There is a lot of money owed by a lot of people in this world. Most of it is manageable, although not entirely pleasant. Some of it is difficult. A little is entirely impossible. But no matter the affordability of the debt that you have, there is something that you should know about it – it does not die when you do. Someone will still need to service that debt when you are gone.
Most of the time, it is your estate that will need to pay off the debts. If there isn’t enough money within your property and possessions, the leftover debt is passed on to loved ones. This is just one of the reasons why writing a will is so important. And it is a good reason to keep an eye on the debt that you are accumulating. Is it really worth it if it will become a massive burden to those you love when you die? You may think that by paying off the minimum from your debts each month is a good idea, giving you more in your pocket in general, and allowing you to save up money to leave to your loved ones. But that saved money will actually be needed to pay off the debts that are left, so you may as well get rid of them while you’re still alive.
Doing this will enable you to then go on to save money after your debt is paid, and that money will be able to be passed on to whomever you want it to go for. That’s a much better legacy than leaving a pile of unpaid bills for family members to sort out.
Is it true that problems at work can mean you lose out on an inheritance? It’s not usually the case, but it is – sort of – what happened to a shamed former army officer recently.
Captain Michael Pain previously of the Royal Dragoon Guards, may well lose an inheritance. But why?
The former army officer had a very privileged upbringing, but this has not stopped him from wanting more. In 2010, he was convicted of conning his mother, Lady Denys Pain of Eddlethorpe Hall, out of almost £460,000. Under the Proceeds of Crime Act he was ordered to repay the money.
He was also jailed for three years for theft, fraud, and obtaining money transfer by deception.
At the time, he only had £166,000, so the courts understood he could not repay all of it. However, recently Pain received some shares from his uncle’s will, which amount to almost £28,000. The authorities, having heard about this, pressed on with the confiscation order, attempting to enforce it to include the new assets. In order to do this, an extension to the original order had to be made through the courts. If the extension is granted, Pain will need to repay the additional money to his mother’s estate as, sadly, she died just hours before the original order was granted.
The case has been adjourned for the moment because there seems to be an issue regarding a missing share certificate. Without this certificate it is impossible to realise the true value of the shares, and therefore impossible to create any extension to the original order.
The reason behind Pain’s initial deception seems to be that, after losing his commission in the army, he was in danger of also losing his house. In order to keep it, he swindled his mother out of the money. His sisters believed he was using the money to run the estate, but instead he was lining his own pockets.
Sometimes beneficiaries for wills can be hard to trace. Heir hunters will have many methods of finding these ‘missing’ people so that they can award them their inheritance, and one of these methods is to use their credit files.
Most people in the UK have a credit file. It is the information that has been collected regarding all of the borrowing that anyone has ever undertaken, including all loans and mortgages.
Equifax does offer this service. It is not free of charge, but if you are searching for someone then the price might be something you are happy to pay. And of course, the initial searches are free – you only need to pay if you want to see the full record.
In order to start this search you will need some information about the person you are looking for. Useful information includes their full name, where they live, and their postcode (or at least part of it). The search results should yield up much more information. This includes their full name, whether they hold any directorships of limited companies (and what companies they are), their business address, any former addresses and their current home address, and their date of birth. This will then open up many other avenues when it comes to being able to find them – their home address is the most useful, but just in case this is not up to date, their businesses can also help a great deal.
Be aware, however, that many transactions that are recorded on a credit file are no more than 6 years old – after that time they are erased.
In June 2016, Gary Bryson Watt was declared bankrupt in Wellington, New Zealand. But this was after he had spent his dead partner’s fortune on luxury items rather than paying it out to his step-children.
Those step-children, James Roberts-Gooch and Alexandra Gooch were too young to inherit when their mother, Anne Roberts, died of cancer in 2012. They were 16 and 14 at the time. She didn’t leave a will, but due to New Zealand probate laws the children were entitled to two thirds of the estate.
