Victoria’s new ‘Death Tax’ – How does the probate fee increase impact you?

You may have seen recent headlines about a new “death tax” in Victoria. As of 18 November there has been a significant increase in probate fees, which can place a financial strain on executors.  

We’ve broken it down in this blog so you have a clear understanding of the changes and how you or your family could be impacted.

The background 

Funds held in a deceased bank account can only be used for funeral expenses, therefor executors of an estate will now need to find funds to pay the increased Court fees upfront.

At OFRM, we understand the additional stress this will cause executors at an already difficult time. This is why we will pay the Court fees upfront for all estates. This means a grant of probate or letters of administration may be obtained without a financial strain being placed on executors. The initial Court fee will be recouped from the estate once its assets have been called in. 

Here's a breakdown of what the increase entails and how you can prepare. 

What are probate fees? 

Probate fees are the charges associated with obtaining a grant of probate or letters of administration.

 A grant of probate of a Will is the Court’s way of declaring the deceased’s Will valid which then authorises the executors to deal with the deceased’s persons assets.

Letters of Administration grants authority to the next of kin to administer an estate where the deceased person did not make a Will or their Will was not valid.

In Victoria, these fees are set by the State Government and calculated based on the value of the deceased's Victorian assets. 

What has changed?
The fee increase means higher costs for executors who are managing estates of significant value. The recent rise has sparked concern, especially for those with substantial assets such as property. 

For estates valued at $500,000 to $1 million, the fees have increased moderately. For estates above $1 million the increases are more significant, with estates now to incur thousands of dollars in probate fees and set out in the comparison table below:

Why the increase?
The Victorian Government cites rising administrative costs and the need to streamline court services as the primary reasons for the fee hike. However, critics argue that the increased fees disproportionately affect families and executors dealing with high-value estates, particularly when those assets are not easily liquid, such as real estate. 

Who is most affected?
Property owners:
With Victoria’s property market seeing steady growth, even modest homes can push an estate’s value into higher probate fee brackets. 

Families managing large estates:
Estates with complex assets like multiple properties, investments, or businesses will now face greater costs. 

Regional Victorians:

Rising property values in regional areas mean that estates in these areas, once considered modest, now fall into higher fee brackets. 

How to minimise the financial impact
While probate fees are unavoidable in most cases, there are steps you can take to reduce their impact: 

1. Understand estate value: Get a clear understanding of the total value of the estate, including property, bank accounts, investments, and other assets. 

2. Plan ahead: Consider estate planning strategies, such as establishing trusts or gifting assets during your lifetime, to reduce the estate's taxable value. 

3. Seek professional advice: Consult with a solicitor or estate planner who can guide you through efficient planning and execution. 

What this means for Victorians
The probate fee increase highlights the importance of proactive estate planning. Families managing an estate should be prepared for higher costs and consider seeking legal advice to navigate the process efficiently.

The fee hike may feel like an additional burden during an already difficult time but OFRM Lawyers are able to alleviate that burden by initially paying the Court fee for the estate on your behalf, giving you one less stress to worry about.

If you need assistance with estate planning or navigating the probate process, don’t hesitate to contact us for tailored advice. Get in touch with our Wills and Estates team now via our online booking system: ofrm.com.au/book-now