Probate Administration Fees Reasonable ?

talby

Hi everyone,

I was just wondering if someone could proffer advice about some probate fees which I’ve been quoted for.

My mother passed away in June, and I am the executor of her will, and the main beneficiary (with a very small amount going to her brother). The estate is worth anything from to 500K - 600K depending on property valuations (the estate is about 90k cash and 2 houses, of which one she lived in with me for many years). I’ve been quoted a fixed fee 9k (7.5k + vat) from a specialist probate company to do all the estate and probate administration, her outstanding tax return, and the property conveyancing, and also doing my will (I need to rewrite it). They will also advise about ways in which the IHT tax bill can be reduced (e.g. by a deed of variation). They say it will take some more months more to complete.

A fee of 9k is a lot of money to me, and I was up to now trying to avoid this route by doing the paperwork myself, but although I’ve begin the process and closed off her accounts (just property valuations to go before the IHT400 form) it is all becoming time consuming now, and more complex now I’ve looked at the IHT400 form. I could probably make a stab of doing it myself but I’m a bit wary at this point, especially as I usually hate paperwork. I like the idea of someone else taking the indemnity and workload, and also I like the idea of getting cover from HMRC by employing someone, but it’s a lot of money in my world.

The additional complication is that, although my mum gifted half the main house to me as tenants in common 6.5 years before she died, and we were advised that this would be a PET (i.e. exempt from IHT), this may not be the case after all and it may need to be classified as a “Gift with reservation”, even though we split all the bills, etc. (I may well start a thread about this one !). So the IHT bill could be larger than I expected anyway.

I would be most grateful if anyway has any thoughts about whether a 9k fee on a 500k estate is reasonable or not.

Thanks in advance
Talby

Pee

Speak to a local solicitor. That seems a lot and it makes sense to compare prices for a professional. One option would be for you to instruct a solicitor to go through the forms with you. On an hourly rate of two hundred pounds that should be less than one thousand.

troubleinparadise

Dear Talby,

I'm sorry to hear about your sad loss of your mother in June.

I did the IHT 400 for my mother's estate, and whilst initially it looked daunting, when it came down to it, it wasn't really that bad.

I submitted it, ticking the box to ask HMRC to check it. Which they did; I had made one error in claiming something which wasn't exempt, and which was rectified by paying the outstanding tax amount immediately, there was no penalty for this error.

The things I thought they might query - overseas shareholdings which required quite complicated currency & share valuations (which was principally why I asked them to check it) seemed to be ok - but they queried the house valuation with the local District Valuer despite a professional valuation - again ok.

So don't be afraid of tackling it yourself if you feel up to it - and using professionals on the odd part that might be beyond you. I had all the paperwork anyway, had to send a few letters with death certificates, but nothing that was too arduous. It seemed silly to spend thousands on those.

I spent virtually nothing, but it did take organisation and time. You do have 6 months in total though....

A deed of variation and new Will would need a professional, and is most definitely worth spending on.

ps My mum got stung for £4k for a mirror will administration (spouse to spouse) by a firm of solicitors - unfortunately she handled all this herself and didn't query it or discuss it with other more sceptical family members. So I'm afraid there are some dubious practitioners out there....

Mojisola

talby wrote: »

My mother passed away in June, and I am the executor of her will, and the main beneficiary (with a very small amount going to her brother).

The estate is worth anything from to 500K - 600K

The money might seem a lot to you now but as a proportion of the estate - and it is the estate which will pay the bill - it's not so much but it's worth getting quotes from some other solicitors.

Work out the bits that you are happy dealing with and then ask them to quote for doing the rest.

joerugby

There are some complexities in this estate which if wrongly handled might cost you more than £9,000 in the long run

Get some quotes from local solicitors. Meet them face to face to understand what they would do for you, then decide.

Caladan

Sorry if I'm completely wrong here, I've never had to deal with an estate but I thought Probate services were typically somewhere around 2-6% of the estate value depending on complexity etc?

Even at the lower end of the scale (i.e. 2%) that would be £12k for the management if the estate was £600k.

talby

Many thanks for the replies. Apologies, I should have made something clear - I've already signed up with this company on friday afternoon, after a chat at my house with their specialist, but I'm now having second thoughts and am in the 14 day cooling off period now.

Also the estate valuation may not be 500k - 600k but 420k - 600k - it all depends on whether her gift to me of half the house we live in qualifies as a PET gift or not.

troubleinparadise wrote: »

Dear Talby,

I'm sorry to hear about your sad loss of your mother in June.

