What are the Risks of DIY Probate?

When a family member or friend passes away there are many steps that need to be taken by Personal Representatives in order to administer their estate. These may be practical arrangements such as re-homing any pets or clearing the property but could also involve legal matters such determining who are the beneficiaries, obtaining a Grant of Probate (or Letters of Administration if no Will has been made, collectively known as a Grant of Representation) and finalising the tax affairs.

Whilst it is possible to administer an estate and obtain a Grant of Representation without instructing a lawyer, there are considerable risks involved. The role of a Personal Representative, whether that be an Executor or an Administrator, is a very important role and many duties and responsibilities are placed upon them. A Personal Representative must tread very carefully when administering an estate to ensure that they are not breaking the law and not putting themselves at risk.

If a Personal Representative makes a mistake during the administration, no matter how innocent the mistake may be, then the Personal Representative could be personally liable. For example, if the beneficiaries of a Will are unclear or there is no Will then the correct beneficiaries must be determined. If the incorrect beneficiaries are paid then the Personal Representative could be personally liable to correct beneficiaries. Equally, if the beneficiaries have been paid and, at a later date, a further invoice is received then the Personal Representative again could be personally liable.

A Personal Representative may also be personally liable for something they have not done, which may be something they did not know was even necessary.

If there is any inclination that an estate may be insolvent (and it must be borne in mind that this may not be obvious at first as details of credit cards and loans, for example, may only materialise later during the administration) then Personal Representatives must take great care. In an insolvent estate there is an order of priority of who should be paid first and if this order is not followed then creditors may pursue the Personal Representatives for the outstanding debt.

Personal Representatives who are administering the estate themselves may not be aware of the provisions of the Inheritance (Provision for Family and Dependants) Act 1975 whereby certain categories of people are allowed to bring a claim against the estate if reasonable financial provision has not been made for them. A Personal Representative may proceed to administer and distribute an estate without realising that someone could potentially bring a claim against the estate and if such a claim is made and is successful, if the estate has been distributed then again the Personal Representative could find that they are personally liable.

If an estate is taxable then it is the Personal Representative’s responsibility to calculate the inheritance tax payable to H M Revenue and Customs if no lawyers are instructed on their behalf. Such a calculation can become complicated, particularly where certain exemptions and reliefs may be applied, but without detailed knowledge of these exemptions and reliefs a Personal Representative could pay more tax than necessary. On the other hand, if tax is incorrectly calculated and too little tax is paid then financial penalties could be imposed for which the Personal Representative could be liable.

Many Personal Representatives are unaware that their responsibility also extends to ensuring the deceased’s income tax affairs are finalised to the date of death and for the period of the administration of the estate. This involves researching the deceased’s income and potentially completing income tax returns. Again, any mistakes made in this regard could result in penalties imposed by H M Revenue and Customs and, again the Personal Representative may be personally liable.

It is worth keeping in mind that it may be possible for certain strategies to be exercised to reduce any tax due, whether that be inheritance tax or possibly capital gains tax, or even considering the possible future tax implications of surviving family members.

This article points out just some of the risks involved for administering an estate without legal assistance. To summarise, there are many situations where a Personal Representative may find themselves personally liable or there are areas where having a lawyer to assist may either save the estate money at this stage or in the future. It is therefore likely that administering an estate yourself rather than instructing a lawyer is a false economy that could become very costly indeed.

It is always worth speaking with one of our lawyers who can provide a quote for our involvement in the administration of an estate. On many occasions, clients have advised that they thought our costs would be much more than the quote provided having read articles online of legal fees being many thousands of pounds. It is only the particularly complex estates that involve the higher legal fees.

To discuss the administration of an estate, obtaining a Grant of Representation or any other matter relating to the affairs of a deceased person, please contact one of our lawyers in the Wills, Lasting Powers of Attorney and Probate Department:-

Jamie Dobbs- jamie.dobbs@maplessolicitors.com
Jane Mawer- jane.mawer@maplessolicitors.com
Faye Blair- faye.blair@maplessolcitors.com

Or telephone the office 01775 722261 and ask to speak with one of the team.