In my twenty years practising Wills and Probate law, I have seen a trend slowly develop towards lay Executors choosing to do more themselves, sometimes without any legal assistance. This practice of “DIY probate” may seem like a cheaper solution, but it may in fact have a costly outcome in the long run and if handled poorly.
The DIY Probate trend is understandable to a degree because the internet – which came along after I started practising – provides a huge amount of easily accessible information and guidance for the lay Executor. Executors will naturally want to minimise costs for the beneficiaries of the estate.
However, through these twenty years I have also seen family relationships becoming more diverse and complex, which in turn has led to an increase in challenges to Wills and claims against estates.
The role of an Executor can be an onerous one because, in essence, you have the responsibility of carrying out the deceased’s wishes and in addition, an Executor has fundamental legal duties to protect the estate for the beneficiaries and to administer the estate properly. All of course, very carefully and in accordance with the law.
Wills and Probate law has its complexities and, given that its practice is entwined with tax laws, if you then add to the mix the aforementioned family issues, it can be a challenge for even the most experienced practitioner.
If you do decide to go it alone without guidance from a lawyer, you need to be aware that there are legal and tax traps, complexities and deadlines. If things go wrong, you could be held personally liable.
If you have chosen to pursue a DIY probate route, one of the first things you should check is that the Will which you have in your possession is the last Will of the deceased. It is quite possible that the deceased may have made a later Will which revoked the one you have found. If the last Will came to light some time later and after you had dealt with the estate, the consequences could be disastrous.
You should do a thorough check of the deceased’s property to ensure that you have identified all of the assets and liabilities of the estate. The presence of an old savings account, some premium bonds or a holding of shares might not be immediately obvious unless you take the time to carefully check through the deceased’s paperwork.
You should also be on the look-out for evidence of gifts made by the deceased because such gifts might have to be declared to HM Revenue and Customs when you apply for Probate. If you miss something, you could be personally liable for any consequential loss to the estate.
Of all of the things which could catch out a lay Executor, taxation compliance is the one which crops up most often and which could potentially lead to some of the most severe consequences for the Executor and beneficiaries.
Many people do not appreciate how an estate’s assets and income are taxed, and there are a number of ways in which an Executor can get it wrong with HM Revenue and Customs.
There are risks around the correct interpretation of Wills, particularly those which are homemade, and, commonly, situations can arise where the wishes of the deceased may not be capable of fulfilment. This might be because a beneficiary has died or cannot be traced. An asset they specified in their Will might no longer exist, or there might not be enough cash in the estate to pay all debts, liabilities and taxes.
In all of these situations, and, in the absence of clear directions having been provided in the Will, there are rules laid down in legislation about what should happen.
You should be particularly cautious where the deceased left debts or gave a personal guarantee and, either the estate is insolvent (where the debts exceed the assets) or there is insufficient cash in the estate to discharge those debts in full.
In the event that the estate is insolvent, you could be personally liable if you pay the debts of the deceased in the wrong order – the correct order of payment for debts is again set out in legislation.
Where the estate is solvent, but there is a shortage of cash, the question may be from what part of the estate should you raise funds to pay those debts? There are rules about this and, if you were to get it wrong, then the disappointed beneficiary who should have inherited the sold asset could sue you.
Executors who have chosen to handle DIY probate can protect themselves from claims by unknown creditors or beneficiaries by lodging ‘Trustee Act Notices’. You may have seen these in the local newspaper asking for claimants to contact the Executors within two months and a day of the date of the notice.
If anyone else wishes to make a claim against the estate, you may not know that they have up to six months from the date of the Grant of Probate to bring this forward. Clearly, if you have distributed the estate in the meantime and the claim is successful, you might have some difficulty recovering the overpaid money from the beneficiaries.
When it finally comes to winding-up the administration of the estate, you may be asked by the beneficiaries to account fully for your dealings and how you have calculated their entitlement. As an Executor, you should prepare Estate Accounts and obtain a written receipt and discharge from the beneficiaries so that it is clear that they are accepting their distribution in a full and final settlement.
This article by no means provides a comprehensive list of the pitfalls of DIY Probate – there are just too many to mention – but the aim of it is to highlight some of the most critical and common.
My recommendation would be to think seriously about getting some professional advice at the outset so that, if you do then go it alone, you have started off on the right foot and know what lies ahead.
Astle Paterson’s Wills & Probate team offers an Executor Support Service which is specifically tailored for lay Executors and an initial fixed fee interview of £150 plus VAT.
Table of Contents Friends or family membersThe alternative: A professional executorPitfalls of a professional executor: What to watch out forFollowing ...Read More
There are a number of myths and misunderstandings about how Inheritace Tax works; that can be a problem with the ...Read More
Table of Contents What are the rules on Power of Attorney Gifts?A practical exampleWhat is the process of making Power ...Read More
As lawyers, we are seeing an increasing number of cases where family members are pooling funds for shared ownership houses ...Read More
As of 6th April 2018, it has become even more beneficial for couples to invest in an Individual Savings Account ...Read More
Astle Paterson, Clay House,
5 Horninglow Street, Burton upon Trent
Staffordshire DE14 1NG
Tel . 01283 531366
Book an appointmentBurton on Trent | Uttoxeter
Business & Commercial • Conveyancing • Family • Litigation • Wills, Inheritance Tax & Probate • Employment