Here in this affluent town of Staines many people are unaware of changes to inheritance tax, which will leave many people considerably worse off.
The changes likely to be effective from May mean that those inheriting estates over £2 million will pay probate fees of £20,000 following a proposal from the Ministry of Justice (MoJ).
The MoJ’s new rules provide a sliding scale of charges for probate fees. It had been the case that this had cost just £215 or £155 if you were assisted by a solicitor. Now though, an estate worth between £500,000 and £1m will attract a £4000 fee.
Only estates with a value under £50,000 won’t incur a charge.
Here in Staines property owners could be hit the hardest, and the implementation of the charges could result in consequences, which will impact many people in a negative way.
Problems include pressure upon older people to give away assets in order to avoid the charges, high risk measures being taken by elderly people, resulting in money not going to the correct beneficiaries and substantial loans having to be taken to apply for probate. This is completely separate to the issue of inheritance tax.
Being wills and trusts experts in Staines we would advise that it may be better for families to avoid the proposed charge by ensuring couples own their homes in joint names as joint tenants, but all the implications of this must be considered. Another idea might be writing assets in trust.
Sadly, this is just another new form of taxation, as the existing fees (£215 or £155) fully met the cost of the Probate service. Fees up to £20,000 are wildly disproportionate, but unless paid executors will not obtain the grant of probate to enable them to administer a deceased person’s estate.
Estates would also pay Inheritance tax on the fees, which are not deductible when working out the tax payable.
It means that beneficiaries, who are asset-rich but cash-poor, would have their lives badly affected by the need to raise such considerable sums to obtain probate. It is also not in doubt that on many occasions this will involve the expense of a bank loan to pay the fee until the house or other assets can be sold.
Some older people will feel pressurised by families or feel themselves that it’s necessary to give away assets in their lifetime, to avoid the proposed charges. This is why a trust might be advisable, but many will be unaware of this and could take high risk gambles.
Sadly, not all older people can rely on their children to act in their best interests. It could result in a risk of giving up personal control and some children will get divorced or end up in financial difficulties with the home then at risk.
In all, it’s not good news for many in Staines and is a matter of some urgency for some and we hope those affected by these proposed changes take action.
Here at Dale and Newbury in Staines our wills and probate solicitors have between them over 65 years’ experience, we are able to advise on how to deal with this change as best as possible.
Wills and trusts and estate planning is something which is so vital that risks cannot be taken. If you wish to know more please call us today. We can help.