It has always been possible to apply for probate as a private individual, however the prospect of completing tax forms and muddling through the legal jargon of Wills has meant that most executors seek professional assistance. However, in the recent times there has been a steady increase in individuals choosing to administer estates themselves. This may be down to the fact that information is so readily available via the internet (including a step by step guide provided by the government) or down to a general shift away from a reliance on professionals as can also be seen in the increase in homemade Wills. That does however beg the question: just because you can apply personally, should you?
As a general rule, I am not adverse to personal applications. In some instances it simply makes financial sense. However there are a few points where proper legal advice can be invaluable and should be taken.
Taxable Estates - in the UK, individuals have an inheritance tax allowance of £325,000. This allowance can be inherited by spouses so that, between them, a couple have an inheritance tax nil rate allowance of £650,000. Generally speaking, estates that fall within this threshold (and don’t have any points mentioned below!) are the most straightforward to administer. However, if an estate is worth more than the available nil rate allowance then a full inheritance tax return will be required. This can be the case even where there is no inheritance tax to pay, either because the assets pass to a spouse or charity or benefit from business or agricultural reliefs. This is also the case if the estate needs to claim the new residential nil rate allowance, as this also requires a full inheritance tax return. You can find out more about this allowance here. The full inheritance tax return is notoriously complex and time consuming. It is also worth highlighting that any misfiling (either intentional or accidental) can result in penalties from HMRC. Good professional advice, particularly in the case of taxable estates, can often save the estate money as the adviser will highlight all the available allowances and ensure that information is correctly filed (so no penalties!).
It is possible to change how estates pass through Deeds of Variation. This is a document completed by a beneficiary in which they redirect their inheritance. Variations are often used as a way to pass assets to children or grandchildren without the need to survive that gift by 7 years. They can also be used as a way of implementing tax savings into an estate, usually by passing a benefit to a spouse in a protected manner. Deeds of Variation are legal documents and have direct implications for inheritance tax and capital gains tax. I would therefore advise against ever using a google template to put these in place.
Many Wills include trusts: life interest trusts for spouses, nil rate band trusts (which used to be very popular) or discretionary trusts for children and grandchildren are all very common. You may also be dealing with the estate of a person who has been a beneficiary of a trust during their lifetime. Trusts are a highly complex area of law and it is not advisable to proceed with these in a blasé manner. If the trust is ignored (as commonly happens) or incorrectly administered then this can lead to significant tax consequences. Trusts can be extremely useful tools and they will normally have been included in the Will for a particular reason. You should therefore seek specialist advise before taking any steps in relation to these estates. If possible, use a member of the Society of Trust and Estate Practitioners (STEP) as they specialise in trusts and would be able to advise you fully on what needs to be done and the options available going forward.
As explained at the start of this blog, there has been a significant increase in the number of people preparing homemade Wills. This has led to a similar increase in the number of estates being contested following a person’s death. If you are acting as an executor of an estate which is being challenged then you should seek immediate professional assistance. This is not something you should tackle on your own.
Above all, you should only start acting as an executor in an estate if you feel comfortable doing so and understand the procedures, regardless of the size of the estate. Once you take on the role of executor you cannot later stepdown (this is called intermeddling). An executor’s role carries personal responsibility and therefore risks if the estate is incorrectly administered. These risks are explained in more detail here
If you are appointed as an executor and wish to discuss any of the points above, or the estate in general, then please contact Ashley Minott on 01494 893518 or firstname.lastname@example.org