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Private Client blog
Opinions and insights from our Private Client team
Private Client Blog
Opinions and insights from Roythornes' Private Client team
There has been a good deal of animated coverage in the press in recent weeks over the proposed probate fees increase. The fee payable to the Probate Registry on application for the Grant to administer the deceased’s estate is currently set at £155 if a solicitor makes the application and £215 if anyone else applies. Under the government’s proposals, fees are set to rise on a sliding scale of up to £20,000 depending on the value of the estate passing under the Grant of Probate.
Recent press articles have suggested that to avoid sizeable probate fees being charged on your estate you should hold as many assets as possible, including holding property as ‘joint tenants’. This would mean that those assets would pass automatically to the surviving co-owner on the first death through the doctrine of survivorship, and would not form part of your estate for the calculation of the fee payable to the Probate Registry.
But it’s not that easy. It isn’t possible to hold all assets jointly; ISAs for example must be in sole names, and it is not necessarily a good idea to jointly hold all possible assets that can be jointly held. There has after all been significant press coverage recently of the high cost of care home fees, with comments on how quickly care fees can deplete an individual’s life savings, including property.
Holding property as ‘tenants in common’, meaning each owner has their own specific share and interest in the property (as opposed to joint tenants where the property passes automatically to the co-owner on first death) can be an important and entirely appropriate method of estate planning both for asset protection and for inheritance tax planning.
For many of my clients who have been married before and have children from those previous relationships, holding property as tenants in common is a way to ensure that their interest in the property can be ultimately inherited by their children, rather than passing directly to a new partner/spouse and potentially to their children.
Holding property as tenants in common also means you can put your property interest into a nil rate band discretionary trust under your will. This can be a valuable method of tax planning and asset protection – it allows your trustees to review beneficiaries’ personal circumstances as well as taxation implications after your death, including ensuring growth in assets is outside of the estates of potential beneficiaries.
The proposed probate fee increase has provoked critical responses far and wide, notably from the Parliamentary Joint Committee, with suggestions that the increase amounts to an additional death tax and that the Lord Chancellor has exceeded her statutory powers. It has also been highlighted that the increased fees are at odds with the well-established spousal exemption (assets passing to spouses on death do so free of inheritance tax) since a widow(er) could, under the proposals, find themselves having to pay sizeable fees on their spouse’s death.
It’s never a case of one way being correct for everyone, despite what the papers may lead you to believe. If you or your family are considering your own estate planning, it is crucial to take proper advice, tailored to your personal circumstances, before making any decisions based on what you read in the press. Our Private Client team specialises in tax and estate planning and we will be pleased to guide you through the impact of this proposed change.
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