Disputes in Estate administration

Not all estates that are left in Wills go through probate and estate administration smoothly.

Sometimes disputes arise because people don’t receive what they expect to receive in a Will.

This can range from one particular item of personal property to a share or the whole of the estate.

For example,2^nd marriages are frequently the cause of dispute where the whole of the estate is left to the new spouse and nothing is left to children.

In this case the first spouse to die leaves all the estate to the surviving spouse on the understanding that whatever passes to the survivor will ultimately be passed on to the children of the first spouse.

The two spouses may even have written Wills in the same terms on the joint understanding that the joint estate on the second death will be divided between each spouse’s children in the shares they made a contribution to the joint estate.

Unfortunately this may not turn out to be the case.

In many cases the whole of the estate passes just to the children of the second spouse because he or she has made a new Will.

At this point the children of the first spouse who were expecting to inherit will usually try to dispute the terms of the Will.

This may be on the basis that they are entitled just on the basis they are  children of the first spouse and they have an automatic right to the estate.

Unfortunately  unless they can prove they were being maintained by their parent then they have no basis of a claim.

They could argue that their parent did not have mental capacity at the time the will was made or that the other spouse exercised undue influence in making a Will giving everything to  the other spouse.

However in most cases this will not apply and nothing can be done.

The way to avoid this is to write a trust for the lifetime of the other spouse with a gift over of the trust assets to the children of the first souse to die on the death of the second spouse .

Consult Consumer Care to deal with this for you and put your mind at rest.

Estate Administration without Wills

When someone dies without a Will they are said to have died intestate .

In this situation the estate will pass according to rules which have been put together over the years  based on what it would be considered reasonable for people to inherit in certain situations.

Although English law is different to all other European law including Scottish law because it is based on ancient Roman law English intestacy rules have carried some elements which  are similar to Roman law.

This is apparent in the division of the estate where there is a surviving spouse and children.

Over a period of many years the rules here have not truly reflected the wishes expressed in a married couple’s Wills .

For as long as anyone can remember  a standard married couple’s Will leaves everything to each other and  then  to children.This happens in probably  80% of cases .

However,the intestacy rules state that in a situation where spouse and children survive :

1 The spouse receives  £450000 and personal possessions and a life interest  in half the remainder ie spouse receives the income from the capital for life and on her death the capital passes to children equally when they reach 18 years of age.

2 The remaining half of the estate passes to the children in equal shares when they reach 18 years of age.

This is hardly reflecting the wishes of most people in these circumstances.

Until quite recently  the amount  passing to the spouse was £250000 and was for many years  so the increase to £450000 is substantial but the overall package does not fit with what people generally want  to happen with their estate.

Whatever the reason is for the intestacy rules being written in this way the fact is that you cannot rely on them if you want to pass your estate entirely to your spouse  and certainly not for you unmarried  partner  who receives nothing under these rules.

The only way to ensure your wishes for your estate are carried out is to make a Will with someone who is conversant with administering estates inheritance tax and the law of succession and who are qualified in this area .

This means that you should only  take  advice from either a solicitor practising in this area or a member of STEP [the Society of Estate Practitioners] or preferably dual qualified which is what our recommended service Consumer Estate Managment have.

Leaving money to Charity in Wills

When one thinks about beneficiaries in a Will, close friends and family are usually the first people you think about. However, it is also important to consider including charitable organisations who could also benefit from your legacy. This could be a charity you have supported during your lifetime, or a hospice which is an institution to yourself and your family.

In the 2011 Budget speech the Chancellor said:-

‘We will introduce from April 2012 this major change to our inheritance tax system:if you leave 10% or more of your estate to charity ,the Government will take 10% off  your inheritance tax rate.Let us be clear no beneficiaries will be better off as a result of this policy –just the Charities to the tune of £300 million.I want to make giving 10% of your legacy to charity the new norm in our country’.

How this would work can be seen from the following example:-

An estate is worth £850000.The Nil Rate Band is £325000.The estate net of the Nil Rate Band is £525000.10% will be £52500.

If nothing was left to charity IHT would be 40% £525000 = £210000.The Beneficiaries get £640000.

If the Will had left  £52500 to charity under the new regime  IHT will be calculated as follows:-

Value of estate                            £850000

Less left to charity                      £ 525000

Balance                                         £797500

Less IHT                                         £170000

Net balance                                  £627400

As opposed to £640000 if nothing left to charity

Onerous duties of an Executor

The duty of an Executor is to ascertain details of assets and liabilities of the estate and of any gifts made by the deceased.

The difficulty is being certain that you have taken reasonable care to find these details.

HM Revenue and Customs  says  this  in it’s Inheritance Tax customer Guide:-

‘How do I find the deceased’s assets?

Make a thorough search of all the deceased’s papers about their financial affairs.Make a rough list of their assets investments ,their other financial interests and the debts  they owed when they died.

If the deceased had to fill in Self Assessment tax returns they may have kept records to fill in those forms and these may help .Bank statements and building society passbooks  may help you to discover whether any gifts were made .Remember that although the income from certain assets such as PEPs ,TESSA’s and ISA’s is not liable to income tax both the capital and the income are liable to inheritance tax and must be included.

You may also find it useful to ask others what they knew of the deceased’s. People who might be able to help are:

• Any solicitor or accountant who dealt with the deceased’s affairs ,
• The deceased’s close family [especially to discover gifts]
• Anyone named in the Will who might know about the deceased’s affairs,
• Any close business associates of the deceased,
• The deceased’s bank ,stockbrokers or other financial advisers [the bank may have other papers or   valuables lodged with them for safekeeping].

