Recently I wrote in relation to impending changes announced to Probate fees. These fees are as as described in the article “… so exorbitant there can be no other way to classify it other than the reintroduction of a death tax.”  You can read the article here.

On 4th March 2016, The Law Society of South Australia passed a motion to the Members of the Legislative Council condemning these fees.  The grounds for this are outlined below in the following memo:

The following is provided as background information for your consideration in relation to the Legislative Council’s vote as to the disallowance of the Supreme Court (Probate Fees) Variation Regulations 2016.

1. Probate filing fees have increased steadily (and at times, rapidly) each year by regulation.
2. In 2004, the fee was $565.
3. Over the next four years, the fee increases ranged from 3% to 4.14%.
4. In 2008, the fee was $651.
5. In 2009, it rose to $814, an increase of 25.04%.
6. In 2010, the increase was a modest 3.32%.
7. In 2011 it increased to $995, an increase of 18.31% over the previous year.
8. From 2012-2015, the fee increase each year has varied between 2.39% to 3.32%.
9. The graph below shows the annual probate fee increase since 2004 compared with the CPI increase over the same period.

10. Probate filing fees historically have applied to all estates, regardless of the size of the estate.
11. The Law Society does not object to annual review of fees.
12. The Law Society sees the advantage in lower fees for minor estates. However, fees valued at less than $200,000 represent a minor number of applications for probate.
13. The current increase in fees, however, represents an increase of between just under 35% and nearly 170% for the vast majority of applications for probate.
14. The fees are also now based on a gross rather than net valuation of the estate. That is unjust because it is a false valuation of the estate.
15. If a house has a gross value of $800,000 but is 80 per cent mortgaged, the real value of the estate to beneficiaries under the Will is $160,000. But they will now be charged a fee that ignores the mortgage.
16. In addition, the tiered system accompanying the gross estate valuation under the new regulations will result in even longer delays than are currently experienced in obtaining probate.
17. The new tiered system of fees will require staff of the Probate Registry to check each sub-addition and addition in each statement of assets and liabilities. This undoes previous efforts by the Probate Registry to avoid checking such statements and to shorten delays.
18. Historically, fee increases for grants of probate have not been used to upgrade the facilities at the Probate Registry – which remain very much dated and inefficient – nor have increased fees been put towards employment of additional probate staff to assist with processing and the reduction of delay.
19. Filing fees in SA are already well above the national average.
20. In WA, a flat fee of $304 applies.
21. In Victoria, the fee is $306.
22. In Queensland, the fee is $637.40.
23. In Tasmania, the fee is $400 for grants of an estate worth less $250k; over $250k the fee is $750.
24. NSW has a tiered system, much the same as that proposed in SA, but the SA fees are even greater than those of NSW.
25. In SA, the fee for an estate valued between $200-$500K is $1,500 whereas in NSW the fee for the same tier is $953. For estates valued between $500K-$1M, the new fee in SA is $2,000; in NSW, the fee is $1,460. For estates valued at more than $1M, the fee in SA is $3,000; in NSW, the fee is $3,243. NSW has yet another tier for estates worth more than $5M.
26. The Society commends the disallowance Motion to the House and submits the Motion is in the interests of removing a burdensome and unfair method for the charging of probate application fees.

The fees are so exorbitant there can be no other way to classify it other than the reintroduction of a death tax.

Probate: When someone dies with a Will it is common for the executor named in that Will to apply for a grant of Probate. Probate is the formal proving of the Will, the authority of the Supreme Court to the executor to carry out various duties on behalf of the estate.

If there is no Will then it is most commonly a close relative or family member who may apply for administration to obtain the same legal authority as an executor.

If the deceased held land in their name or bank accounts of, usually, more than $25,000, Probate will be required to effect the proper administration of the estate.

Filing Fee: It is common and well understood that whenever you lodge a document (undertake a transaction or formally deal in some way with the government), a fee will be involved. While usually small in nature, they are annoying, but perhaps arguably necessary for the proper functioning of government.

On occasions, a fee, like stamp duty, can be quite high. On the transfer (purchase) of property valued at $500,000 stamp duty of $21,330 is payable, together with another government fee (registration of the transfer at the Lands Titles Office) of $3,751.50.

When an application for Probate is lodged at the Supreme Court a filing fee is payable. Fair enough, you might say, however, in recent years the fee has increased significantly.

I recall not too long ago the fee was less than $700, a steady increase over the years had the fee set at $1,114 which commenced from 1 July 2015.

By comparison;
Western Australia $304
Queensland $637.40
Victoria $306
New South Wales operates under a sliding scale as follows;

Value of Assets                                                                                             Filing Fee
Less than $100,000.00                                                                               Nil
$100,000.00 or more but less than $250,000.00                                $702.00
$250,000.00 or more but less than $500,000.00                                $953.00
$500,000.00 or more but less than $1,000,000.00                            $1,460.00
$1,000,000.00 or more but less than $2,000,000.00                        $1,946.00
$2,000,000.00 or more but less than $5,000,000.00                        $3,243.00
$5,000,000.00 or more                                                                              $5,406.00

New Fees for South Australia:  There is now a new sliding scale application fee approach to be used from 28 February 2015 in South Australia, those fees are as follows;

Value of Assets                                                                                              Filing Fee
Less than $200,000.00                                                                              $750.00
more than $200,000.00 but less than or equal to $500,000.00      $1,500.00
more than $500,000.00 but less than or equal to $1,000,000.00   $2,000.00
more than $1,000,000.00                                                                          $3,000.00

Some additional comments:  The value used to work out the filing fee is the gross value, meaning it matters not what debts or liabilities the deceased had. For instance, if the deceased owned a property valued at $500,000 but there is an existing mortgage to the bank of $400,000 the filing fee for Probate will be $2,000.
You can imagine how easy it is nowadays for a deceased estate, with a simple residential home in suburban Adelaide, to be valued at greater than $500,000. What that means in reality is, that where once a filing fee of would have been $1,114 it is now $2,000.
There is an argument that the sliding scale will benefit those small estates, where a grant of Probate is required with assets comprising no more than $30,000 or $50,000. However, it should be highlighted, that in my experience, they are not common.
By sheer mathematics, the gains will far outweigh the slight loss at the lower end.

The kicker:  Here is the real rub.
The fees payable, despite being paid to a Registry of the Supreme Court, are funnelled into the State Government’s general coffers. That is, it can be used to fund any project or cost of the government, including Politicians wages and entitlements.

Conclusion:  Once upon a time there was a tax after death – aptly named death duties. It was a revenue raiser for the government based upon the value of the assets of the deceased. There have been no death duties for many years.
The increase in filing fee, in such a dramatic and obvious way, cannot be classed as anything other than a tax on assets held by a deceased person. Although payable, funded, by the value of the assets themselves, what it actually means is less directed towards the beneficiaries of the deceased.
As a lawyer I am appalled at the blatant increase in such a manner. This is, in a nutshell, a Death Tax, and one beyond the control of both Lawyers and the Supreme Court.