Acting as an Executor of a Will or Administrator of an intestate estate
[Read time: 4 minutes]
In her article written in collaboration with Landmark Financial Asset Search, Caroline Alexander explores the common pitfalls encountered by Executors and Administrators of intestate estates.
Acting as an Executor of a Will or Administrator of an intestate estate (an estate where there is no Will) can be an exceedingly onerous task. Executors and/or Administrators are collectively referred to as the Personal Representatives (“PRs”) of a deceased’s estate.
There are many hidden pitfalls when it comes to administering a deceased’s estate whether it appears straightforward or not, PRs should act with due diligence and care. Taking up the role of a PR does not exonerate you from any errors you may make; it in fact makes you personally liable if anything goes wrong (that is, unless you have appointed a solicitor to undertake the administration on your behalf).
Lay PRs frequently inadvertently fall into proverbial pits, not realising they are in a pit until it is too late for them to climb out without there being some personal cost. Sounds scary? Well it is, especially where the PR may not even stand to benefit from an estate.
In this article we cover off five of the most common pitfalls lay PRs fall into especially when there is limited evidence and/or knowledge of the deceased’s lifetime affairs or the beneficiaries.
The first pitfall
If a PR administers a Will which later turns out to be invalid as it had been revoked by a Will made at a later date and the beneficiaries of the valid Will differ; the PR will be liable for putting the rightful beneficiaries of the estate in the position they would have been had the correct Will been administered. If there is any doubt as to whether or not there may be a Will in a suspected intestacy or where a more recent Will may have been executed, a Certainty “Will Search Protect” search should be undertaken by the PRs. This search checks various sources, places notices and adverts and provides an insurance quotation for the PRs. The PRs should always take out insurance where they do not have in-depth knowledge of the deceased’s lifetime affairs to protect themselves.
The second pitfall
With the increasing use of paperless on-line accounts PRs should not assume that they have found all of the deceased assets by simply trawling through their papers. A Landmark Financial Assets Trace search has far reaching scope to search for a deceased’s personal pension, life policies, investment bonds, unit trusts & investment trusts, National Savings & Investments (NS&I), Occupational pensions via (DWP) and the FTSE 100 Shareholdings (registered with Capita, Computershare & Equiniti). It also checks the Unclaimed Assets Register. In a recent estate an endowment policy was found with a value of £44,000 on the Unclaimed Assets Register. The deceased’s house had been cleared when he moved into care with dementia during his lifetime. There was no evidence of this asset amongst his papers. If a search had not been undertaken this asset would never have been found.
The third pitfall
PRs should take advice if the estate is insolvent or partially insolvent. It is possible that it is best to leave the administration of the estate to the primary creditor.
The fourth pitfall
If PRs do not properly check for and discharge the debts of an estate and they distribute the estate assets to the beneficiaries and a creditor subsequently comes out of the woodwork, the PRs will be personally liable to settle whatever is due to that creditor. PRs should place Trustee Act Notices to check for any unknown creditors in a paper local where the deceased owned property and in the London Gazette. Subsequent to the expiration of a two month notice period, the PRs will be protected from their personal liability to settle claims by previously unknown creditors if they have distributed the estate.
The fifth pitfall
Distributing to a bankrupt beneficiary. If PRs do not check whether or not a beneficiary is bankrupt and distribute funds to that beneficiary they can become liable to the trustee in bankruptcy for the value of the distribution. As such, shortly before distributing any sums, PRs should undertake bankruptcy searches for each beneficiary.
There are many other more complicated traps and pitfalls in estate administrations and PRs should always take professional advice to protect themselves especially if they are not the only beneficiary of an estate.
For advice relating to Wills or administration of an intestate estate please contact our Private Wealth team.