2010 - 2017
Making a Will is not about wealth it is about making sure that what you want to happen to your estate does happen. It gives you the opportunity to specify such things as who will administer your estate, who will care for your children and who will receive specific items of your property.
A notice to creditors should be placed in the London Gazette and a newspaper circulating in the area in which the deceased resided. Such a notice gives creditors two months from the date of publication to notify the executors of their claim against the estate. Executors placing such notices are protected from personal liability for the debts should a valid claim arise later.
In this connection it should be noted that the Recovery From Estates section of the Department of Work and Pensions is notoriously slow in writing to claim back overpaid state benefits so that it is advisable to write to them immediately the death occurs.
The other time-limit is the six-month time-limit under the Inheritance (Provision for Family and Dependants) Act 2005. Those six months run from the date of the Grant of Probate not the death.
If it takes two months from the death to obtain probate, then the time-limit will not expire until eight months or so after the death. It is a very unwise executor who pays out before the time-limit expires. It may be thought unlikely that a claim will arise but it is never possible to say with certainty. Beneficiaries must understand that it is better to wait out the six months than to be asked to give back money paid out too early because a claim has arisen.
Where an estate has paid inheritance tax, a prudent executor will obtain a tax clearance certificate from the Capital Taxes Office before distributing the estate.
It may happen that a beneficiary will offer to indemnify the executors against any claims that arise if only they will pay out earlier. Great caution should be exercised.
There is a well-known case of a solicitor executor who accepted an indemnity from a beneficiary in respect of instalments of inheritance tax. When the beneficiary later went bankrupt and couldn't pay the tax, the Inland Revenue looked to the solicitor to pay it. As the primary responsibility for tax payments rests with the executors he had to pay.
The more the beneficiary pleads that he has desperate need of the funds, the more caution should be exercised by the executors. Where the beneficiary concerned is a major charity, the possibility of a default may be far less of a consideration for the executors. In that instance, an indemnity may be offered and considered acceptable. A lot depends on the overall position of the estate and, in particular, whether the charity is sole beneficiary.
The final decision must always rest with the executors.