Nicola Neal outlines what each profession can bring to the probate process.
Though the period following the death of a loved one is distressing, there are often a number of arrangements and decisions that need to be made about their personal affairs.
Many of these decisions will require input from the family, but if the deceased had a will, the executor is tasked with the job of administering the estate.
In very straightforward cases, the executor may be able to administer the deceased’s estate without professional input. However, in the majority of cases, it will most likely be necessary to seek professional advice, so as to avoid any traps for the unwary.
So, is it necessary to instruct an accountant or a solicitor, or both?
Though there may be occasions where the input of an accountant will be required (for example, to deal with tax matters), a solicitor will almost always need to be engaged from the outset of the executry to identify and address legal issues that may be at play. A solicitor will, in most cases, also be able to deal with tax aspects.
In particular, the input of a solicitor will likely be required in the following scenarios:
- If the deceased’s domicile is in doubt, given that the question of domicile will inform the tax regime applicable to the deceased’s estate.
- If the deceased died without a will in Scotland, it is necessary to make an application to the Scottish court to appoint an executor. Generally, any persons entitled to share in the deceased’s estate are entitled to be appointed as executor, and this is normally an uncontested process, but it may still be prudent to instruct a solicitor to assist with this application.
- In Scotland, if the deceased owned heritable property, the inventory of the assets must include a full conveyancing description of the property to ensure that there is a valid link in title to the property. A solicitor will need to assist with this exercise.
- Care should also be taken in relation to the treatment (particularly IHT) of any assets that are subject to a survivorship destination/special destination, especially if there is an implied survivorship destination.
- If the deceased owned heritable property in a foreign country, it will be necessary to ascertain whether they left a will in that country. Advice will need to be taken from a solicitor in the country to ascertain how that asset is to be distributed. (See also: Probate when the deceased was domiciled abroad)
- If the deceased had an interest in a business, input will undoubtedly be required to assist with the mechanics of transferring that interest to the intended beneficiaries.
- In Scotland, the age of legal capacity is 16, compared with 18 in England and Wales. For children included in the will who are below this age, the executor must pay the funds, or transfer assets to the child’s legal guardian(s). If the value of the assets is in excess of £20,000, the executor must apply to the accountant of court for a direction as to the administration of the property. It would be advisable for the executor to consult a solicitor in these circumstances.
- If the deceased’s will includes one or more will trusts, additional steps will need to be undertaken by the executor (who may also be the trustee) to set up the trust. There will then be ongoing administration of the trusts, and depending on the nature of the property held, it is almost certain that the executor/trustee will need to instruct a solicitor and an accountant to prepare tax returns and trust accounts.
- It is possible to challenge the formal validity of a will, most commonly where there are allegations that the deceased lacked the necessary testamentary capacity when their will was executed, or there may be allegations of facility and circumvention. If there is any suggestion of the will being challenged, the executors should consult a solicitor as soon as possible. (See also: How can a disappointed beneficiary challenge a will?)
- Where the deceased was domiciled in Scotland at the date of death, the concept of legal rights exists under Scottish law to ensure that no surviving spouse, civil partner or child of the deceased can be disinherited. Legal rights apply whether or not the deceased left a will. Executors have a duty to inform claimants of their rights, and could find themselves personally liable if they distribute the estate without addressing them. If legal rights are at play, it would be prudent for the executor to seek advice from a solicitor before distributing the estate.
That being said, there may also be aspects of the executry administration where the input of an accountant may be required. For example, the input of an accountant will be needed in the following circumstances:
- If the deceased was a taxpayer, the executor will need to prepare a tax return to the date of the deceased’s death, to ascertain whether there are funds due to or by the estate. A tax return for the year before death may also be required in some cases. Executors should watch out, in particular, for chargeable event certificates, which often arise when an insurance policy pays out.
- Executors have a duty to report any taxable events during the administration period to HMRC and pay any tax. For example, the executors may realise a gain on the disposal of an asset in the estate, or they may receive untaxed interest or rental income.
- Finally, in almost all cases, a certificate R185 will be required for each residual beneficiary, showing the income collected by the executors during the administration. This will enable the beneficiary to complete their own tax return or tax claim, if appropriate.
- If the deceased had an interest in a business, the partnership/company accountant will need to be instructed to prepare business accounts to the date of death.
So, while the role of an accountant and solicitor during an executry will often be distinct, in the vast majority of cases, solicitors will have the expertise to be able to deal with all aspects under one roof.
In any event, input from a solicitor will almost always be required to ensure that any legal issues are identified and addressed before the estate is distributed. Best practice would suggest that the individuals dealing with the deceased’s estate should have an initial consultation with a solicitor at the outset of the executry, to ascertain whether their input is likely to be required on an ongoing basis.
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