If you have been tasked with the role of executor or estate administrator, you may be tempted to go ahead and undertake everything yourself. For the simplest estates, and for those who are familiar with the tax and legal regulations, this may be a realistic prospect. However, taking into consideration that executors are personally liable to the beneficiaries of a will, as well as to HMRC in terms of Inheritance Tax, it is vital to be aware of the pitfalls of DIY probate.
Here our experts take a look at the most common probate mistakes, and how to avoid them.
1. Using an incorrect version of the will
It is vital that you use the most recent version of the deceased’s will. Some people will change their will multiple times, and may keep copies of all the previous versions. If you inadvertently administer the estate according to the terms of a previous will, then you could end up giving assets to the wrong beneficiaries.
The problem with this is that any beneficiaries who find themselves out of pocket as a result will be legally allowed to pursue you personally for their shortfall.
If you are uncertain as to which is the correct version of the will, take advice from a professional probate and estate management specialist who will be able to confirm whether the will in question is valid, and advise you on searches you can carry out to determine whether there is a more recent version.
2. Working with an invalid will
A will that has not been signed or witnessed following the correct procedures will be classed as invalid and there will be no choice but to use the next most recent version that is valid.
Other reasons for a will being invalid could be doubts around the mental capacity of the will maker, or the will maker having been coerced or persuaded to include certain things.
Again, consulting a legal professional will help you avoid probate mistakes by determining whether the will is valid before you go ahead and start administering the estate.
3. Failure to locate all the beneficiaries
In cases where beneficiaries are not specifically named, for example where the will refers to ‘all my children’ or ‘all my grandchildren’, then the executor will be responsible for making sure all the people under these categories are included.
There is a legal requirement to take ‘all reasonable’ steps to ascertain all the beneficiaries. If you fail to do so, and a beneficiary later comes forward who has been left out, then you could be personally liable for their loss.
A legal professional will help you to determine what counts as ‘all reasonable steps’ in such circumstances so that you can avoid probate mistakes like this.
4. Failure to follow the terms of the will
It is vital that you follow the terms of the will to the letter. For example, there may be stipulations as to when money is paid to certain beneficiaries.
Sometimes gifts can seem straightforward, but they are in fact trusts, which must be handled differently to regular gifts.
5. Not keeping estate funds separate from your own personal funds
Executors will often place funds collected from the estate, such as the proceeds of sales of assets, in their personal bank accounts. Whilst this is usually done in good faith, it does constitute a breach of executor’s duties.
Executors are legally required to open a separate bank account in which they should pay in any estate funds.
6. Failure to collect all the assets
From time to time, small amounts of money may be sitting in accounts or policies that have been forgotten about.
Executors are duty bound to track down all the accounts and policies, and ensure all sums are claimed and distributed to the beneficiaries so as to avoid probate mistakes like this.
7. Failing to obtain accurate valuations
Another common probate mistake made by executors is failing to obtain accurate, up to date valuations.
Valuations of assets such as property must be accurate, otherwise they can affect the value of the estate, which means beneficiaries could be short changed, as could HMRC in terms of Inheritance Tax payable. In such cases, the executor could be personally liable for any shortfalls.
8. Inaccuracies with paperwork
The likes of probate applications and tax returns can be incredibly complex, and it is easy for executors to make mistakes.
Errors on official documentation can have serious consequences, making this one of the biggest probate mistakes to avoid. Taking financial advice and / or legal advice is therefore essential.
9. Distributing funds to beneficiaries too early
Beneficiaries will often put pressure on executors to receive their funds before all the assets have been collected. But if costs arise down the line and funds have already been distributed, it can cause considerable problems.
A probate and estate management professional will be able to handle such situations from a less personal standpoint.
Looking to avoid probate mistakes? Talk to Partridge Muir & Warren.
Whether you wish to hand over your full responsibilities as executor, or need professional guidance with one or more aspects of estate or probate management, the dedicated experts at Partridge Muir and Warren are here to assist in the way that suits you best.
For the help you need to avoid probate mistakes and to protect yourself personally in the process, we welcome you to get in touch.