It can be tempting, especially during this coronavirus pandemic, to try to save costs by dealing with the administration of an estate yourself, without instructing a solicitor. However, this could be false economy, and could cause you and the deceased’s family considerable distress and upset.
Mistakes in dealing with the administration of an estate can cause significant loss, and the person taking on the tasks, normally the executor or administrator, could become personally liable for losses sustained by the beneficiaries of the estate.
Potential pitfalls in dealing with an estate yourself
1. Failing to distribute to the correct people
There are many instances of personal representatives failing to distribute estates to all the correct people. This could arise, for instance, on intestacy i.e. where there is no will. Take for instance the man who died leaving three children. He had a fourth child who had predeceased him, leaving children of his own. The personal representatives failed to take into account the entitlement of the issue of the deceased child. This resulted in an incorrect distribution being made and the administrators becoming personally liable to the children of the deceased child. Distributing to the wrong people can arise from a misinterpretation of the terms of a will. For instance, a gift to “the deceased’s grandchildren”. An executor distributing to step-grandchildren could be making a serious error and could result in him becoming personally liable.
2. Non-payment of debts
An executor who distributes an estate can be personally liable for debts which have not been paid, even though they were unaware at the time. Ignorance is no excuse. Therefore, if an executor distributes and pays the beneficiaries out but doesn’t pay all the debts, the creditors can come against the executor. The executor can try to seek reimbursement from the beneficiaries but this could be a real problem if the beneficiaries have already disposed of their inheritance, or just refuse to pay them.
3. Payment to a bankrupt beneficiary
If you pay a beneficiary who is bankrupt, you can be personally liable to reimburse the official receiver in bankruptcy.
4. Incorrect tax calculations
An executor who is not legally qualified can fail to take into account all the appropriate tax reliefs. These include the unused nil rate band of the deceased’s late spouse, the main residence nil rate band and such other reliefs as business property relief. This could result in a significant over payment of tax.
Taking on the burden of being an executor is an onerous responsibility. The issues can be far more complex than you realise when you start taking it on.
If you want peace of mind, you should instruct a specialist solicitor. Otherwise, you can be personally liable and out of pocket.
