Payne Hicks Beach UK probate and estate administration fees information

Estate administration is the process of dealing with someone’s estate after their death.

It is referred to as probate when the deceased left a valid will. In this case, the executors named in the will would apply for a grant of probate to administer the estate.

If there is no will, meaning that the deceased was intestate, close family members would usually apply for a grant of letters of administration to give them authority to become the administrators of the deceased’s estate. Executors and administrators are here both referred to as personal representatives.

Every estate administration is handled in two stages.

Stage one covers all of the steps up to the point at which we can apply for the grant of probate (or the grant of letters of administration where there is no will). These steps will vary from one estate to another, but normally will include:

• Establishing who will administer the estate and who is entitled to receive the deceased’s estate under the will or on intestacy
• Calculating the assets and liabilities of the estate
• Accounting for the inheritance tax due on the estate (if any) by submitting a comprehensive tax return to HMRC and arranging payment of the tax
• Applying and waiting for the grant of probate (or letters of administration)

Stage two generally involves the following steps:

• Collecting in the estate
• Paying any liabilities of the estate
• Accounting for income tax and capital gains tax which has arisen during the estate administration period by filing the necessary tax returns and arranging the payment of the tax due to HMRC
• Preparing estate accounts
• Distributing the estate

After stage two has completed, any trusts created on death can be set up and administration by the trustees can begin.

Our fees are usually calculated by reference to our probate team members’ hourly rates and the amount of time we spend working on an estate.

Our hourly rates range from £535 to £760 for partners and £100 to £490 for other fee earners. These rates do not include VAT at 20% or disbursements (which may also be subject to VAT at 20%). Our hourly rates are reviewed every year on 1 June.

We always ensure that work is resourced at the correct level of expertise and at appropriate and efficient hourly rates. Members of the estate administration team have specialist experience ranging from 18 months to over 15 years working in this area. All work is supervised by partner and head of estate administration, Dean Ryan.

We provide a quote for a bespoke fee estimate at the start of every estate administration which is based both on the specific information provided to us and on our previous experience. We always try very hard to remain within that estimate, but sometimes circumstances outside of our control mean that we have to revise our fee estimate. If that happens, we keep you fully updated.

We do sometimes charge a fixed fee when requested to do so, but this may give rise to higher fees overall than when paying on the above hourly rate basis. We never charge a percentage of the estate value but we do sometime reference this when giving estimates of our likely charges.

No two estates handled by Payne Hicks Beach are ever the same. Each estate presents different levels of complexity and unique issues to consider. We approach every estate administration in a bespoke manner and therefore the fee ranges below are only a general indication of the likely fees and time involved.

Small, simple UK estates worth up to £2.5 million

In the following example our fees up to the application for a grant of probate would be likely to be in the region of £8,000 to £12,000 plus VAT and disbursements.

Alex had a valid will and his executors are happy to act in the probate. He owned one house in England, a few personal possessions, a couple of bank accounts in his sole name and some investments held in a managed portfolio. There was no trust created in his lifetime or under his will. He had no international elements to his life and owned no foreign assets. He left his entire estate equally to his two adult children who are straightforward to identify. Alex’s estate is exempt from inheritance tax. There are no claims against his estate and no disputes amongst the beneficiaries, personal representatives or in relation to his will

VAT is chargeable on our fees at 20%.

Medium value, mid-complexity UK estates

In the following example our fees up to the application for a grant of probate would be likely to be in the region of £20,000 to £30,000 plus VAT and disbursements.

Sara had a valid will with one codicil and her executors are happy to act in the probate. She inherited her late spouse’s transferable nil rate band for inheritance tax. Sara’s estate is valued at £3.5 million and requires an inheritance tax return. She owned three UK properties, one of which was rented out. She owned a couple of valuable paintings and had multiple bank accounts and shareholdings. Sara had no international elements to her life and owned no foreign assets.  She leaves her estate to a mixture of child, adult and charity beneficiaries. There are no claims against her estate and no disputes amongst the beneficiaries, personal representatives or in relation to her will

VAT is chargeable on our fees at 20%.

