PROBATE RIP OFF: A FIVE POINT PLAN TO PROTECT YOUR ESTATE

“I’m not afraid of dying – I just don’t want to be around when it happens!” Woody Allen

Reading some of the recent newspaper reports of fraud, deception and family feuds, it’s not surprising that Woody Allen does not want to be around when he dies. It can be a most unpleasant experience!

Martin Lloyd, an ex Northampton Borough Councillor, who was convicted and jailed for two-and-a-half years for probate fraud in May 2010, stole £81,000 from an estate to which he was the executor so that he could take his wife on a luxury cruise on the QE2 and pay for £25,000 lost on the horses. In Lincoln, David Nash and Nicholas Butcher of the Will-writing firm Willmakers of Distinction Ltd have appeared in Court. They had pocketed half a million pounds in cash from a number of estates, intended to be paid out to relatives and friends as well as to charities. As a result of the greed of the professional executors (an accountant and an ex-solicitor), in July 2010 the two principals were locked up for three and a half years. The investigating officer said: "The convicted men took advantage of people who were often grieving for close family members or friends. They plundered large sums of money from the estates of deceased people.” Welcome to the real world of probate!

There are a number of problems with probate which makes it such a suitable candidate for fraud. Rule Number One to avoid anyone ripping off your estate is to make a valid Will. It may appear to be an obvious point but the person who has died is not around to check what is happening! They are not able to spring up and say “That’s not my signature on the Will” or “I signed a new Will last week, don’t use that one” or “Look under the mattress – I put my Will there”.
There are numerous examples of Wills going missing and, despite having been seen before the death, they never materialise. But if a Will has been destroyed it is nigh impossible to prove to the court. On one occasion there were too many Wills. The solicitor preparing the Will for his client produced two versions, the correct one and a second with his own name as an alias inserted as a beneficiary.

The executors - the persons responsible for carrying out the wishes in a will - are another problem. Unqualified or unregulated people appointed unwittingly when the Will was written, may be acting as executor. The law currently allows them to collect in assets and pay the proceeds into their own bank account. Clever accounting schemes, cheques going missing, properties being sold at low values, cash paid into the wrong account, personal possessions ending up in the wrong hands – there are examples of all these incidents happening. One charity received a set of accounts and was puzzled why a 92 year old had spent a great deal of money on her credit card just before she died. An investigation showed that the solicitor involved in the will had faked his own card debts to appear with the dead woman's name.

Very often the beneficiaries (those who are receiving bequests from a will) are completely in the dark. They simply do not know that they are going to receive a bequest or, if they do know, they have no idea as to how much. Despite the dramatic and regular portrayal of the family gathering in front of their solicitor for the Will reading, there is no obligation for the executor to tell anyone about the Will and its contents. When probate is granted, the contents of the Will fall into the public domain but by that time it may be too late. A beneficiary can receive one set of accounts showing how much he is due, while another beneficiary can receive a completely different set for the same estate. The difference has ended up in the executors bank.

So what can you do to protect your self and your family? Here are some basic planning rules to ensure that what you want to happen to your estate actually does happen. 

5 Rules to help you plan for your estate

Rule No 1.  Make a Will. Dying without a Will is a bad idea. The wrong people could end up taking your estate; your children could be consigned into the care of family members with whom they have nothing in common in another part of the country. Worst of all if you do not have any family, your entire estate could end up in the hands of the Crown.

Rule No 2.  Do not forget to sign it. You have had your meeting with your solicitor or Will writer and they have gone away to draft the document. You have taken your to do list and put a big red line through the action “Write a Will”. A common mistake! Having given the instructions and probably paid the fee you forget to follow it up and have it signed and witnessed. A Will with no signature is not worth the paper it is written on and you might just as well not have bothered.

Rule No 3.  Signing and witnessing your Will.  There are strict rules about signing and witnessing a Will. You have to sign it first in front of the witnesses otherwise there is nothing to witness. Each witness must sign the will and either sign or acknowledge his signature in your presence. You must be present when the witness signs or acknowledges his signature, but there is no necessity for each witness to be present when the other witness signs. While there are some specific rules to cover blind people signing a Will, your witnesses cannot be blind and if they are named a beneficiary in the Will they will lose that bequest!

Rule No 4.  Put your Will somewhere safe. Having written your Will, you want to make sure that it can be found after your death, Keep a copy. Make sure your Executors know where the Will is. Store it with the person who drafted your Will. If your Will is controversial, be doubly certain to put it in a safe place with a third party. The alcohol crazed son who has been cut out of the Will may be the first person in the room after your death and it only takes seconds to hide the Will away. Whatever you do, do not put it into a bank deposit box. Most banks will not open a box until after the Will has been sent to and proved by the Probate Court. Where’s the Will? In the box!

Rule No 5.  Appoint an executor you can trust and don’t get tied into paying future high fees for administering the estate. Do not rush into appointing a professional executor in your Will by that I mean a solicitor, bank or other professional person or organisation. Whilst you will have to name an executor(s) in your Will, give consideration to appointing a family member or trusted friend instead. If you appoint a professional executor, check their policy for charging for probate and estate administration. Additionally, obtain assurance from them that they will renounce if requested if their fees or estimate fees are high when the actual time comes to administer the estate.

What happens when you die?

Having written signed and stored your Will, you are in a better position to die than Woody Allen. Now it is time to consider how you can help your family manage the process better. You have chosen your executor(s), who will be there to help at the time. The news of your death has reached all your family and they are gathered around to discuss what happens next. Here are three tips to help them through the process.

Find the Will. Make sure your family knows where to find the Will and that the right person gets hold of it. Ideally your executors should be aware of where it is stored, and that the firm responsible for storing should only release the Will to your executors.

Protect the estate property. When someone has died, their executor(s) have to perform many tasks, most importantly dealing with the bereaved members of the family and arranging the funeral. They do not have to start handling the probate immediately but your executors do need to ensure that, if there is property, the house is insured and secure; that personal possessions are not “taken away” by family members who think they may have been left the items in the Will and that bank accounts, credit cards and cheque books are not left in unsafe places.

Your executor(s) should obtain telephone support and shop around before appointing a professional to handle the estate administration. If a professional executor is named in the Will you may be able to get support on what to do next. This can be an invaluable help for members of the family who may be in shock and simply need a comforting and knowledgeable voice to go through the important matters and say what needs to be done and what can wait for the moment. Check the documentation that is with the Will and make sure that you are not starting to run up professional fees at hourly rates. Shop around and obtain a few quotes for administering the estate and opt for one that offers a fixed price with no catches.

Looking at all the cases in the news, they can’t be clearer on how critical it is to plan what will happen when you die. The “ostrich head in the sand approach” simply does not make sense!

William Feeny is a director at Kings Court Trust Corporation. You can reach him on 01225 787107 or at william.feeny@trustcorporation.com