Probate – what are the risks of doing it yourself?

In recent years, the Government has introduced measures to actively encourage the public to apply for probate themselves.

Online services have been introduced allowing the public to make applications and in early 2022 a new flat rate of £273 was introduced regardless of whether you choose to make a personal application or use a solicitor. These changes are broadly welcomed by the legal industry, but executors need to be aware of the risks of dealing with probate themselves before deciding if this the right route for them.

Anyone aged 18 or over can be an executor, so whether you are asked by family, friends, or neighbours, it’s important to know exactly what responsibility you are taking on.

At first glance it may appear that applying for probate online is simply a tick box exercise whereby the applicant just needs to provide details about the deceased’s persons estate including financial information. What the online service does not tell you is how to administer an estate, about the potential of someone challenging the Will and about your personal liability as an executor.

Many people are unaware that the role of executor to a deceased person’s estate is onerous as it carries with it unlimited personal liability, which means if you get something wrong, you may end up personally paying the bill yourself.

There are many tax pitfalls and other procedures that must be followed during the probate process that executors may not be aware of, such as recent changes to Capital Gains Tax (CGT). These changes to CGT mean that if CGT is payable on the sale of probate property it must be calculated, reported, and paid within 60 days to avoid penalties.

Executors may also be required to investigate the tax position of the estate and fill in Inheritance Tax (IHT) forms for HMRC regardless of whether IHT is due. If you don’t do this correctly and fail to pay the tax that is due, then you or the estate may face penalties. On the flip side, you may not be aware of all the latest exemptions and reliefs that can be applied to a persons’ estate to reduce any IHT bill. Using a professional will ensure that the maximum exemptions and reliefs are applied for and this can often significantly reduce the IHT bill for an estate and increase payments to beneficiaries.

The online service currently provides no guidance on how to ensure the financial information submitted by the applicant is correct. A solicitor can advise executors on how to trace assets of the deceased and how to advertise for unknown creditors of the estate. As an executor dealing with the estate, you will be liable for any debts left unpaid. Therefore, if a beneficiary doesn’t receive the correct inheritance or if there is an outstanding bill which is not settled before you distribute the estate, you could be personally liable for this. The best way to avoid these pitfalls is to seek advice.

Executors are entitled to protect themselves from personal liability by using the services of a solicitor or accountant to administer the estate correctly, who can help to minimise the risks, advise on the appropriate procedures and avoid the common pitfalls. It is usually the case that reasonable legal and accountancy fees can be legitimately deducted from estate funds before payment is made to the beneficiaries.

Some people’s affairs are straightforward, but executors should ensure they fully understand the role, responsibilities, and risks from the outset and remember that if guidance is needed then professional advice is available.

If you would like to know more please get in touch with our team today.