09 August, 2013
Whilst it is entirely possible to administer an estate without legal assistance, there are many pitfalls for the unwary.
Many professionally drafted Wills contain trusts. These trusts are usually included in the Will to save tax, protect assets for the future or to provide protection for vulnerable beneficiaries. Without proper advice, executors can unwittingly undo the planning by not transferring assets to the right people or putting in place the correct documentation.
One example is a Will that includes a discretionary trust for tax planning, often referred to as a "Nil Rate Band Trust". These were common in Wills made before October 2007 as a way of saving inheritance tax. More recent changes in the law mean that families now have options in how they deal with the estate and these trusts play a vital role in that. However, decisions need to be made within specific time limits and the correct paperwork put in place, otherwise there is a risk that the tax planning will be undone. Taking early advice on the administration of the estate can ensure that the existence of the trust is identified and the options are discussed.
Another common situation is a Will that leaves a surviving spouse the right of occupation or a "life interest" in the family home. This is also a trust and is usually done to make sure that the person's share of the property passes to the children ultimately and not to creditors or a new spouse. If this is not identified and the interests of the beneficiaries properly protected, over time the trust can get "forgotten". This can cause problems later, particularly if the property has been sold and the proceeds of sale have not been ring-fenced.
People aren't always aware of the complexities and assume probate work is straightforward. It is true that it can be, but it is just as true that sometimes it isn't. In all but the most straightforward cases, it is important to seek timely specialist legal advice that can actually save you money and worry.
Solicitors specialising in probate work will often offer to work in partnership with the deceased's family to help and support them with the legal and technical work and can often add value by identifying cases where money is owed to the estate, for example care funding which should have been met by the NHS.