The dangers of DIY probate

With the UK economy far from flourishing, virtually everyone is looking to save money, with legal services identified as an area where savings can be…

With the UK economy far from flourishing, virtually everyone is looking to save money, with legal services being identified as a potential area where savings can be made.

So when a relative dies, the increasing trend has been for the executors or administrators (known generally as personal representatives) to deal with the administration of the estate themselves. It is entirely possible to obtain probate and deal with the estate without ever having to see a solicitor, with personal applications to the probate registry costing approximately £215 – a noticeable saving on a solicitor’s legal fees. This option also offers families the opportunity to deal with things between themselves, without the formality of going to a lawyer to discuss personal matters. The district probate registries are approachable and very helpful, and can take some of the intensity out of an already distressing process. You can even now swear your documents at a local solicitor’s rather than having to attend at the registry itself.

However, this route is not for the faint of heart as it does carry some risks, as legal group Solicitors for the Elderly (SFE) has recently highlighted.

Many professionally drafted Wills contain trusts to save tax, to protect the monies of the deceased from going to someone they would prefer not to benefit from their assets and to reduce the likelihood of potential disputes. SFE members have noticed an increase in ‘DIYers’ returning to them to seek advice when they have made a mistake or find the paperwork too tricky. Mrs A’s Will had included a tax saving trust, but when her husband administered the estate, he paid the whole estate to himself. He eventually went to see a solicitor who was thankfully able to sort out the matter and avoid future complications occurring when Mr A dies. In Mr G’s case, he sold some shares that had made a gain during the administration of his late sister’s estate and had to pay tax. If he had transferred the shares to himself first, before selling them, he could have avoided the tax.

A specialist probate research company, Title Research, has also identified that DIY probates are increasing the risk of tax fraud and the incorrect distribution of assets. Having reviewed government statistics, they say that the share of probates undertaken by solicitors fell by 30% between 2006 and 2010. As the economy has floundered and the use of the internet has increased, the current figure is likely to be even less. In turn, an almost inevitable consequence of fewer people using solicitors or other professional advisers is going to be the incorrect or even fraudulent distributions of estates, and inheritance tax evasion. The idea that relatives can save on solicitors’ fees might be an attractive one, but probate and IHT are incredibly complex areas and the chances of making a costly mistake are high.

It was also suggested that the rise in DIY probate could, in part, explain why there are an increasing number of legal disputes over inheritance that reach the courts and perhaps why HM Revenue & Customs are now so concerned over inheritance tax evasion. There has been an 85% leap in the number of high court cases launched by claimants dissatisfied with their inheritance. Such disputes can dissipate the assets of an estate very quickly, so DIY probate can be a false economy.

A lot of these issues can be resolved over time, but it is obviously better that they be avoided altogether. As a personal representative carries a certain amount of personal liability in their role, they can be opened up to substantial legal claims. There are lots of ways to slip up, if corners are cut, or the personal representatives are unaware of the laws and their obligations, especially when the deceased did not leave a Will. The caveat should therefore always be that if in any doubt, seek professional advice, otherwise the £215 personal application may turn into a legal claim of thousands of pounds.

At Weightmans LLP, we are proud to provide a personal, transparent and efficient service by a team which includes fully qualified members of the Society of Trust and Estate Practitioners as well as members of Solicitors for the Elderly.

Understanding the importance of careful estate planning to help provide for future generations, we offer lifetime and post-death planning to a diverse range of clients.

Our main areas of expertise include:

  • Wills
  • Trusts
  • Tax planning
  • Probate and Administration of Estates
  • Powers of Attorney
  • Deputyships
  • Trust and Estate Disputes

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