The tasks that need to be considered following the death of a loved one are not something you will face on a regular basis. Therefore, knowing where to start can often be daunting and it can be a difficult process to get the ball rolling. Whilst many people opt to instruct an estate administration specialist to help, others choose the DIY (do it yourself) route in the hope of saving more money to maximise the amount of inheritance due to the beneficiaries of the estate.
What is probate?
Probate, often referred to as the 'Grant of Probate' in England & Wales or 'Confirmation' in Scotland, is required when the Deceased owns a property in their sole name or if a financial institution (such as a bank) requires a Grant of Probate to release funds. Obtaining the Grant of Probate from the probate registry gives the Executors (in a Will) or the Administrators (if there is no Will) the authority to act in the administration of the estate. It is important to remember that probate is one component of the overall estate administration process, and whilst not every estate will require probate, every estate will need administering to some extent. To find out more about the differences between probate and estate administration, click here.
What is the DIY probate approach and what does it involve?
The DIY probate approach means taking on the full responsibility to administer the Deceased’s estate yourself. The tasks involved might include but are not limited to; locating the Will, valuing the estate (noting assets and liabilities), paying Inheritance Tax (if applicable), paying back any debts that occurred, closing all of the Deceased’s accounts including utility and financial institution accounts, managing property, completing Income Tax work, obtaining a Grant of Probate or Confirmation, distributing funds to the beneficiaries and much more. It’s important to remember that obtaining the Grant of Probate is just one part of the wider estate administration process.
This approach to handling the estate of a loved one should be considered with caution. It is a time-consuming option for Executors and Administrators who have never had to fulfil these responsibilities before. This blog aims to explore the risks associated with the DIY approach in order for you to make an informed decision about the options available to you.
The associated risks of the DIY approach
As the Executor or Administrator dealing with the estate, you are financially and legally responsible for any errors that are made, regardless of whether they are entirely innocent or not. It is important to consider whether this is a burden that you are happy to accept throughout the process. The tasks involved throughout the process require you to deal with a great amount of legal paperwork and accurate information will be required. This can be a challenging task for Executors or Administrators, and they will be held accountable for any mistakes.
If you are unsure of the process or faced with a particularly complex estate, for example, where the Deceased passed away without a Will (known as intestacy), consider instructing an estate administration specialist. At Kings Court Trust, when instructed to complete the full estate administration by the named Executor or Administrator, we will remove the stress and burden and take on the financial and legal responsibility. By relinquishing this responsibility, you will be provided with peace of mind should a claim be made against the estate in the future.
We also offer other estate solutions where we can take care of parts of the estate administration process, including obtaining the Grant of Probate. These services may be more suitable for those who want some expert assistance with some parts of the process but wish to retain the overall responsibility for the estate administration.
Failing to identify or locate all assets and liabilities
Locating all the Deceased’s assets and liabilities may not always be a straightforward process. Whilst a good place to start is to conduct a full and detailed search of the Deceased’s home to uncover any paperwork, it is important that all banks and financial institutions are contacted to get a full picture of the entire estate makeup. Completing this task can take a great deal of time and resource, and unfortunately, you are not guaranteed to locate all the assets and liabilities within the estate, nor are you able to charge for your time. However, you can claim reasonable expenses if the Deceased did not live close to you.
If an additional asset is found once the Grant of Probate has been issued, you will need to have the new asset valued. You will also need to take instructions from the institution which manages the asset (i.e. the bank) to release the asset to you. This will then need to be added to the value of the estate, which was included in the application for the Grant of Probate in the first place, and a corrective amount notified to the Probate Registry.
Incorrectly filling in probate and Inheritance Tax forms
Unfortunately, a common mistake that Executors and Administrators make when applying for probate is incorrectly filling in the probate and Inheritance Tax forms. When filling in these important documents, it is important to provide the correct probate valuations for the assets and liabilities in the Deceased’s estate and to be able to justify how these were valued. Not providing all the assets and liabilities could result in the wrong calculation of the amount of Inheritance Tax that needs to be paid. Errors also cause lengthy delays, as forms may need to be re-submitted and this, in turn, causes frustration for beneficiaries receiving their inheritance.
Another common mistake is not being aware of all the tax-free allowances applicable for the estate. Miscalculations may mean too much tax is paid, which in turn means the beneficiaries have not received enough inheritance and leaves the Executor(s) open to claims of mis-administration.
Incorrect interpretation of a Will
A Will is a binding legal document that expresses the wishes of the Deceased with the instructions on how they want their estate to be handled. There is the risk of the Executor/Administrator incorrectly interpreting a Will, especially if the Deceased’s Will is not written clearly or homemade. Additionally, the Will may contain ‘legal jargon’ that is open to interpretation. An incorrect interpretation of a Will may result in Executors failing to provide beneficiaries with their rightful entitlement and again could lead to a claim being made against the estate. This can be made increasingly difficult if there are amendments to the Will, such as Codicils, or when a beneficiary dies. If you are unsure of the contents of a Will, it’s advisable to seek professional help on the matter.
The risk of unexpected claims
With the increase in extended or blended families comes the greater risk for unexpected claims from unknown beneficiaries. Again, you could be personally liable if their claim was to succeed. It is also advisable to publicly notify creditors of the death through appropriate newspaper adverts. Although this is not a strict legal requirement it does provide important protection against unknown debts.
Kings Court Trust is an award-winning probate and estate administration provider who can take care of the complicated practicalities after death. We offer a range of solutions from applying for the Grant of Probate to taking on the entire estate administration process. If you have any questions about probate or estate administration, call our experienced Client Services Team on 0300 303 9000.