abuse of the elderly and vulnerable with Roman Kubiak, head of our Contested Wills, Trusts and Estates team commenting on the issues in The Sunday Times.

The concern is that elderly and vulnerable people will come under pressure, whether by reason of their own anxieties or pressure from their families, to give away their assets, place them into trusts or even join risky financial schemes to avoid the charges.

The reality of that is that elderly and vulnerable people may end up making these decisions without fully understanding the consequences and could lose control of their assets, which will have a direct result on their ability to rely on and use those assets during their lifetimes.

Further, and indeed looking at the changes from a litigious perspective, family dynamics change so frequently that those individuals may by the end of their lives wish to change the devolution of their estate but will be unable to do so having giving away their assets long before.

To avoid the potential consequences that may ensue, individuals who are concerned about the increases (assuming they are implemented) should consider seeking legal advice before making any decisions regarding their assets.