Choosing your beneficiaries is an important decision when considering the legacy you wish to leave behind. Most often, gifts are left to family, friends and charities; however, with the ever-increasing movement of people throughout the world, it is not uncommon for an address in a will to quickly become outdated or for life to get in the way and contact to lapse between friends and family. In some cases, where no will has been made, the rules of intestacy will apply, and you may be unaware of who your beneficiary will be.
Obligations of the personal representative
When someone dies and their personal representatives need to locate a beneficiary, the first course of action is to reach out to the deceased’s friends and relatives in the mere hope that they may still be in touch with the beneficiary or may know someone who knows them and so on. But what can the personal representatives do then when this is not enough? How can they protect themselves from a claim or from a challenge to the will later down the line when the missing beneficiary makes themselves known?
The personal representatives must exhaust all their options to protect themselves from a claim. Did they employ tracing or intelligence agencies who may be able to track down the beneficiary from their last known address? Are there any unique or unusual traits about the beneficiary, such as uncommon surname that would narrow the search? Or is there any sort of tie to a particular area? Narrowing down the search criteria is often a big step in identifying the whereabouts of the beneficiary, but even this can be a daunting task.
Protection for the personal representative
Whilst there are various measures used by personal representatives to protect themselves against potential claims e.g., a legal advert known as a “Section 27 Notice” is often placed in a local newspaper and/or the London Gazette and whilst this notice protects the estate against any claims from creditors, it does not extend to any claims from missing beneficiaries. Another common practice is for the personal representatives to wait six months after the Grant has been issued before making any distributions. This only protects against a challenge to the will under the Inheritance (Provision for Family and Dependents) Act 1975 and there is no safe time limit to wait in the case of a missing beneficiary.
Options available
In cases where the personal representatives have exhausted all their options and the beneficiary has not made themselves known, there are various options available:
- The personal representatives can apply to the court for an order known as a “Benjamin Order”. This order allows the personal representatives to distribute the final amount left in the estate and protects the personal representatives from any future claims should the missing beneficiary resurface. A downside of this option is that it is not only very costly, but if the missing beneficiary later comes forward, they still have the right to recover their entitlement from the other beneficiaries who received their share.
- Specialist insurance known as “missing beneficiary indemnity insurance” can be obtained which in many instances will be the cheapest option and has the advantage of protecting not only the personal representatives but also the other beneficiaries from any claims.
- The missing beneficiary’s entitlement can be paid into court. This is usually a last resort and used only when there are no other beneficiaries to distribute to.
Given the complexity of the above, the importance of keeping an up-to-date will cannot be understated as it reduces costs and helps speed up the process of contacting the beneficiaries.
For further guidance on dealing with missing beneficiaries, contact our private wealth lawyers.
