The Pitfalls of DIY Estate Administration
Estate Administration and its jargon
- ‘Estate administration’ is the process of managing an individual’s assets after they have died; the ultimate aim being to transfer those assets to that individual’s beneficiaries.
- An individual’s ‘assets’ includes property, money, shares, and anything else the deceased individual owned.
- ‘A beneficiary’ is a person or organisation that derives advantage from a Will.
- ‘Executors and administrators’ are the individuals legally permitted to manage the deceased’s estate and they are collectively known as the ‘personal representatives’.
- The Last Will prepared by the individual includes the chosen executors.
- If the individual died intestate (without a Will), the administrator will have the duty of administering the estate. The administrator must apply to the Court for authority to act.
- Executors and administrators possess the right to consult a ‘professional estate administration provider’ to take care of the deceased’s estate. In simpler terms, a solicitor, financial advisor, or some companies that specialise in the administration of estate can act on behalf of the executors and administrators.
- Consulting a professional provider is extremely advantageous as they have an advanced knowledge and experience of the law, while being able to maintain distance from the grief related to the passing of a loved one. Although this will incur professional costs, it is still in the best interest to seek their assistance.
Why DIY Administration?
- Some individuals decide to administer the deceased’s estate themselves, without the aid of a solicitor or other professional body. As a result, the executor or administrator will perform all the responsibilities themselves. This is usually because of a reduction in time and cost.
- It is completely understandable that once the sheer size of the estate administration task is understood by an executor or administrator, it can seem too late to seek professional assistance. This is incorrect and nobody should feel overwhelmed and stuck in such circumstances.
The Darkside of DIY Estate Administration
- First, if an estate is partially or incorrectly administered, the cost and time can be significantly more than consulting a professional in the first instance. Pursuing legal advice and attempting to correct errors can be costly and extremely time consuming.
- Personal representatives, the executor or administrator, are liable for any financial detriment caused to the estate. This applies regardless of whether it was committed with intent or not.
- HMRC may also implement financial sanctions for missing information, errors and for failing to pay Inheritance Tax correctly. The penalties imposed by HMRC are becoming increasingly stringent.
- Not only are there several legal and financial consequences of incorrectly administering an estate, but the trusting relationships between the beneficiaries (those who benefit from the Will) and the personal representatives can deteriorate as the trust is lost.
- When administering the deceased’s estate, having to complete all the required tasks can be detrimental to one’s wellbeing during a time of mourning and grief.
Blog post written by Josh Williams.