Many people deal with probate themselves these days and many people may well do that successfully. Here’s a salutary warning, however, of the risks associated with not taking professional advice as an Executor when winding up the estate of a deceased.
The recent case of Usher v HMRC concerned the estate of the late Terence Guy who died in October 2012. The estate was worth some £1.5million and the Executors named in the Will did not take any legal advice when winding it up.
The problem they encountered related to outstanding income tax. The Executors filed a self-assessment Tax Return for the period up to the date of death but they failed to include some investment income, which they knew about and which had been included in the papers they had submitted for the Grant of Probate. Having paid the income tax (or so they thought), the Executors distributed the estate and thought all was at an end.
Crucially, they did not advertise it for creditors under Section 27 of the Trustee Act 1925. These adverts which you may see in the papers give creditors two months to come forward and protect the Executors against those who do not.
A year after the tax was paid, HMRC wrote to the Executors demanding a further £14,457 and a penalty of £5,060 for their failure to disclose the relevant income.
Although the Executors managed to get the penalty reduced to nil, they still had to pay the additional tax and were faced with having to go to the residuary beneficiaries of the estate (to whom they had distributed the money) to ask for them to pay it back.
Although we would say it (wouldn’t we?), anybody appointed as an Executor ought to take advice before dealing with the responsibilities given to them by the deceased. While this applies to an estate of any size (perhaps except the very smallest), it is a surprise that somebody should seek to deal with an estate of £1.5million without taking any advice.
If you would like advice in relation to any Will or Probate matter, please contact Gary Ovey on 01208 72328 or firstname.lastname@example.org