Our fees and disbursements

Our fees

We charge on a time-spent basis which means that we will only charge you for work we have completed on behalf of the estate. Our initial meeting is at no charge to the estate and we use this as an exploratory session to gather information on the estate which will enable us to provide you with an estimate for the work to be carried out. Our fees are not based on a percentage of the estate and we do not charge a responsibility fee. You are welcome at any stage to request a timesheet showing the time spent attending to your matter and the tasks undertaken. We will always agree a fee estimate with you before starting work. The fee estimate will be reviewed as your matter progresses and it at any time it becomes apparent that more time will be needed to complete the work (for example if additional assets are located in the estate; HMRC have lodged an objection to a valuation submitted in the inheritance tax return), we will discuss a revised fee estimate with you before proceeding.

The hourly rates at which our time is charged depends on the experience of the individual who works on each task. We make every effort to ensure that tasks are handled at the appropriate and most cost efficient level. For example, an experienced solicitor will complete and talk you through the contents of the inheritance return while a paralegal (supervised by a solicitor) will usually liaise with asset holders to obtain the probate valuation of assets within the estate and deal with the daily administrative tasks. See our team section for the hourly rate of each individual who may work on your matter.

Disbursements

The administration of an estate will incur administrative costs that can be paid from the estate. We will pay these in the first instance and they can be repaid from the estate when it has the funds to do so. These costs, known as disbursements, include:

  • Probate application fee of £300 plus £1.50 per additional court certified copy (typically one copy is required per asset);
  • Asset holders, such as those that hold shareholdings, may charge a fee for a probate valuation which will vary on a case by case basis;
  • Bankruptcy-only Land Charges Department searches (£2 per beneficiary). This is to protect the Executors from mistakenly making a payment to a beneficiary that is subject to a bankruptcy order;
  • Notice in the London Gazette and in a local newspaper to alert potential creditors to the estate of approximately £150 – £200 plus VAT. This is to protect the Executors against unexpected claims from unknown creditors.

Case studies

To help provide you with an estimate of our likely fees, below we provide examples of three estates of varying complexity which we have administered on behalf of Executors our approximate fees in each case. The precise details of the estate have been amended to protect client confidentiality.

Example 1

The deceased’s Will left everything to his wife, so there was no inheritance tax liability.

The majority of the deceased’s assets; being a property worth £800,000 and bank account funds of £150,000, were held jointly with his wife. A grant of probate was not required for the transfer of these assets to her. However, the deceased’s shares in the company of which he had been a director, which were worth approximately £250,000, and around £13,000 in sole bank accounts did require a grant in order to be transferred. As such, an application for probate to the Probate Registry was required.

Despite lifetime gifts made by the deceased increasing the value of the estate that was subject to inheritance tax, the estate fell below the threshold required for a formal inheritance tax account to be filed with HMRC. No official clearances were needed prior to applying for probate. A simpler form, known as an IHT205 could be filed with the application for probate that was sent to the Probate Registry.

The deceased had appointed his wife, close friend and only son as executors of the estate. The son and friend were overseas at the time of death and opted to renounce their appointment, leaving the wife as the sole executor. We assisted the deceased’s wife, with the application for probate, including liaising with our team of tax advisors on the valuation of the deceased’s shares in his company.

Once the grant was obtained, we also assisted the family’s financial advisor with claiming the pension benefits owed to the spouse (these fell outside the value of the estate for inheritance tax purposes) and transferred the title of the family home into the wife’s sole name.

Our fees for assisting the executor of this estate came to around £2,000 plus VAT and disbursements.

Example 2

The estate consisted of a bank account in their sole name worth around £100,000, a share portfolio of £25,000 and various life assurance policies that totalled roughly £280,000. In addition the deceased owned a half share in a property valued at over £2m with the surviving spouse which was subject to a mortgage of £200,000. The entire estate passed to the deceased’s surviving spouse in accordance with his Will so there was no inheritance tax to pay. However, given the value of the assets in the estate a full inheritance tax account was required to be filed with HMRC and appropriate clearances obtained.

Some of the deceased’s assets were also owned in joint names so no grant of probate was required to transfer the assets. We also liaised with the deceased’s financial advisor as they dealt with the redemption of the life assurance policies and transfer of pension benefits to the surviving spouse.

In addition, estate accounts were prepared so that there was a clear analysis of the assets and liabilities. This could assist with the application for the transfer of the tax free allowance on the death of the surviving spouse.