You will need to make quite detailed enquiries so that you can find out about  everything that makes up the deceased’s estate.It is very important that you provide full and accurate information because you may make yourself liable to a financial penalty if you provide information incorrectly due to your negligence or fraud’.

It is therefore necessary to look at ,at least some of,the deceased’s bank statement and retained paperwork  to get a sense of their affairs.

Family members should be warned of the dangers of non disclosure.The penalty regime allows a penalty to be charged where an inaccuracy in the liable person’s document was attributable to another person .This is particularly rele vant to inheritance tax where Executors inevitably rely on other people to provide them with information about the deceased’s estate.

Where it can be shown that the other person deliberately withheld information or supplied false information  to the liable person with the intention that the IHT account or return would contain an inaccuracy ,a penalty may be charged on that other person.

BUT  that will not mean necessarily that the Executors are off the hook.  If the withheld or false information gave rise to those inconsistencies in the information received about the estate and the PRs do not question those inconsistencies, they may also be charged a penalty for failing to take reasonable care.

It is clear from the above that the role of Executor or Administrator  can be quite perilous and the estate administration is better dealt with by people who are experienced in this area.

Our recommended Estate administration company, Consumer Estate Management, is made up of a legal team with many years experience and would be very pleased to assist in dealing with an Estate administration on your behalf for a very competitive fee. 

Wrong Will signed by Testators

In a recent case Marley v Rawlings the facts were Mr and Mrs Rawlings each left the other their entire estate but if the spouse failed to survive the whole estate was left to Terry Marley who was treated as their adopted  son.

The Rawlings had 2 natural children but were not close to them and their intention was to benefit Mr  Terry Marley  alone on the death of the survivor.

Their house was vested in their 3 names as beneficial joint tenants and the rest od the estate came to about £70000 net.

The solicitor who had prepared the Wills visited Mr and Mrs Rawlings at their home with his secretary for the purpose of signing the two Wills.

By mistake Mr Rawlings executed Mrs Rawlings Will and vice versa.Both signatures were witnessed  by the secretary and the solicitor and no-one noticed the error.The mistake was not picked up on the death of Mrs Rawlings in January 2003.Presumably all the assets were jointly owned so that it was unnecessary to obtain a Grant of Probate.

It did not come to light until Mr Rawlings died in 2006.

If the Will was invalid the estate would pass on intestacy to the 2 natural sons of Mr Rawlings.The report makes it clear that Mr Marley will hold the solicitor responsible for the error.

The Court held that the Will could not be omitted to Probate because the requirements of the Wills Act  section 9 had not been met.This section provides that no Will shall be valid unless it appears that that  the testator intended by his signature to give effect to the Will.

In the Judge’s opinion Mr Rawlings did not intend his signature to give effect to the Will he signed.

The Will was therefore invalid.

In case the Judge was wrong  on that point she went on to consider whether the Court had the power to rectify the will under the Administration of Justice act 1982 section 20 and decided that it did not.

Section 20 allows a Court to rectify a will only if  it is satisfied that the Will fails to carry out the testator’s intentions,in consequence of a clerical error, or a failure to understand his instructions. The meaning of clerical error is wider than mere errors in transcription. In the present case there was no error of drafting whether by inclusion or by omission or by miscasting of words.

The Wills were both correctly expressed ,the error was simply that  the wrong Will was signed. It was as if the solicitor had pulled a Will prepared for a totally unconnected testator out of his briefcase and that one had been signed by mistake.

Rectification was not available.

The case is a reminder of the care that a solicitor needs to take if overseeing execution. Where a solicitor does not oversee execution if the Will is to be returned to the firm for safe keeping there is a duty to check that, on its face, and on the facts then known to them its execution was ostensibly valid.

Professionally written and updated Will

Using appropriate professional help will ensure wishes and preferences are known and specified by an individual or organisation that is reputable to ensure a valid legally enforceable Will.

Due to the complex and changing nature of family relationships it is important that a Will is up to date to prevent complications at death.

When death occurs if a professional executor is named in the Will or appointed to administer the estate at death, such as our recommended Executor company Consumer Estate Management, it will ease the burden on the next of kin.

It is notable that Will provision and the need to obtain a Grant of Probate are examples of relatively few areas in our research where a marked difference between socio-economic class is evident.

Those in the higher band were much more likely to have made a Will and require a Grant of Probate or Letters of Administration than those in the lower band, a difference that indicates the need for education to encourage more widespread adoption of the practice.

It is not reasonable to just leave things to chance.It is always advisable to make a Will to ensure the future of your estate.

Will Storage

An original signed Will is the only version of the Will which can go to Probate to allow your estate to be administered in accordance with the wishes in your Will.

Therefore you need to keep your original Will in a safe, water-resistant, fire-resistant place - preferably away from your home. If it is lost, stolen or damaged in a house fire or flood for example, then you will not have a Will which can go through the probate procedure.

If you have difficult family circumstances, bear in mind that if whoever gets to the Will first finds they could benefit if the Will had never been made, then the Will may be destroyed. There is no point in putting a Will under the mattress in a secret drawer or anywhere else if it can’t be found when it comes to your family members needing to apply for probate.

You should tell your family that you have made a Will and where it is kept and how to get access to it when you pass away. Think carefully before telling anyone who is a beneficiary your Will's location. It is preferable to keep the location of your Will only to the knowledge of your Executors and the people you trust.

Consumer Care offer a Will storage facility in a fire and water resistant environment, where same day access to the Will is available.

We will also keep an electronic copy of the signed Will on our computer system as a permanent backup to the original paper version of the Will which we store.

We recommend you take advantage of this service to ensure your final wishes are carried out.