The Pitfalls of Probate – Why you should seek professional advice

The role of Executor or Administrator is a daunting one, and with it comes an abundance of burdens and legal responsibilities.

When an individual passes away, it is the role of the Executor/Administrator to handle the deceased’s estate in accordance with their will.

Failure to do so – and failure to follow the applicable law – can result in personal financial liability. A lack of knowledge or understanding of the process is not a defence.

With all of this in mind, and with the constant changes being made to the duties and obligations of Executors/Administrators, our Chartered Legal Executive Ellie-May Betts explains why seeking professional advice is now more important than ever.

Tax Advice

• The world of tax is a minefield, and dealing with the administration of an estate is no exception. When an individual dies, whether or not any Inheritance Tax will be payable will depend on the size and nature of the estate, events that have taken place during the deceased’s lifetime and the allowances and exemptions available to the estate. There are also deadlines for settling Inheritance Tax and late payments will often result in interest becoming payable.
• In addition to Inheritance Tax, there are other taxes to be mindful of such as Income Tax and Capital Gains Tax, which may be reportable and subsequently payable to HM Revenue and Customs. Depending on the circumstances, there are ways in which you can potentially reduce and, in some cases, eradicate taxes such as Inheritance Tax or Capital Gains Tax. This is a complex area of law, but one which as an Executor/Administrator you should be exploring with the help of a qualified professional.

Reporting Requirements

• As an Executor/Administrator, you may be required to register the estate or a trust comprised within the will or rules of intestacy (should you die without a will) with HM Revenue and Customs. Directive (EU) 2015/849 (the fifth anti-money laundering directive) requires all UK express trusts (with some exclusions) to register on the Trust Registration Service, whether or not they have a liability to UK tax. It is not uncommon for a will to include a trust such as a discretionary trust or a life interest trust, which under these new rules may well need to be registered. As an Executor/Administrator you will more than likely also be appointed as a Trustee in which case it is your responsibility to comply with the registration requirements and failure to do so within the deadlines set out could lead to penalties.

Interpreting the will

• As set out above, the Executor/Administrator must administer the estate in accordance with the terms of the will, or the rules of intestacy. Wills often contain legal jargon which can be difficult to understand and there may be clauses to interpret which may affect the distribution of the estate. Generally speaking, incorrectly administering the estate would leave you personally liable to the intended beneficiaries.

Trustee Act Notices

• As an Executor/Administrator, you are responsible for settling all debts owed by the deceased before distributing the estate to the intended beneficiaries, and it is not always obvious when searching through the deceased’s paperwork that the debt even exists. Should you distribute the estate without having settled all debts, and a creditor then comes forward to claim that debt, this could mean that you as the Executor/Administrator are personally liable for the unidentified debt. In order to avoid this, under Section 27 of the Trustee Act 1925 notices can be placed to ensure that sufficient effort has been made to locate all creditors prior to distributing the estate. The notices must be placed correctly and for the minimum period of time set out in the legislation.

We’re here to help

At Hamers, we recognise that dealing with the affairs of a loved one after their death can be daunting.

It is likely to be one of the last things you will do for your loved one, and we understand how important it will be for you to carry out their wishes.

It can be a devastating time, but our sympathetic, skilled and experienced Wills and Probate team is ready to guide, advise and ease the burden.

Our solicitors are fully qualified and belong to the Society of Trust and Estate Practitioners, Solicitors for the Elderly and the Law Society Wills and Inheritance Quality Scheme.

Call us today on 01482 326666 for advice and support.