DIY Probate Administration – A Risky Business
When a relative or a close friend passes away and we are contacted by the executors, sometimes we are asked whether they can DIY probate administration. Our answer is, yes, of course and it will save on professional’s costs. But, is DIY probate administration really worth the risk of making what could be an expensive mistake?
What Is Probate?
Probate is the name given to the process of dealing with the deceased’s estate. This may necessarily involve (but not always) obtaining a Grant of Probate (or other type of Grant of Representation) from the court. The Grant of Probate is the ‘ticket’ that you as the person entitled to administer the estate (known as an executor or administrator, or more generally “personal representative”) needs to administer the estate. Then the personal representative will need to carry out the job of collecting and distributing the estate assets to the beneficiaries.
When it comes to dealing with the affairs of a deceased relative or friend, this can be a stressful process. Many people do not realise the extent of the emotional impact of having to dig through their loved one’s belongings , putting them in order and then having to present this information to the court in a tax return. It is difficult to be subjective, particularly when you are still grieving.
In many ways, DIY probate can be a false economy. Many people who take on probate themselves ultimately end up seeking legal advice due to errors made or because they’re struggling with the paperwork. Even a simple mistake may mean that any cost savings you’ve made by not using a solicitor is spent having to rectify matters.
That’s why, in all but the very simplest of estates, we at Geoffrey Lurie Solicitors recommend that you speak to a probate specialist for legal advice. This can save you both time and money.
What Do You Need To Consider In The Probate Process?
You need to understand the provisions of the Will. If there is no Will, you will need to consider the intestacy rules, which governs the position where no Will was left. The law on the rules of intestacy can be complex. Personal representatives have a responsibility to ensure that all beneficiaries are considered. In fact, the personal representative would be personally liable to any beneficiaries who have lost out.
Provided the probate process is dealt with quickly, it may be possible to vary the Will if all beneficiaries agree. It is important that any variations are dealt with properly, as otherwise there may be negative consequences such as increasing the estate’s Inheritance Tax liability.
Whilst tax may not always be payable by the estate, the personal representative will always have to complete returns to HMRC. This can be extremely time consuming and complicated, especially if a full return is necessary, as this can amount to over 20 different forms. There are also considerations as to the different types of assets that the deceased owned or was entitled to, such as property held in trust, shares or foreign property. A professional who is experienced in probate matters will be able to deal with all of this quickly and efficiently.
We at Geoffrey Lurie Solicitors are acutely aware that families often have their problems, for example conflicts of interest may arise either at the start or during the probate process. As an independent party, a professional advisor will be able to help manage any such conflicts, and navigate between the personal representatives and the beneficiaries.
Where conflicts are not resolved, a solicitor will also be able to represent you if, for example, the Will is contested. A solicitor can also assist in setting up any Trusts created by the Will, which often have their own tax and legal rules.
What Are The Risks?
If you have any doubts about the solvency of an estate, you should tread carefully and if the estate is not handled properly, the personal representative may be personally liable for unpaid debts to HM Revenue and Customs (HMRC) and other creditors.
If the process is carried out correctly, the executor will not be personally liable for debts that the estate can’t afford to pay.
If there is a loss to the estate, for example, a property is sold too cheaply or if assets are lost or mismanaged, as executor you could be held personally liable to any beneficiary that suffers as a result.
Tips For Personal Representatives
Make sure you thoroughly assess the deceased’s financial affairs to identify the extent of the assets and liabilities, and consider if any tax reporting needs to be done.
Ensure all debts are paid before distributing the estate. If you don’t, you could be forced to pay a missed debt personally. You can protect yourself from unknown creditors by placing a notice in The Gazette and a local newspaper. If you do that, and a surprise debt comes to light after the notice expires, you will not be liable to pay it yourself and the creditor would have to pursue the beneficiaries for repayment.
Do not distribute the estate if you are on notice that someone may either challenge the validity or question the interpretation of the will, or pursue a claim against the estate under the Inheritance (Provision for Family and Dependants) Act 1975.
Carry out bankruptcy searches against beneficiaries – if a beneficiary is bankrupt, the executor should liaise with the trustee in bankruptcy over payment of the legacy.
When the estate is being finalised, produce an estate account to set out details of all the assets and liabilities of the deceased at the date of death, details of capital and income payments received by the estate, transactions undertaken by the executor on behalf of the estate, payment of funeral costs, tax, debts and expenses.
This record will enable each beneficiary who is left a share of the estate see how their entitlement has been calculated. Beneficiaries who are left a set sum, or specific items, are not entitled to see the account, unless their gift can’t be satisfied in full.
Probate is a complex area of law, and this whistle-stop tour doesn’t constitute watertight advice.
Pleading ignorance will not amount to a defence for an executor who gets something wrong and is pursued by a beneficiary or creditor. So it’s important that you assess whether or not DIY probate is right for you.
If you have doubts about any issue in the estate, seek specialist legal advice. Professional fees will be paid by the estate, and in the event of a solicitor making a mistake, you will have the protection afforded by the solicitor’s indemnity insurance.
In order to avoid being involved in one of these claims the advice should always be, if there is any doubt, always consult a professional. This will ensure you fulfil your personal duty to the estate and will also give you peace of mind that your loved ones’ property has been administered fully in accordance with their wishes and the rules that govern it.
At Geoffrey Lurie Solicitors we aim to make our probate service good value for money, ensuring that our clients receive the best customer service as if we are helping members of our own family.
All initial enquiries are without obligation, so please call us now on 0191 466 1444 and ask to speak to our expert solicitor or complete a Free Online Enquiry and we will soon be in touch with you.