I did the IHT 400 for my mother's estate, and whilst initially it looked daunting, when it came down to it, it wasn't really that bad.

I submitted it, ticking the box to ask HMRC to check it. Which they did; I had made one error in claiming something which wasn't exempt, and which was rectified by paying the outstanding tax amount immediately, there was no penalty for this error.

<Snip>

Thank you for your kind words. I'm interested in your point about penalties - are you saying that if (for example) I put down the half-house gift from my mum, and they turn round and say it's not a gift but is taxable after all, that they may give me a penalty over and above the tax owed ?

joerugby wrote: »

There are some complexities in this estate which if wrongly handled might cost you more than £9,000 in the long run

Get some quotes from local solicitors. Meet them face to face to understand what they would do for you, then decide.

Yes, it's the complexities which worry me slightly - I really don't want to get into a long drawn out dispute with HMRC, the VOA or anyone. I wish I had a time machine (both ways !) then I would know if I need help or not ....

Caladan wrote: »

Sorry if I'm completely wrong here, I've never had to deal with an estate but I thought Probate services were typically somewhere around 2-6% of the estate value depending on complexity etc?

Even at the lower end of the scale (i.e. 2%) that would be £12k for the management if the estate was £600k.

They have given me a lower fixed price quote on this occasion (their normal fees are on a sliding scale) I think because I also indicated that in the future I would want to do better inheritance tax planning (trusts, etc) on my estate, with them. Also I've been quite well organised up to now.

Thanks again
Talby

talby

Without wishing to take the thread off-topic, I've just read some articles which scare me deeply about the way HMRC can operate, and their IHT penalty regime, and why I'm now even more worried about going solo anyway .... the articles are over on another UK "taxation" website about "Executor on trial" and "Saints and sinners" and are about how executors can and are fined in the most ridiculous ways even if they've done nothing wrong. I'm not allowed to post the links but I found them from a simple google of "iht penalties".

Molly2473

don't be scared about HMRC, I deal with my fathers estate and believed we should get business relief on his business which I took over, it took me 2 years but Ive done it ! got 100% relief ! little me won against the mighty HMRC

troubleinparadise

Dear Talby,

I can't give you a clear answer about penalties, only my own experience.

I know that when you fill out, sign and submit forms you are warned that there might be penalties for errors/omissions etc - but as mine would be very much unintended & with no professional input I really hoped they would be treated leniently - which they were.

I do realise that ignorance is no excuse in law, especially with tax, but I was as transparent as I could be, and errors really would be down to human mistakes, not deliberate means of evading tax.

I think HMRC (and now I'll be shot down for saying this!) aren't out to get you - they will anyway! - but you do have to comply, and as long as you do when you've made a mistake it all gets sorted in the end.

My personal experience was straightforward - and perhaps I've been fortunate - maybe others will come forward with other stories.

But do what feels right for you - I can't deny that I did feel the pressure, and it's not for everyone. In the big scheme of things, the numbers you talk of really do make the price of someone else handling the probate at the cost they quote a small amount out of the big pot, and it will take the stress away from you. Its just up to you to live with paying £10k maximum when ultimately you will end up with £500k - not a crazy amount of money, especially if you can just sleep peacefully without worrying. (and the will and deed of variation included - not a silly cost at the end of the day).

joerugby

talby wrote: »

Many thanks for the replies. Apologies, I should have made something clear - I've already signed up with this company on friday afternoon, after a chat at my house with their specialist, but I'm now having second thoughts and am in the 14 day cooling off period now.

Also the estate valuation may not be 500k - 600k but 420k - 600k - it all depends on whether her gift to me of half the house we live in qualifies as a PET gift or not.

Thank you for your kind words. I'm interested in your point about penalties - are you saying that if (for example) I put down the half-house gift from my mum, and they turn round and say it's not a gift but is taxable after all, that they may give me a penalty over and above the tax owed ?

Yes, it's the complexities which worry me slightly - I really don't want to get into a long drawn out dispute with HMRC, the VOA or anyone. I wish I had a time machine (both ways !) then I would know if I need help or not ....



They have given me a lower fixed price quote on this occasion (their normal fees are on a sliding scale) I think because I also indicated that in the future I would want to do better inheritance tax planning (trusts, etc) on my estate, with them. Also I've been quite well organised up to now.

Thanks again
Talby

The first thing you should do is cancel your contract now, within the cooling off period.

Then sit back and consider some of the advice you have been given.

If after that you choose to go back to the firm you have signed up with then fine, but give yourself some time