When a person dies there are numerous tasks that need to be carried out. These are not tasks that most of us will be familiar with and certainly won’t have done on a regular basis. Simply knowing where to start the process can be daunting which is why many people instruct a specialist in estate administration to assist them. However, this can be an expensive process so many choose to do it themselves to try to save money and leave as much as possible to those due to inherit from the Deceased’s estate.
Unfortunately, despite best intentions, this can backfire and result in the beneficiaries losing out.
In this blog, we explore the risks associated with carrying out Probate and Estate Administration yourself so that you can make an informed decision about the options available to you.
Probate, what is it?
In England and Wales, Probate, or the ‘Grant of Probate’ as it is often referred to, is needed when the Deceased owned a property in their sole name or if a financial institution (such as a bank or building society) requests a Grant of Probate to release funds. The process is called ‘Confirmation’ in Scotland.
When the Grant of Probate is issued the Executors of the estate (where there is a Will) or Administrators (where there is no Will) have the authority to do what is necessary to administer the estate.
Probate is only one aspect of the process of estate administration. Not every estate will need probate but each one will need a level of administration. If you need more clarification on the difference between Probate and Estate Administration you can read our blog here: What is Probate?
What do you need to do to carry out Probate on your own?
The first thing to be aware of is it involves taking on full responsibility for administering the Deceased’s estate. This can be straight forward but it can also be drawn out and stressful so make sure you have the time and head-space to deal with it before you decide on this course of action.
Here are some of the key tasks (in no particular order) involved but be aware that there may be numerous other things that crop up:
- Obtaining the grant of probate.
- Locating the Will.
- Notifying creditors of the death
- Getting the estate values and noting assets and liabilities.
- Paying any Inheritance Tax that might be due.
- Ensuring any debts that occurred are paid.
- Closing all of the Deceased’s accounts such as banks and building societies, utilities, broadband and entertainment (Sky etc).
- Managing any property that the Deceased owned and dealing with any tenants if applicable.
- Completing any Income Tax work.
- Distributing any funds to the beneficiaries.
All of these tasks can be very time-consuming, especially if you have not been through the process before. When you are also grieving it is made even harder.
What are the associated risks of the Do-It-Yourself approach?
Liability
The first thing you need to be aware of is that as the Executor or Administrator dealing with the estate, you will be financially and legally responsible for any errors that are made, even if they are made in complete innocence. This can become a huge burden, especially if you are already busy with work and family. It is not a task to be taken on lightly so it is important to give it a great deal of thought before you accept.
Throughout the process, you will be required to deal with a large amount of legal paperwork where accurate information is essential. This is not a task that can be skipped over and while some may relish it, it can be very difficult and time-consuming.
When a person dies without making a Will there is an additional process to go through to establish who should benefit. Claims against an estate can be made years later so it’s worth considering handing over the process to an expert simply for future peace of mind.
Failure to locate all assets and liabilities
All the deceased’s assets and liabilities need to be discovered before the estate can be sorted out and inheritance paid. This can be a lengthy process if the deceased was not organised. The first place to start would be to search the Deceased’s house to see what paperwork could be located. All financial institutions need to be contacted in order to establish a financial picture of the estate. A search of the property is not guaranteed to reveal all the assets and liabilities for all sorts of reasons and it can take a lot of hours to plough through it all and make the necessary calls and emails. While you cannot charge for your time, there are occasions when you can claim for reasonable expenses, if, for example, the deceased lived far away from you.
Sometimes, after the Grant of Probate is issued a new asset is discovered. In this instance, you would need to get a valuation on the new asset and the valuation would need to be added to the value of the estate. The Probate Registry would also need to be notified.
Incorrect filing of probate and inheritance tax forms
This is an area where Executors and Administrators often run into trouble. It is important to ensure that the correct valuations for both assets and liabilities in the Deceased’s estate are listed. You should also be able to justify these valuations. Incorrect information can result in Inheritance Tax being incorrectly calculated and paid.
Errors also cause delays with forms needing to be resubmitted.
When administering an estate it is vital to be aware of the tax-free allowances that may be available for the estate. Error and omissions made here can result in the beneficiaries not receiving the correct inheritance and the estate paying too much in tax. Errors can also leave the Executor and Administrator open to claims of mis-administration.
Misinterpretation of a Will
When a person writes a Will they create a legal document that contains their wishes on how to deal with their estate when they die. While many Wills are drafted by a Will writing expert, some are not. Some are handwritten and while legal, not necessarily clear. A Will can also contain ‘legal jargon’ that could be open to interpretation by the layperson. If a Will is misinterpreted, for whatever reason, there is a danger that the beneficiaries may not get the correct inheritance. This once again could result in a claim being made against the Executor or Administrator.
When there are difficulties interpreting a Will we would advise that you get some professional advice.
Unexpected Claims from missing beneficiaries
Despite extensive searches, with the rise in blended families, there is always a risk that unknown beneficiaries surface long after the estate is deemed as settled. Once more, as an Executor or Administrator, you are personally liable for errors or omissions. Creditors can be publicly notified of a death through newspaper adverts, this will provide you with some protection against unknown debts, though it is not a legal requirement to do so.
We hope this blog gives you an insight into what is required should be asked to be an Executor or Administrator of an Estate. If you have any questions about the process please don’t hesitate to get in touch with us here: https://beesandco.com/contact/
