Cost of living pressure continue beyond the grave – can your executors afford to administer your estate?

When someone passes away, the people appointed by the will to manage the deceased person’s affairs (the executors) are often required to apply for a grant of probate or letters of administration.

This document, issued by the Supreme Court of Victoria, confirms the validity of the will and provides to formal authority for the executors to deal with the assets and administer the estate.

 

The present application fee for obtaining a grant of probate in Victoria (not including legal fees) ranges from $68.60 for estates worth less than $500,000, up to $2,318.90 for estates worth more than $3 million.

Proposed Change

The Victorian government is proposing to increase probate fees by up to 650 per cent, which will significantly affect executors. The below tables outline the present fee structure, and the proposed new fee structure.

 

Current Fee Structure:

July 1, 2024 to June 30, 2025

Proposed Fee Structure

What does this mean?

If the proposed changes are implemented, this will greatly affect the executors of estates. As probate application fees are an upfront application fee that must be paid before the executors have access to estate funds, the executors are commonly required to pay this cost out of their own pocket (to be later reimbursed from the estate after probate is obtained and estate monies become available). Should the proposed changes be implemented, this will create a greater financial burden on executors and may even impede executors from being able to administer an estate.

 

With the significant increase in the value of properties and the most significant anticipated intergenerational transfer of wealth on the horizon, many “average” estates are likely to fall within the category requiring the payment of $7,000 to $15,000 in probate application costs.

Whilst it may be suggested that executors could borrow the funds to pay these fees, it is worth noting that, in accordance with existing estate laws, if an executor takes out a loan to pay the probate fees, they may not be able to recover the cost of the interest from

the estate.

 

At Coulter Legal, they can provide clients with personalised, expert advice to ensure the estate will be dealt with in the best way to suit the circumstances, including strategies to deal with these proposed changes.