Watt was given the task of being the administrator of the estate – an estate which included large pay outs from life insurance companies, as well as substantial savings. Instead of dividing the estate up and putting the children’s money into trustfor them when they were older, he spent it on things like cruise, motorbikes, and cars.
Although the family court did order Watt to pay the children their money – around $300,000, he didn’t do it. So James took matters into his own hands and applied for Watt to be made bankrupt. This would mean that the house he lived in – which had belong to Anne – would be sold, and the proceeds could go to James and Alexandra. Even so, after legal fees there might not be much left. However, he felt it was his only choice, and it was what he had to do.
It may sound like a good thing to do. It may sound like your only option. What is it? Leaving some kind of inheritance to friends and family after you die. But it can be a complicated thing in the end due to issues such as inheritance tax and gifting making people unsure about exactly how much they can leave someone before it becomes too much. And although you may want any money or possessions left over to help your loved ones, could you actually be doing more harm than good?
There are certain questions that should be asked before deciding on what to leave to whom. Once these are answered, you’ll have a much better idea of exactly what you should do for the best.
The first question is to ask how much you can leave as an inheritance before it becomes a burden. To know the answer to this, you should work out the tax implications of each bequest, and if this is not possible then speak to a financial advisor or accountant about it. They will be able to tell you the best way to leave your estate to your loved ones.
Next, just what is your financial position? Without knowing this it can be very difficult to work out how much you can leave someone anyway. What about your retirement? You may have financial wealth when you write the will, but what about if you live long into retirement? Will your estate be affected? Will you need to write a new will to take that into account?
And what about the beneficiaries? Although it’s nice to leave something to everyone, are there some that need the money more than others? And are they healthy? How old are they? It all can make a difference, even if it isn’t the nicest thing to think about. If the heir is a minor, you’ll need to think about setting up a trust for them, or you may need to mention specific provisions to be put in place for a disabled beneficiary. But what if the inheritance will have an impact of any benefits they receive from the government? This will all need to be taken into account. And if your potential beneficiaries have been made bankrupt in the past? Their creditors might take the majority of the inheritance as payment, and it could have been a better idea to leave it to someone else.
Although the figures are getting better, there is still a large proportion of the adult population who do not have a will – it’s around two thirds. And this can cause major problems when they die because their estate may not be given to the person they would have wanted it to be given to.
It can be stressful for those left behind, and it can cause financial issues too.
So why is it that only one third of people in the UK have wills?
The main reason, a new study by NS&I has discovered, is that it’s because no one likes to talk about death. It’s still a big taboo. And that taboo means that people simply aren’t comfortable when it comes to discussing their own demise, or other people’s, and especially when it is linked to money or inheritance.
As well as not writing a will, these adults don’t have any plans at all for when they die. That includes not having plans for looking after the relatives they leave behind – both elderly and children. This is how scared the UK is of death; even if it going to affect others negatively, people would rather not think about it at all.
Around 46 percent of adults in the UK are not happy about discussing their death with their loved ones, and a third say that they won’t discuss it with anyone at all. They would just prefer not to think about it. Or they think they are too young to consider writing a will. The problem is, death can come at any time for anyone, and having a will in place ‘just in case’ will stop any potential arguments after death.
Not everyone will be happy to be named as an executor in a will. In fact, for some, it could truly be their worst nightmare. Not only will they have to manage their grief over the testator’s death, but then they need to quickly start work on executing their will. It can be too much responsibility for some people to take. This is why it is important to speak to those you are considering naming as executors before you do so. They can then let you know whether this is something they are willing to do.
But what happens if they aren’t happy to take on the task?
One option is to use a professional executor.
Yes, they really exist, and yes, they can help you when you need help the most.
And it might not just be because the person you are hoping to ask doesn’t want to do the job. It could be that they simply won’t have the time. Probate can take many months, and that’s without any issues arising. Your executor may have to take time off work, so they may require compensation. A professional will require compensation so why then would someone else not need paying for their services just because they knew you well? The problem then becomes an issue of fairness; other family members may see the executor as gaining more from the will than anyone else, without perhaps realising all the work that goes into dealing with probate, work that can impact on the executor’s life and day job. Feuds can erupt from something like this.
