The risks of DIY probate
An increasing number of executors choose to deal with an estate themselves when a close relative dies, but is this really a wise move? The reality is that probate is usually a complex process, even where the estate appears at first blush to be small and straightforward.
If you take into account the feelings of grief and the need to adapt to the loss of a loved one, you need to consider carefully whether you want the responsibility of calculating the inheritance tax liability and taking on the risk of personal liability if things go wrong, as Deborah Adams, Director of Private Client Services at Parnalls Solicitors explains.
You will be personally liable
As the executor dealing with the estate, you could be liable for debts which are left unpaid. What does this mean in practice? You will have to pay out of your own pocket if a beneficiary does not receive their rightful inheritance from the estate, for example because you did not obtain the true market value for a property; or if an unknown beneficiary comes forward after you have distributed the estate; or when there is an outstanding inheritance tax bill. You will not be able to plead ignorance to avoid payment. This is a heavy risk to carry.
All the estate debts need to be settled before any beneficiaries are paid their share. The only way to avoid personal liability is to make sure the estate is dealt with properly and the best way to ensure this is to instruct a specialist solicitor who has had appropriate training and experience.
Valuing the estate
Before applying for probate, you will be required to swear an oath stating the value of the estate. You may need specialist advice on how to calculate this total because different factors need to be considered, such as the amount of gifts in the previous seven years.
Most estates have tax issues to deal with and more estates than ever are now liable for inheritance tax (IHT). If an estate is worth more than £325,000, IHT is chargeable at 40 per cent of the value that exceeds that amount. With many properties worth at least that amount, it is not hard to see why so many estates come within the IHT band.
There are various tax reliefs and exemptions available, including for your main residence, charitable legacies and business assets. The rules are complex, and an incorrect calculation could mean that you pay the wrong amount with the result that the beneficiaries could be out of pocket and you will be liable for the shortfall.
You also need to know that inheritance tax often needs to be paid early and this can mean a cashflow problem for the unwary. Furthermore, it is the executor’s responsibility to pay it. Passing on the responsibility for payment of IHT to a beneficiary is not worth the risk. In a recent case, the executor transferred the estate assets to a beneficiary on the basis that the beneficiary would be responsible for paying the tax – however, the beneficiary disappeared with the money and the executor was held personally liable to pay it.
There may also be other tax issues to consider, such as whether any lifetime gifts were made which could attract IHT, or if income tax is payable on any trust or rental property.
The risk of an unexpected claim
The growth in extended families has meant an increased risk of an unexpected claim by an unknown beneficiary. Suppose you deal with the estate yourself: it all goes according to plan and you have just paid the last of the beneficiaries their portion of the estate when someone makes a formal claim against the estate purporting to be entitled to a share.
Again, you could be personally liable if their claim was to succeed, unless you have publicly notified creditors of the death through appropriate newspaper adverts. Although this is not a strict legal requirement it does provide important protection should such a claim arise.
DIY probate is rarely cost effective
The reality is that if you try to do the probate yourself, you risk missing important steps which could result in a costly mistake.
It makes sense to invest in specialist advice from a solicitor who is backed by professional indemnity insurance. You will then have the reassurance that the estate is being administered properly and in accordance with the law – giving you peace of mind at what is undoubtedly a very emotional time for you and your family.
For further information, please contact Deborah Adams, Director of Private Client Services on 01566 772375 or email firstname.lastname@example.org
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since thi
Landowners’ rights and the Electronic Communications Code
Building in your back garden
Christmas is a time for giving (and inheritance planning)
Buying the freehold of your leasehold house
Redeveloping an empty pub for commercial use
Why it takes time to obtain the Grant of Probate
Social Media: The unconscious privacy threat
Is your reputation being threatened?
Making a will after your spouse or partner has died
Interns celebrate completion of internship at solicitors
Selling your home in a flat market, some top tips
Claiming compensation for a serious road traffic accident
New Media and Communications Court list reflects surge in internet defamation claims by Laura Baglow
Has your personal information been shared without your permission?
Planning your escape to the country, what you need to consider – part 2
Government consultation on new national model for shared ownership
Choosing a partnership structure
Planning for what happens when you die by Deborah Adams
Changes to legislation could offer protection for tenants in the private rental sector
Move to the country - Part One
The risks of DIY probate
Will your septic tank still be legal in January?
The death knell for ‘kiss and tell’?
Making a will when you retire
Selling your property at auction
Not looking so good - your guide to compensation for botched non-surgical cosmetic procedures
New threshold of seriousness in defamation proceedings
Legal considerations when building a granny annex
Choosing the right person for your power of attorney
Formal Interviews - Do you need legal representation?
Privacy rights and aerial images
Trustees’ duty to give information to beneficiaries
Five problems with a leasehold property
Taking your first commercial lease
Is your organisation protected from employee social media legal risk?
Have you been targeted by negative social media posts?
Farmers be alert when being inspected
Help for House Sellers?
Don’t let your digital assets end up in a digital grave
Valuing an estate for probate
Development proposals and your local authority search
What can you do if your child is injured in a serious accident
NetRights welcomes new protection for social media users
SHOULD I GET A LAWYER FOR A SPEEDING OFFENCE?
Supreme Court recognises that social media is a “casual medium” in libel battle
Choosing the best conveyancer who is right for you
Making a will after a second or subsequent marriage
Option or promotion agreement – which is best for landowners?
Anonymous pub and restaurant online reviews leave a bad taste
Have you had an accident involving a horse?
Help to Buy – beware of some cracks in the structure
Understanding Lasting Powers of Attorney
Changes to Energy Performance Certificate for Landlords
Had a cycling accident? Your route to obtaining compensation
New year, new home: tips to sell your home in the New Year
Tax Planning for your inheritance
Hearing loss: when your employer may be liable
Buying a home for your retirement, five things you need to consider
Farmers plan to diversify after Brexit
Ministers press ahead with probate fee shake-up - reports BBC News
Botched dental treatment? You may be entitled to compensation
Why a Health and Welfare Power of Attorney is a good idea
Will the new charge on building developments in Cornwall affect you?
Energy Performance Certificates – Do They Matter?
HMRC Challenging Stamp Duty Land Tax Payments
Ben Mitchell qualifies as a solicitor
The potential implications of Brexit on employment law
Appointing a guardian for your children
Houses in multiple occupation – new rules from October 2018
New Agriculture Bill published
Will Brexit affect my pension?
Dreaming of a holiday home? Sort out the legals before putting your feet up
Lasting Power of Attorney by Deborah Adams
Settled status after Brexit by Alexis Hager
How to choose an executor to administer your estate when you die
How overage agreements can boost profits from your land
Top tips for first-time buyers
How Could Brexit Affect My Farm?
Wills & Succession in Spain by Deborah Adams
Brexit – an international and local view by Alexis Hager, Litigation
Capital gains tax - important facts for non-residents of the UK
Buying a home: the importance of making sure the seller is entitled to sell
Changing a will after someone has died: it is possible and it could save you money
Your responsibilities when you have people working in your home
Sad passing of Battle of Britain pilot who served with Parnall family member
Considerations when buying a heritage property
Disciplinary proceedings at work: guide for employers
Employers should have a disciplinary process in place, but just following this may not be enough to avoid falling foul of the law and exposing yourself to the risk of an employment tribunal claim.