The pitfalls of DIY probate | AAG Wealth Management

The pitfalls of DIY probate

Posted: September 24, 2014

The death of a loved one is typically an emotionally stressful time. With a number of things that need looking after in the first few days, such as registering the death, identifying the Will and confirming funeral arrangements, the last thing you may want to think about at this difficult time is probate.

What is probate?

‘Probate’ is the legal term given to the process of dealing with a person’s estate under a ‘grant’ (‘grant of representation’ – or ‘grant of confirmation’ in Scotland) after he or she has died.

Probate is typically undertaken by the executors of the Will or, where there is no Will, by the administrators of the estate, both known also as the deceased’s ‘personal representatives’. The procedure of obtaining a grant allows the personal representatives to gather in the assets of the deceased and distribute them in line with the terms of the Will, or the intestacy rules where there is no Will.

Probate is not required in all instances. For example, where the deceased has left a minimal amount of funds (usually considered to be less than £15,000) and personal possessions it is unlikely that a grant will be required, or if assets are passing spouse to spouse – with some exceptions .

However where more significant assets are left, or in more complex situations, a grant is likely to be needed to administer the estate effectively.

Such situations include where the deceased:

  • has left significant funds in a bank account or building society (usually over £15,000)
  • has left significant assets in their own name

Or owned:

  • ISA
  • stocks and shares
  • property that needs to be sold
  • a business or farm land
  • assets abroad

Or:

  • had an interest in a trust where funds need to be released under death benefit.

Probate is a daunting task which can often involve exhaustive enquiries into debts, assets, pensions, lifetime gifts or planning for care home fees.

While in difficult economic times, online DIY probate services can seem a tempting option, a lack of care or knowledge can often lead to unnecessary problems and mistakes.

Common mistakes of DIY probate

That which, at the beginning, can seem to be straightforward, can lead the lay personal representative into a position of duty and responsibility, to the beneficiaries, for an estate whose complexity far outweighs his/her knowledge of either the laws of succession or tax. Common mistakes of DIY probate include:

  • undervaluing the estate for Inheritance Tax purposes
  • failing to identify or locate all assets
  • failing to identify beneficiaries who are entitled to inherit
  • failing to pay Inheritance Tax within the strict time deadlines
  • failing to implement a trust contained in the Will
  • failing to pay gifts to children correctly
  • failing to pay all the deceased’s debts
  • or, where an estate is insolvent, in their correct order.

Perhaps even more stressful and damaging, DIY probate can result in mistrust between family members. It can also result in greater costs, and time, putting things right.

While the costs of DIY probate may seem lower, the value gained from the stress-free process of instructing an experienced legal professional more than makes up for the difference. Working with them will not only remove the risk of tax problems and liability, but may actually be a wise investment and save you money in the long term.

 

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