Hiring a professional executor can relieve the burden of responsibility from your family and friends. Plus, since they are well versed in what they are doing, they can deal with any problems that arise quickly, including tax questions and the setting up of trusts. They will also be able to value the estate, deal with potential claims, and trace missing beneficiaries should they need to.
The only possible downside to using a professional executor is that they can be costly, sometimes charging a large percentage of the entire estate as their fee.
IWC offers a fixed fee for this service, which will work out much less expensive than traditional solicitors’ fees, as well as giving you peace of mind that everything is running smoothly. Contact us for more details.
In some states in America (Alaska, Ohio, Arkansas, and North Dakota) it is possible to request ‘living probate’ to be carried out. It isn’t something that many people think about doing, and it isn’t absolutely necessary in most cases, but when it is done it ensures that the will is valid and correct before the testator dies.
The testator will be able to prove that they are in sound mind and body, and wrote the will by themselves, without any outside influences. This is useful if they believe there might be those who would choose to challenge the will after they die. By proving that the will was written exactly as the testator wanted it to be, there is then little chance that any kind of challenge can be made.
This is, however, an expensive option, and one that is not needed in the majority of cases. If there is a chance that someone will contest the will, and if doing so would create a lot of problems for many people, or hold time sensitive funds up for too long, then it could be something that some people would consider doing. And it’s not just about money either – contesting or challenging a will can cause huge family feuds and upsets. It could be that the testator wishes to avoid anything like that, and so organises a pre-death (or antemortem) probate review.
If you were to go down this route and then change your mind regarding who should benefit after you die, it is possible to change your will, or revoke it entirely. However, there will be a validated version on file, and therefore you must go to court in order to have that will destroyed to avoid any confusion. And, if you wish to go through the antemortem probate procedure for your second or subsequent wills, you would need to pay.
An executor is always expected to act reasonably when it comes to dealing with someone’s will and estate. They must act in the best interests of the estate, and the beneficiaries named in the will. This involves a number of things including getting the best possible price for any property or assets that are sold. It also means that they should ensure that the death is registered correctly. If this is not done, there could be serious implications that affect many people, and their inheritances.
The estate must be calculated correctly as well. This is to make sure that, if any inheritance tax is due, it is paid on time, and at the correct figure. This needs to be done before any of the money and assets are distributed.
The death should also be ‘advertised’, for example it could be announced in a national newspaper. This is so that anyone who is not mentioned in the will but who is owed money by the estate can contact the executor to arrange for payment. These debts must be paid off before any beneficiaries can inherit. If this is not done, and someone makes a claim after the money has been distributed, the executor may be liable for the debt.
If someone disputes the will (ie, if they question whether the will is valid, or if they have evidence that there is a newer will, for example) then there could be further claims. Being executor is an important job with huge responsibility, and it is always worth getting independent legal advice if you take the job on, to prepare you.
Applying for probate can be a complicated process, particularly if you have never had to do it before. If you don’t seek expert advice, there are some common mistakes that are often made. These mistakes can cause probate to take much longer than it needs to, making it more costly, and more stressful.
The first mistake that often occurs is that people apply for probate in the wrong country. The only place to apply for probate is in the country where the person was living before they died. Many people applying for probate apply in the country where the person was when they died, rather than their country of residence. This is not always the same place, and if you are unsure it is best to check.
The forms required can also be confusing and lead to mistakes. The forms can be found online, but although they are easy to find, they are not always that easy to fill in. Every part of the form needs to be completed, and that might require some research because all the names of the person need to be entered. Those names much match the ones on the will. This might relate to middle names, or perhaps maiden names. All the information much be correct and the same on all the forms.
Estate fees are the last area where big errors can be made. There is a special formula that needs to be used to calculate the fees and taxes due. Mistakes here can mean big problems further on, which is why hiring an expert to help at this point can save you a lot of trouble in the long term.