By James Mabey, Partner at Winckworth Sherwood
Amid the high levels of current inflation and the economic backdrop, it is understandable that many executors will decide to administer a deceased’s estate themselves and dispense with the cost of instructing a solicitor. We have compiled a list of 6 key reasons why it pays to pay for Probate.
Executors are accountable to beneficiaries and are liable personally for anything that goes wrong, and so administering an estate oneself, rather than instructing a solicitor, means taking on additional risk. This can be exacerbated by the fact that for many executors, it will be the first time they have carried out the role. Unfamiliarity with the Court system, dealing with HM Revenue & Customs, HM Land Registry and generally with financial organisations can all mean that important deadlines are missed, and financial penalties can result. If something goes wrong and you have instructed a solicitor, you can complain to them and have the benefit of their indemnity insurance. Instructing a solicitor to handle the estate can therefore give you peace of mind – not just that you are in safe hands, but also that you have an added layer of protection.
Instructing a solicitor who carries out this work on a daily basis and is familiar with the deadlines and organisations mentioned has a lot of advantages. A solicitor will have access to precedent letters and software specifically designed for completing and filing necessary documents, not to mention technical resources if there is a point of law or procedure which needs addressing, or the expertise within their firm to draw on. That may include a conveyancing practice to sell an estate property or specialist knowledge about anyone who may make a claim over the estate. Unless you have access to these resources and software yourself, it is likely to take you longer than it would take a solicitor to complete the same work.
Administering an estate is a time-consuming process, with lots of the correspondence involved still needing to be carried out by letter. It is not uncommon for the administration to take one or even two years. More complicated estates can take even longer to administer. The amount of work required often comes as a surprise to an executor and the time involved can interfere with other work you might be carrying out, or simply eat into spare time. A solicitor can therefore help to free up evenings and weekends which you would otherwise spend on administering an estate.
If the person who has died is a family member or friend, you will be grieving at the same time as dealing with their estate, which is a double burden. As the months go by, beneficiaries can get restless and want to know when a property is going to be sold or when they are likely to receive their inheritance. Solicitors are familiar with the stages of an administration and timeframes and can manage expectations accordingly in their capacity as professionals.
Higher levels of inflation, increases in house prices and a capped tax-free allowance (the “nil rate band”) has meant that the number of estates that must pay inheritance tax continues to increase. Knowing what amount of tax there is to pay is not always easy to calculate, or how to take advantage of tax-free allowances like the residence nil rate band. A professional administration team will be able to advise you on income, capital gains and inheritance tax. Your solicitor will also prepare Estate Accounts to ensure accounting is properly done. Acting on advice from experienced professionals could assist you in saving tax to benefit the beneficiaries in the long run.
While solicitors’ fees for administering an estate may seem large, they often amount to between 1.5% and 3.5% plus VAT of the value of the gross estate. The fees are not payable by you personally and are payable out of the estate.