Probate – what are the risks of doing it yourself?

Published by on 10 August 2021

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In the last year, the Government has introduced online services to encourage the public to apply for probate themselves. These services are broadly welcomed by the industry, but executors need to be aware of the risks of DIY probate before deciding if this the right route for them.

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

For example, in 2012, an executor found himself in a difficult situation where he had submitted the deceased’s final income tax return, paid the calculated income tax and distributed the estate. Then two years later in 2014, HMRC queried the accuracy of the tax return and made a claim against the executor for the undeclared income and interest, which amounted to £14,458, together with a penalty of £5,060 for the failure to disclose the income.

The case was heard by the First Tier Tax Tribunal who waived the penalty, but the executors were held liable for the tax and interest and this had to be repaid from their own finances as the estate had already been distributed to beneficiaries.

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) which mean that CGT payable on the sale of probate property must be calculated, reported and paid within 30 days to avoid penalties.

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 minimize the risks, advise on the appropriate procedures and avoid the common pitfalls. And 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 at the outset and remember that if guidance is needed then there is professional advice available.

If you would like to discuss the topics explored in this article then please get in touch with our legal services team.

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