SFE Submission Document

SFE submission document

1. Do you agree that it would be fairer to charge a fee that is proportionate to the value of the estate compared with charging a fixed fee for all applications for a grant of probate?

Solicitors for the Elderly (SFE) represent some 1600 regulated solicitors, barristers and legal executives who represent the majority of people applying for a Grant and therefore feel that although there may be some financial argument to review the fee structure, the proposals set out are unfair to the larger estates where there is a greater likelihood that a solicitor will be engaged thereby undertaking the bulk of the work prior to an application being made. The work being undertaken by the Probate Registry is largely administrative in these cases and the value of the estate is irrelevant. A significant number of large estates will attract IHT and will therefore be paying tax. There are also many estates where relief from IHT is relevant (Agricultural, Business, Spouse exemption) and there is little or no realisable cash assets and no intention to sell property yet a potential fee of up to £20,000 is proposed placing a burden on families at a sensitive and distressing time.

2. Do you agree with the proposal to increase the threshold above which the fee is payable from £5,000 to £50,000? Please give reasons.

Statutory regulations and severe penalties for breach need to be brought in if any raise is agreed. No clear indication has been set out that the total estate must not exceed the exempt limit (including property). We see financial institutions closing any account with less than the exempt limit and transferring a significant amount of money (to the average person) into the hands of a family member who may not be the Executor under a Will, without realising the potential for family conflict, money not passing to those entitled etc. Where there is an intestacy, what checks are proposed to ensure that the person claiming the money is entitled? We see the potential for financial abuse of the elderly and vulnerable with unregulated providers potentially "selling" products to remove assets from the banding so that even though they may be taxable no grant is needed or families putting undue pressure on the elderly to place their assets in several small accounts or elsewhere to avoid the fees. This will also have the effect of reducing revenue. Without proper and clear protection in place we also foresee lay people either unintentionally or otherwise failing to file IHT returns or paying IHT on estates.

3. Do you agree with the government's proposals to charge fees for probate applications as set out in Table 1? Please give reasons.

The statistics quoted state that 62% of estates use a solicitor. In those cases the work checking validity of the Will, those entitled on intestacy, value of the estate, preparation of Oath and IHT forms will have been completed meaning that the Probate Registry is performing a purely administrative role where the value of the estate has no bearing on the work undertaken. To burden larger estates with a significantly larger fee in a situation where the advisability/necessity of using a solicitor is likely and where IHT to be paid is an unfair form of taxation. In addition there is a significant number of larger estates where assets are primarily property and very little cash to pay the fees proposed. These will include estates where there are agricultural or business properties together with homes in the sole name of a spouse passing to a surviving spouse all potentially exempt from IHT but require the probate document to facilitate transfer of assets. The fees proposed will place those estates at risk and a burden on families to pay the fees without any hope of repayment unless there was a sale. The proposal to take an executors' loan is not always possible and is an expensive option for many estates particularly where, again, the main asset is a property and the fee cannot be paid until the asset is sold. Where cash assets are available we would suggest that if fees are to be increased there is a facility ,as with payment of funeral and IHT, that probate fees are transferred directly from an account without the need for an executors loan. We would also suggest that there is a significantly reduced fee where solicitors are used as the personal applications are those that will involve greater work and time and a less administrative role. Personal applicants should pay the fees proposed but, as currently exists, where an application is made by a solicitor there is a reduction using a similar format to that in place perhaps as a percentage discount.

Question 4: Are there other ways that executors should be supported to make payment of the fee and/or examples of banks or funding institutions who regularly assist with finances before the grant of probate? Please provide details.

Some retail and private banks are willing to release funds pre-Grant so that essential estate liabilities can be paid. This can, however, be a difficult process and there is no guarantee that the banks will agree to release funds. Even if some banks are willing to pay Probate fees, there will likely be administrative difficulties and delays as they familiarise themselves with the new fee structure – particularly in circumstances when Probate fees are at the higher end of the spectrum.

The current level of Probate fees means that many law firms agree to cover the Probate fee as a disbursement but that will be completely unrealistic for the proposed higher fees.

Some executors seek to obtain a loan to cover estate liabilities pre-Grant. However, this comes at a cost: there are arrangement fees, interest and it usually increases the professional fees of the solicitors advising on the estate administration. It also puts the executors in a difficult position because they are often asked to indemnify the lender against any losses etc at a time when the full value of the estate is unclear. In addition, there is no guarantee that a suitable lender can be found given the tight deadlines for paying IHT etc. There will likely also be significant practical difficulties for estates where the main asset is the family home which is already subject to a mortgage.

Subject to the above comments about the level of fees, one option would be to defer the payment of probate fees until, say, 3 months after the Grant has been issued.

Question 5: Do you agree with the proposal to remove grant of probate fees from the fee remissions scheme? Please give reasons.

We would be much more willing to agree with this proposal if the fee structure remains as it is.

Question 6: We would welcome views on our assessment of the impacts of the proposals set out in Chapter 1 on those with protected characteristics. We would in particular welcome any data or evidence which would help to support these views.

We do not feel there is direct discrimination to address, but clients who are vulnerable and/or elderly (but not being sufficiently disabled to fall within the DDA) will likely be put at risk by the new proposals. Such clients might be persuaded to make lifetime gifts to avoid Probate fees even if the effect is to leave them with insufficient assets to provide for themselves for the rest of their life.

In addition, the proposed increased IHT exemptions (i.e. the new main residence nil rate band) apply only to spouses and even then only in certain circumstances so the increased Probate fees would only be offset by an IHT saving for a limited number of people.

Solicitors for the Elderly March 2016