This week the Financial Times have examined the issues arising from the introduction of a brand new probate fee scheduled to come in this May. As we have reported previously the government are planning to abolish the flat probate fee of £215 for lay executors and replace it with a new probate fee, on a sliding scale, which will be linked to the value of the estate.
While there is good news for those dealing with estates below £50,000, where there will be no probate fee, the majority of estates will generate much higher fees, up to £20,000 for estates valued at over £2m. This inevitably will mean more problems for executors.
The probate fee must be payed by the executor before the grant of probate is issued but without grant of probate the executor does not normally have full access to the estate. The responsibility and liability for the probate fee rests with the executor so many executors may be forced to pay the fees themselves in order to obtain Grant of Probate.
This is a very similar situation to Inheritance Tax which must be paid before Grant of Probate is issued. Most banks or building societies recognise this chicken and egg scenario and it is usual for them to release money from the estate for inheritance tax payments – enabling executors to obtain Grant of Probate. There is hope that banks will respond in the same way to the new probate fee so that executors can pay the fee with estate assets, (ultimately these fees would eventually be refunded through the estate anyway) but regardless of how these fees are eventually dealt with the burden of liability once again rests with the executor and this was emphasised in the Financial Times by Stewart Stretton-Hill at Irwin Mitchell.