Probate fees are set to rise dramatically from May, with many owner-occupier farming families facing extra costs of £20,000.
A grant of probate is needed before assets can be distributed according to the terms set out in a will.
At present, a flat fee of between £150 and £250 applies for estates valued at more than £5,000, below which no fee is payable.
Despite overwhelmingly negative responses to a public consultation, the government is implementing the sharp rise from May this year.
“The new fee structure will mean that while most UK estates – those with a value of up to £50,000 – will now face no probate fee at all, those worth more than this amount will face significantly increased fees,” said Kathryn Harwood, head of wills and estate planning at Napthens solicitors in Cumbria.
For estates worth more than £2m, the proposed fee is £20,000. Advisers point out that while a farming family may be asset-rich, and commonly worth more than £2m, finding the £20,000 cash would be a real challenge for many, possibly forcing the sale of assets or taking out a loan.
Ms Harwood says: “Farmers receive agricultural relief for inheritance tax, but will now face what some in the industry have called a ‘tax by the back door.’
“In my role I have met plenty of people who might be putting off applying for a grant of probate – perhaps the spouse of someone who has died, and may feel they don’t need the grant at that stage, or may be relying on their children to apply in the future when circumstances change again.
“This announcement makes it clear that people should not put off applying for a grant any longer, and if they can, apply before May of this year or face potentially crippling fees.”
Funding court services
The increases were agreed to assist in funding court services, says Elizabeth Young, head of private client at law firm Roythornes.
“But this is such an enormous change of direction that it’s going to be extremely difficult for the public to swallow,” she said. “Furthermore, many will know nothing about these charges until someone close to them dies.
“The news of this increase has come as a great surprise to the law community; 831 people responded to the question of whether they agreed to the proposal during consultation with 810 objecting. It’s disappointing that this 97.5% majority wasn’t compelling enough to encourage modifications of the original proposal.
“The changes represent an increase of around 13,200% for the highest property value band. This is particularly worrying for our client base as a firm that has strong ties with land and rural estate owners.”
Lawyers fear that the changes may result in pressure being put on family members to transfer assets earlier than they would otherwise do, in order to avoid or reduce probate fees.