High value, UK complex estates

In the following example circumstances our fees would be likely to be in the region of £35,000 to £45,000 plus VAT and disbursements.

Maya did not have a will in place when she died. Her family need advice on the intestacy rules and on who can administer her estate. They take a while to engage with the role of administrator. Maya had a spouse and infant children. She ran and part-owned a successful company which may be eligible for business property relief from inheritance tax, but this will require detailed investigation and advice. She also owned a couple of jointly-owned UK rental properties and some farmland which needs to be assessed for agricultural property relief from inheritance tax. Maya had let her tax affairs slide somewhat during her lifetime which will need to be addressed. Maya made some large gifts during the past few years and her estate is valued at around £6 million. Maya had no international elements to her life and owned no foreign assets.  There are no claims against her estate and no disputes amongst the beneficiaries, personal representatives or in relation to her will.

VAT is chargeable on our fees at 20%.

High value, cross-border complex estates

In the following example circumstances our fees up to the application for a grant of probate could be in the region of £40,000 to £70,000 or more plus VAT and disbursements:

Omar was born outside the UK but lived here with his family for many years. He had an English will and also wills in other countries to cover his property there. His estate is worth over £25 million. He also had an offshore trust in place. His English executors need advice on Omar’s tax position and where in the world his tax liabilities lie and whether double tax treaties apply, as well as the extent to which his English will covers his assets. Advice from international experts will be required. Omar had numerous business and partnership interests and had set up a charity in his lifetime. He excluded one of his children from benefiting under his will.

The fee estimates above usually include:

• Advising on who has the right to administer the estate and their role
• Identifying which type of probate application you will require
• An information-gathering meeting with the personal representatives / administrators where we would advise on the process of estate administration and on who is due to benefit from the estate
• Reasonable levels of correspondence with beneficiaries and personal representatives
• Arranging statutory notices to check for potential unknown creditors
• Reasonable levels of correspondence with asset holders e.g. banks to obtain valuations and, later, to release assets
• Inheritance tax advice, calculations and compliance as appropriate and reasonable
• Application for grant of probate or letters of administration

After we have made the application for a grant of probate or letters of administration we set out our fee estimate for the rest of the estate administration. This is because we are very familiar with the estate by that stage and so we are able to provide a more accurate estimate for the work required to complete the estate administration.

The fee estimates we provide for estate administration work generally do not cover:

• Post-grant work as explained at “What is included in the fee estimates?” above which might include
  • preparing estate accounts
  • arranging bankruptcy searches
  • preparing income and capital gains tax returns for the deceased and/or estate
  • organising the payment of debts and expenses
  • informing beneficiaries about their share of any reportable income
  • making distributions to beneficiaries and/or
  • setting up any trust created under the will or intestacy
• any conveyancing (i.e. buying or selling land and property)
• any tax disclosures which may need to be made to regulate the deceased’s lifetime tax affairs
• Compliance checks by HMRC for the inheritance tax position of the estate
• any post-death planning in relation to the estate (e.g. varying who receives a gift under a will)
• dealing with a personal representative who no longer wishes to act
• queries about the validity of the will
• advice about lifetime trusts
• securing, clearing or managing the deceased’s property (including rental properties)
• bankruptcy searches against non-UK beneficiaries
• complex tax returns for the deceased and/or estate
• advice relating to any will dispute or estate dispute
• advice to the beneficiaries in relation to their tax position

Every estate is unique, so the information provided in this guide is merely an indication of the likely fees.

