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The “Pitfalls” of Probate

If you are going to take on the role of personal representative (either executors or administrators*)  and apply for probate do it with your “eyes wide open”!

Yes it may be daunting when you enquire about legal fees for a professional who can either assist or take on the whole process for you but there are advantages of instructing an expert ….

Did you know that the office of an Executor/Administrator (personal representative) is one which lasts a lifetime?  This means that you can be held personally liable for any unpaid tax or problems arising due to the way in which the estate was administered for many years after the completion of the probate process.

There are certain steps which an Executor should take to ensure that the estate is administered efficiently and effectively.  By taking all necessary steps the Executor will limit their liability for anything which comes to light after the completion of the administration period.

An Executor has a so called “Executor’s year” to complete the administration.  Therefore, a beneficiary should generally wait for until the end of a year before action is taken if it is considered the estate is not being administered efficiently or effectively.

Inheritance tax has to be paid within 6 months of death.   It is possible in some circumstances for inheritance to be paid in instalments. It is sometimes necessary to set up a loan to pay the inheritance tax.

It is not always possible to gain access to all assets without a Grant of Probate.  It really depends on the asset and whether it was held jointly or in the deceased sole name.  In order to obtain a Grant of Probate it is necessary to complete complicated Inheritance Tax forms.

In circumstances where beneficiaries of an estate, whether testate or intestate**, have concerns as to whether the personal representatives are administering an estate properly, they need not wait patiently for their personal representatives to produce accounts or distribute the estate before taking appropriate action.  There is much they can do to ensure proper administration rather than wait for the worst to happen and then be faced with the decision as to whether to initiate proceedings to remedy a wrong.

A personal representative may be liable for devastavit, breach of trust or fiduciary duty.  Assets are given to personal representatives on trust and they may breach not only their duty to administer but also the express or implied trusts on which they hold the estate: they may also be in breach of their fiduciary duty if they do not fulfil their duty of loyalty to their beneficiaries.

Once a Grant of Probate is obtained it is necessary to carry out section 27 notices; creditors have two months from the Grant in which to come forward to give notice of their interest in the estate and claimants have six months from the date of the Grant of Probate to make a claim under the Inheritance (Provision for Family & Dependants) Act 1975.  However, courts have the power to grant permission to a Claimant to make a claim outside of the six month period.  If the personal representatives have distributed the estate prior to the expiry of this six month time period they can be held personally liable.  If notice of a claim is served within the six months then it is best practice to wait until 11 months after the Grant of Probate has been granted before distribution, as a claimant has four months from issuing a claim to serve it upon the estate.  Thus, the Claimant will have sufficient time to serve proceedings on the estate.  If the time limit is observed before the estate is distributed, and no court proceedings are issued against the estate then the personal representative will be free from personal liability.

If the estate is distributed after the necessary 6 or 11 months and a claim is allowed by the court out of time the assets can be “traced” and the assets claimed back from the beneficiaries but without liability of the personal representatives.

A professional advisor such as myself will be able to identify early on where there is potential for such claims to be made and advise on appropriate action to ensure the estate is protected as far as possible from such claims.

Unfortunately, if you are a personal representative and a claim is made against the estate under the Inheritance (Provision for Family & Dependants) Act 1975 then you will be a party to the proceedings.  Such claims are made by persons who consider that they should have been provided for by the Deceased or the provision made for them is insufficient.  The personal representatives may need to obtain legal advice. However, a personal representative should remain neutral in such proceedings.  Such claims can have a huge impact on the administration of the estate delaying completion for many years.

A claim for a devastavit, breach of trust or fiduciary duty is a claim against a personal representative personally and not against the estate.  If there has been a devastavit, breach of trust or fiduciary duty, a personal representative cannot escape liability by pleading (as he would if a third party claim is made) that the estate has been fully administered and that he has no assets left in his hands.  If he is found liable he will have to make good the loss to the estate out of his personal resources unless he is insured, in which case his indemnity insurers may have to provide funds to restore the estate.

Claims against a personal representative have to be made within twelve years of completion of the administration.

It is possible for Executors to renounce their appointment but this can only be done early on and before they have “intermeddled”.  If you do not wish to be an Executor then you should not make any enquiries into the estate of the deceased as you will be required to administer the estate and unable to renounce.

It is possible to have power reserved to you and enable other appointed Executors to take on the role.

It is also possible to instruct a professional such as myself to administer estates.  Please contact me should you wish to discuss the different services I offer.

Amanda Weston FCILEX MIPW
Mobile: 07931 411733