The UK Government recently published law which, from April 2019, will increase probate fees from £155 to £6,000 for estates valued over £2 million.
A Statutory Instrument is a legal mechanism with allows the Government to change a law without that change being fully scrutinised in Parliament. The House of Lords’ Legislation Scrutiny Committee has described this change as a “stealth tax” and an “abuse of power” by the Government. The fees have also been described as a de facto additional inheritance tax. Probate fees must be paid before the executor of any estate may obtain access to the estate’s assets and distribute them to heirs and beneficiaries.
When preparing wills and planning for inheritance, these significantly increased fees will need to be considered. Sufficient cash will need to be readily available to the executor to ensure the fee is payable but that does not simply mean having cash in the estate. Probate fees must be paid before any cash or other assets in the estate can be accessed. Life insurance policies may be useful for ensuring cash is available, so long as those life insurance policies pay out promptly when needed and to those who need it.
If you would like to discuss inheritance tax and leaving assets to the next generation please contact us.