However, the following can generally add to the time and cost involved in administering an estate:

• if there is no will or there is a dispute about the validity of a will
• if there are codicils
• income tax and/or capital gains tax calculations for the estate or relating to the deceased’s lifetime
• assets in joint names / multiple assets
• international elements to the deceased’s life (e.g. non-UK resident or assets in foreign jurisdictions)
• where abatement occurs e.g. because there are multiple legacies in the will but the remaining assets (the residue) are not enough to cover the estate’s debts and expenses so the legacies must be reduced (abated) accordingly.
• where there is a gift in a will of a specific item which has since been given away (ademption)
• if the deceased had multiple liabilities
• if the deceased was non-compliant with tax affairs
• if the estate becomes insolvent i.e. the estate’s debts and expenses outweigh its assets, resulting in reduced payments to creditors
• conflict within the family or between the personal representatives
• disputes / detailed investigations about the status of lifetime gifts (potentially exempt transfers i.e. “PETs”)
• litigation against the estate or any other dispute relating to the estate
• if the deceased was running a business or owned agricultural assets
• if the Department for Work and Pensions reclaims overpaid allowances
• HMRC enquiries about income tax or tax credits
• HMRC enquiries about the Inheritance tax position of the estate
• if tax reliefs need to be claimed
• if there are large numbers of beneficiaries or gifts in the will
• if there are gifts to charity
• if items in the estate need to be sold
• if there is a trust either during the deceased’s lifetime or in the will
• if any or all of the following inheritance tax points arise: the transferable nil rate band, residence nil rate band or 36% rate for charitable gifts
• advice relating to how to fund inheritance tax
• if there are shareholdings in the estate outside a managed investment portfolio
• if the deceased owned unlisted company shares or partnership interests
• if the personal representatives, beneficiaries, asset holders, HMRC or other third parties do not respond or provide information in a timely fashion
• urgency

Every estate is unique so, as above, the information provided in this guide is merely an indication of the likely fees.

However, the following can generally help to reduce the time and cost involved in administering an estate:

• valid will in place
• no codicils
• deceased’s tax affairs fully up to date and compliant
• deceased’s paperwork in order in relation to assets, bank accounts etc.
• assets in deceased’s sole name
• small number of assets
• simple inheritance tax position or no inheritance tax return required
• UK-only assets and UK resident deceased
• will makes only a gift of the main estate (“residue”) to small number of people, as opposed to multiple specific gifts and/or large number of recipients
• deceased had no liabilities
• estate remains solvent
• family members and personal representatives all responsive and engaged
• no lifetime gifts or details of lifetime gifts easily accessible
• no disputes relating to the will or estate
• managed investment portfolio with responsive investment manager
• the deceased had simple assets and was not e.g. running a business or farm
• no tax reliefs need to be claimed
• it is clear how the inheritance tax will be funded
• no gifts of any of the residuary estate to charity
• items in the estate do not need to be sold
• no trust in lifetime or in the will

Disbursements are charged in addition to our time costs. They are costs which we pay on your behalf to third parties, such as court fees. We handle the payment of the disbursements on your behalf to ensure a smoother process.

Where VAT is chargeable on disbursements it is charged at a rate of 20%.

Other disbursements may include personal representatives’ insurance and third party professional fees such as accountants, valuers for more complex assets, surveyors and foreign lawyers. If this were the case, quotes would be obtained and shared with you for approval.

There is usually no longer a need to pay to swear an oath in order to obtain a grant of probate or a grant of letters of administration. The application is generally now submitted online with a statement of truth instead.

The time for completing the administration of an estate will vary from one unique estate to another and will increase or decrease where there are factors included above under “What will add to the time and cost of administering an estate?” or “What will reduce the time and cost of administering an estate?”

As a generalisation, however, for small, simple estates as detailed under “What is probate or estate administration likely to cost?” above with none of the delaying factors listed under “What will add to the time and cost of administering an estate?”, we would expect the whole process to take 12 – 18 months, allowing 9-12 months for stage 1 to secure the grant because of delays at HMRC and the Probate Registry and 4 – 6  months for stage 2 to collect the assets, settle liabilities and distribute the assets.

For medium and high value estates with more complex issues, as detailed under “What is probate or estate administration likely to cost?” above, the process will take much longer and may take 2 years or more to complete.

For more information about probate please contact Dean Ryan.