DIY Probate: do you know the risks?
- AuthorJacqueline Marshall
Many people question why, when someone has made a will in their lifetime, there is any need for further formalities once that person dies. This is due to the fact that a will is a legal document by which a person expresses their wishes as to how their property is to be distributed at death, and usually names one or more persons, the executor or executors, to manage the estate until its final distribution. The will itself does not contain the legal authority to transfer or collect the property, meaning the executor may have to obtain a grant of probate (grant). The grant is the legal document which confirms that the executor has the authority to deal with the deceased person's assets (property, money and belongings). This is called 'administering the estate'. Some organisations will allow the release of money without a grant below certain limits so a grant is not always required, if you are in any doubt it is worth seeking advice.
Executors are increasingly attempting DIY probate (i.e. administering the estate themselves rather than paying a professional agent to do this), usually in the hope this will keep costs to a minimum. There is a raft of information available on the internet for executors to refer to, making completing the process simpler than ever before. But before you proceed in administering an estate it is worth taking note of the risks involved.
What are the risks?
Understanding the legal jargon – the will itself is likely to contain terminology that you are unfamiliar with. It is imperative that the will is interpreted correctly to avoid paying money or distributing assets to the wrong beneficiary or paying at the wrong time. Does the will create a trust? If so there may be further formalities required. Is the will, in fact, valid and would you know if it were not? For anyone who is unfamiliar with the terminology and contents of a will, misunderstanding the terms of the will could lead to being sued by disappointed beneficiaries.
Executors are also responsible for ensuring any tax due is paid to HM Revenue and Customs. The obvious tax is Inheritance Tax but there could be other taxes that are outstanding and need to be settled before distributing the remainder of the estate. The executor may need to look back at historic transactions the deceased has made and decide whether these need reporting to HMRC. An executor can become personally liable for these debts if the estate is not administered correctly.
An executor is responsible for administering the estate correctly. They can become liable for mistakes they make and also, and perhaps more worryingly, for acts they have omitted to undertake. How can you be sure you have done all that needs to be done? Executors can be held personally accountable by the beneficiaries if they cause a loss to the estate through poor administration.
The amount of paperwork involved can be considerable. Obtaining all the information required for HMRC can be daunting. The executor also has to ensure that the legal title to property is transferred in the correct manner to the relevant person. The executor can be sued for loss to a beneficiary if this is completed incorrectly or omitted.
Probate is a complex area of the law and ignorance of the process is not a defence for an executor who gets something wrong. An executor who acts reasonably and honestly may be excused by the court, however in the past the courts have found it unreasonable of an executor not to seek legal advice and the executor has still been held accountable.
If in any doubt, seek legal advice. It may appear cheaper to ‘DIY’ in the first instance but you need to be sure you are fully aware of the risks before proceeding.