Our fees for assisting the executor of this estate came to around £4,000 plus VAT and disbursements.

Example 3

The estate comprised a residential property to be marketed and sold, a portfolio of shares worth £100,000 and some funds in various bank accounts. As the estate passed to the deceased’s children rather than to a surviving spouse or a charity, the entire value of the estate was chargeable to tax.

The deceased also had a right to income from a separate trust and consequently the value of the assets held in that trust formed part of the chargeable estate for inheritance tax, even though the beneficiaries of the Will were not entitled to the trust assets. This meant working with the representatives of the trust to ensure that the correct amount of tax was paid and the funds transferred were correctly allocated by HMRC.

As the estate included a residential property that passed to the deceased’s children, we calculated the value of the additional tax allowance, known as the “residence nil rate band”, available to the estate. As the property sold shortly after the date of death for more than the original valuation obtained, we liaised with HMRC to agree a final probate figure.

Taking all of the above into account, the inheritance tax liability amounted to around £120,000. We arranged for the tax to be paid on an instalment basis so that the funds would not have to be found to meet the entire tax bill until the property was sold. We also liaised with the companies that held the cash and the shares to settle the tax bill that was immediately payable.

The Will included money gifts which had to be paid before the distribution of the estate was passed to the children. Once the tax and the gifts were paid, we drafted estate accounts that were approved by the Executors before distributing the assets to the children.

Our fees for assisting the Executors of this estate were around £10,000 plus VAT and disbursements.

Example 4

The estate consisted of the deceased’s residence; a farm; funds in various bank accounts; valuable personal possessions; and livestock. The deceased had given many valuable gifts during their lifetime but kept these at their home, which meant they remained part of their estate for inheritance tax purposes under the “gift with reservation of benefit” rules. The value of the estate came to approximately £2m. The estate passed to the deceased’s children so there was inheritance tax to pay.

As in Example 3 above, the deceased’s residence passed to their children, so we calculated and applied the “residence nil rate band” that was available to the estate to reduce the inheritance tax bill. We also drew on the expertise of our tax specialists to advise the executors on the availability of Agricultural Property Relief and the criteria for this relief to apply.

A complication was that significant liabilities and the inheritance tax bill meant that not all the gifts made in the Will could be paid. We therefore advised the executors on the order of priority as to which gifts could be paid and which failed.

We worked in tandem with our firm’s tax team to prepare and submit the deceased’s tax return for the year up to his date of death and subsequently the estate’s tax returns over the period of administration to pay any income or capital gains tax.

Our fees for assisting the Executors of this estate were around £30,000 plus VAT and disbursements.

Example 5

The estate had an interesting mix of assets which qualified for Business Property Relief (i.e. no inheritance tax was payable on these assets); assets which had the potential to qualify for Business Property Relief; as well as a wide portfolio of investments and shares with four different investment managers totalling over £5million. The net value of the estate was £15m. In addition, the deceased had made numerous cash gifts in his lifetime. The Will created a discretionary trust over assets that qualified for relief from inheritance tax. The residue of the estate was left on a flexible life interest trust for the surviving spouse.

Drawing on the expertise of our tax advisors a report and analysis on the availability of Business Property Relief over the assets which qualified for relief and had the potential to qualify for relief was produced. Our internal experts were able to value the various private companies owned by the deceased.

The administration of the estate required a careful analysis of the lifetime gifts made by the deceased in the seven years prior to his death as well as analysis as to whether any of the gifts made could be exempt from inheritance tax. We did this by reviewing the deceased’s income and expenses in the seven years prior to his death with a view to establishing if any of the gifts would qualify for relief from inheritance tax. The value of the gifts resulted in an inheritance tax charge of around £500,000.

The Will (drafted by the deceased’s previous advisors) made provision for the surviving spouse and children which were not suitable. Our legal and tax team were able to find a solution that worked for the family from not only a legal perspective but one which was tax efficient as well.

Due to the nature of the investments and the amount of income earned during the administration period, the estate tax returns were complex and having our legal and tax advisors working in tandem ensured a smooth administration process for the client.

Our fees for assisting the Executors of this estate were around £140,000 plus VAT and disbursements, representing less than 1% of the value of the estate.

Part of the legal team at Moore Kingston Smith, Alison Morris has been a private client solicitor for over 18 years, working with families and individuals in the preparation of Wills, obtaining Probate and dealing with the administration of estates, advising on estate and tax planning including lifetime gifts and post death Deeds of Variation,… Read more

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