11th October 2016
It is a fact of life that nobody likes to talk about death. During lifetime we procrastinate about having Wills drawn up: it stays on the list of things ‘to do’, but the mundane jobs of painting the garden fence or cleaning out the drains always seems more preferable than thinking about our mortality. Conversely, we all know of someone who has died where there is either a shocking amount of inheritance tax paid, which could have been avoided, or the estate passes to a second cousin twice removed who no one knew existed because there was no Will.
By taking the time to make a Will you can:
When the time does come and a loved one dies, sometimes grief is rudely forced aside whilst the administration of the estate is dealt with.
This is, of course, the red tape associated with a person dying: drawing a line under their paper and digital life, gathering in assets, settling debts and distributing the remaining estate in accordance with the Will or statutory rules of Intestacy (where there is no Will).
An executor is appointed under the Will or an Administrator appointed under Intestacy (together they are Personal Representatives or PRs). Normally these are family member(s) or close friend(s), occasionally it may be a bank, solicitor or other professional.
In addition to dealing with asset providers, the PRs may also need to report to HMRC (Income Tax and Inheritance Tax) and apply to the Court for Probate (the Court order recognising who has the legal authority to deal with the estate). For most estates that are over a certain amount, the asset organisations will require the PRs to produce the Probate before they will release the assets.
Dependent on the size and complexity of the estate, this can become an onerous task and comes at the worst possible time when trying to cope with loss. Reverting to a solicitor to assist can relieve the day-to-day burden, leaving you to make the important decisions and sign documents.
Too often we have seen PRs try to rush the process. We, of course, recognise that they want to move on following the bereavement, but they often end up falling foul of HMRC leading to penalties or can risk potential litigation by disappointed beneficiaries as the result of financial loss to the estate.
Binding obligations set out in the Will are ignored, especially in relation to trusts such as traditional Nil Rate Band (‘NRB’) trusts set up under some Wills to preserve for married couples to make best use of their Inheritance Tax allowances. This can also be the case with Life Interest trusts set up as part of tax or care home planning (usually on the death of a first spouse) that are incorrectly dealt with, if at all, and can often lead to additional tax on the death of the surviving spouse, penalties, interest and massive delay.
We are all different, not everyone wants solicitors to deal with the administration of their estates. However, recognising when professional advice is required is half the battle. If there is a legal document, such as a Will, which has plenty of jargon, why not take an hour to speak to a solicitor so you understand the implications rather than taking a chance? It could save you more time, money and stress in the long run.
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