Like many government organisations, Her Majesty’s Courts and Tribunal Services (HMCTS) has been increasing its digital services over the past few years as it aims to provide a more streamlined system for probate registries.
While the online service provides an option for executors and administrators to deal with an estate themselves, there are many reasons why instructing a professional remains sensible.
If you distribute an estate without properly taking into account the terms of the will, as well as the rules governing the different types of gifts and trusts, you could find yourself subject to a claim for breach of your duty.
Taking a step back from the administrative duties can allow you proper time to grieve and entrusting a legal expert with the more practical aspects of estate administration means that you are in safe and experienced hands. Our probate team has been rigorously trained and are used to dealing with estate administration on a day-to-day basis.
An estate may seem simple enough to deal with, especially if you knew the person well. However, only a small percentage of estates are truly straightforward and there are many apparently ordinary circumstances which should be considered in more depth, and which may call for the knowledge and expertise of a practised professional.
If there are any minors (those under the age of 18) who are due to inherit, you must consider the precise wording of any will to ensure that their money is held as per your loved one’s explicit instructions.
For example, a small gift to a child might be the subject of a bare trust, whereas a larger gift might be part of a bereaved minor trust.
These different types of trusts have different rules and restrictions and wills do not usually explicitly state the trust type.
Most estates today include some property and how property is owned is important. If you are dealing with an estate which includes a house the deceased owned jointly with someone who is still alive, that house may or may not pass in accordance with the terms of the will, as this will depend upon exactly how the house was legally and beneficially held.
Alternatively, a property held in the name of a sole owner may have no inheritance tax attributable, but this does not mean there is no capital gains tax when the property is sold by the estate or beneficiaries. Obtaining legal advice in this regard is essential.
Large estates or unusual assets
The type and volume of assets involved may also be a good reason to enlist professional help. Overseas assets will need to be handled carefully.
Shareholdings, for example, attract complicated valuation and tax rules. If dealing with a particularly large portfolio you will need to carefully consider all its individual holdings to ensure that the estate does not overpay or underpay tax, as well as whether any tax is the liability of the estate or the beneficiaries.
Inheritance, income and capital gains taxes
Tax is a complex legal area and a professional can help you to ensure that all tax is accounted for. When administering an estate, you need to consider not just inheritance tax, but income and capital gains as well. A professional can also make sure that no tax is paid needlessly, ultimately saving you and the estate money.
Some assets will be subject to special tax exemptions or reliefs.
For instance, an estate which includes business or agricultural property is likely to attract specific tax reliefs, and assets passing to certain people or organisations (such as a spouse or civil partner, or a charitable organisation) will be exempt from inheritance tax altogether.
There are also some other more nuanced rules concerning tax, such as a reduced tax rate where a certain percentage of the estate is left to charity. A professional can help you to navigate all of these rules meaning that you need not worry about misinterpreting, or missing out on, any available tax reductions.
Estates with limited assets
Sadly, not all estates can pass as the deceased had wished.
Sometimes there are insufficient assets available and an estate will be insolvent, or subject to abatement. The order of entitlement under an insolvent estate must follow a strict order which is set out in the law.
Abatement refers to the process for administering an estate which is solvent but in which there are insufficient assets to honour all of the gifts made by a will. Again, the order by which gifts must abate is predetermined and must be followed.
Claims from family members
Family members do not always get along, and an extended or blended family may disagree over the distribution of an estate.
If you anticipate a dispute, it would be wise to instruct a legal professional to administer the estate from the outset.
Not only can this introduce a neutral person to prevent the further deterioration of family relationships, it will also mean that they are familiar with the estate should a claim arise.
How we can help
As executor or administrator, you are responsible for making sure correct procedures are followed. A legal expert will be familiar with the rules and can ensure they are correctly adhered to on your behalf.
If any of these potential complications seem familiar, or you are worried about any aspect of an estate for which you have been asked to act as executor or administrator, we can offer you peace of mind and expert assistance, whether you are yet to begin the administration or you are already well on your way.
For further information, please contact Associate, Melanie Christodoulou, in our Private Client team on 01227 763939 or email firstname.lastname@example.org