In the current economic climate, DIY may be the answer when it comes to a new kitchen or a bathroom but is it the best way to save money when dealing with the estate of a friend or relative?
Despite acting with the best intentions, many personal representatives are unknowingly paying more tax than they need or even placing themselves at great risk.
Whilst some estates are relatively straightforward many are not. The probate process is often time-consuming and stressful, but can also prove costly in the long run. If mistakes are made, whether deliberate or not, the personal representatives can find themselves in court and held personally liable for any losses.
Nuts, bolts and rusty bodge jobs
Many Wills are full of legal language and are difficult to understand. Often Wills contain trusts designed to protect vulnerable beneficiaries, save inheritance tax or to avoid assets being eroded by care home fees in the hands of a surviving spouse. If the terms of such Wills are misinterpreted there is a risk that assets will be dealt with incorrectly.
In addition older Wills may have been rendered invalid by a later document or event (such as the marriage of the testator). Homemade Wills can be a particular problem as often they are not valid at all. Reliance on such documents can result in the estate being distributed to the wrong people.
Where no valid Will exists the estate will be distributed in accordance with the 'intestacy rules'. These rules can result in the creation of trusts and so it is important to make sure that you take professional advice.
Any probate dispute has the potential to damage family relations permanently and can quickly eat into the estate leaving very little for the beneficiaries.
If an estate is distributed incorrectly the true beneficiaries can seek to recover their inheritance and substantial legal costs from a personal representative's own pocket.
Jack of all trades, master of none?
Personal representatives without legal knowledge and probate experience may also struggle with complex inheritance tax returns. Errors or omissions can result in the estate incurring penalties or paying the wrong amount of tax. In particular, personal representatives may not recognise the opportunities to claim a range of valuable tax exemptions and reliefs. This may ultimately cost the estate many thousands of pounds.
We would strongly recommend that you seek professional guidance before attempting to administer an estate yourself. A professional will be able to give you expert advice and guide you through the probate process. This could save you a considerable amount of time, worry and may well prove more cost effective in the long run.
If you are encountering difficulties please do not hesitate to get in touch. Our experienced solicitors can offer advice and help to resolve any problems you might be experiencing.
For more information please get in touch with your usual contact at Wansbroughs.
