In trying economic times, it is natural to want to save money where possible. If you are an Executor of a Will you may try and limit your expenses by managing the probate yourself; however, this can be incredibly risky. Few people realise the amount of paperwork involved in applying for Probate and the subsequent administration of an Estate. As an Executor, you are legally responsible for meeting all the legitimate claims on the Estate (including Inheritance Tax). If you make a mistake, you could be taken to court by the beneficiaries, or be subject to costly HMRC penalties.
This article is not designed to demonise DIY Probate – for simple, low-value Estates which involve no property, a DIY Probate may be relatively risk-free. However, if there are multiple beneficiaries in a Will and/or property and assets to be distributed, it is important to understand the risks involved in DIY Probate so you can make an informed decision.
What is Probate?
Probate is the legal term used to describe being granted the right to administer a deceased person’s Estate and their affairs. This is known as a Grant of Representation.
If a person dies with a valid Will with a named Executor, the responsibility for obtaining Probate passes to them. However, if there is no Will or no named Executor, a relevant family member will be responsible, and they will be known as an Administrator. Executors and Administrators are called Personal Representatives.
Personal Representatives are also responsible for registering the death of the deceased within five days of death or the body being found.
If the Estate is valued at less than £5,000 or it is being passed to a spouse or a civil partner, and everything is held in joint names, a Grant of Representation is usually not required.
In all other situations, an application for a Grant of Representation will be required. If you have been named as an Administrator, you will need to apply for Letters of Administration, which will provide you with the same rights as an Executor.
The responsibilities of the Personal Representative
Locating and securing the deceased’s assets
Although an Executor or Administrator’s role includes distributing the deceased’s Estate in accordance with the Will or Rules of Intestacy, one of their first duties is to secure all the property and assets of the deceased.
To ensure assets are safeguarded the Personal Representatives should:
- locate and obtain the deceased’s title deeds (if unregistered) or Land Certificate for any property they own in the UK and/or overseas
- locate and obtain the deceased’s documents supporting the existence of assets and liabilities
- locate all loose cash
- ensure the deceased’s home is secure
- where the deceased resided in England and Wales but had assets situated in another country, make enquiries as to whether a foreign Will was made to deal with those assets
- check the existence and adequacy of insurance cover
- if the deceased was a surety in a contract of guarantee, notify the creditor of the death
- if the estate is solvent, pay the deceased’s UK and foreign debts with due diligence
Where the deceased had investments, pensions, or property, the chances of one or more assets being unaccounted for in a DIY Probate is high, especially if some assets reside offshore. An experienced solicitor follows a due diligence process in establishing the location of property and assets which belonged to the deceased and ensuring all debts are promptly paid.
Finding the Will
Locating the deceased’s Will is not always straightforward. If it cannot be located in the general paperwork, the Personal Representative should:
- make enquiries of the deceased’s family and friends
- make enquiries with the deceased’s accountant or solicitor
- make enquiries of the deceased’s bankers
- consider a search of the safe custody Wills register (at the Probate Registry) to see if it was deposited there
- consider placing an advert for the Will in the Law Society Gazette
- check with Certainty
This process can be extremely time-consuming. If the Will still cannot be found, the services of a genealogist and/or professional Probate researcher (colloquially known as ‘heir hunters’), may need to be engaged. A private client solicitor knows precisely which steps to take to locate a missing Will and has contacts within the profession and with Probate researchers, which can save inordinate amounts of time, money, and frustration.
Inheritance tax matters
There is an old saying – “nothing is certain except death and taxes”. But under UK law, negotiating death and taxes requires the navigation of an intricate and complicated process that takes time and patience to complete.
Every person in England and Wales has an Inheritance Tax allowance of £325,000. If an Estate is valued at less than this amount, no Inheritance Tax is required to be paid. Any part of the Estate that exceeds the threshold will be taxed at 40%.
A person’s Inheritance Tax allowance can be passed onto their spouse or civil partner, which results in a tax-free threshold of £650,000. The family home may also be eligible for an allowance, known as the Residential Property Nil-Rate band.
Making a mistake with Inheritance tax can be extremely costly and leave Personal Representative’s liable, not only to HMRC, but the beneficiaries of the Will.
Although there are numerous articles discussing the benefits of DIY Probate, few discuss the risks involved. And the risks are plentiful. Instructing a professional solicitor to manage the Probate process may cost a little more in the short term than going it alone, but could save you hundreds of hours of time, and thousands of pounds, should something go wrong.
Hart Reade Solicitors is a full-service law firm with offices in Eastbourne, Hailsham, Polegate and Meads. We hold a Lexcel accreditation from the Law Society of England and Wales and are a member of The Association of Lifetime Lawyers. To make an appointment with one of our private client solicitors, please phone our office on 01323 727 321.
Please note, this article does not constitute legal advice.