avoiding the need for probate

[dubre]

Transferring property prior to death so as to leave only a small amount of cash? Would this work?

[staffordian]

As I understand it, yes.

Probate is only needed to gain access to significant accounts, and as you suggest, deal with property.

I dealt as executor with a relative's will a few years ago. They had about £20k (IIRC) at Lloyds, and they didn't need a grant of probate even for that. A copy of the will and some ID from me was enough.

But every institution has it's own rules...

[Lootman]

Transferring property prior to death so as to leave only a small amount of cash? Would this work?

In my experience, yes. The two main reasons why you can't avoid probate is where there are financial institutions who will not release assets without a grant of probate. And where there is real property that cannot be transferred or sold without probate because the land registry insists on that.

Absent those two things there is no reason to go through probate at all, and no way you can be compelled to initiate probate if you do not want to.

It is possible that there are creditors to the estate who would have an interest in probate happening, to be sure they get paid. After all probate exists primarily to protect creditors. The most important of those might be HMRC. But no creditor can force you to initiate probate against your will, and if they are that concerned about their debts then they can initiate a process themselves and take their chances.

[Clitheroekid]

Transferring property prior to death so as to leave only a small amount of cash? Would this work?

Yes, possibly - as has been said, it's possible to administer a small estate informally and without the need for probate.

Though bear in mind that if the gifts were substantial, and made within 7 years of death there may still be inheritance tax payable, in which case an inheritance tax account would need to be submitted. And completing the IHT forms takes about 10 times as long as the application for probate!

However, it may not always be sensible to take this route, even if it's technically possible. If you're the executor of the Will, but the estate is left to other people then you are taking a significant personal risk if you distribute the estate without probate.

It could be, for example, that after you've paid everyone a later Will is found leaving the estate to different people. The recipients would then potentially have to repay money into the estate, and if they refused to do so you would have to make up the shortfall from your own resources.

Another risk is that a substantial creditor crawls out of the woodwork a few years after death, which would cause similar problems.

Obtaining probate really isn't that difficult, and only in the simplest of cases - usually where there is only a very small estate or it all goes to one beneficiary - should it be deliberately avoided.

[Lootman]

It could be, for example, that after you've paid everyone a later Will is found leaving the estate to different people. The recipients would then potentially have to repay money into the estate, and if they refused to do so you would have to make up the shortfall from your own resources.

Another risk is that a substantial creditor crawls out of the woodwork a few years after death, which would cause similar problems.

You are the expert of course, with all that that implies. But surely those two scenarios that you describe would be highly unlikely. And as long as the Executor acted in good faith and adopted good practice guidelines, I struggle to see how he or she could be effectively held personally liable.

Moreover isn't the point of publicising a probate (from memory in The London Gazette and, I assume, the appropriate local paper)) to act as sufficient notice for any creditors?

If the risks you cite were more than a minute possibility it would surely be impossible to ever find an Executor willing to do the job. And in that case avoiding probate would also avoid executorship, which you seem to be making a good argument for doing!

[GoSeigen]

It could be, for example, that after you've paid everyone a later Will is found leaving the estate to different people. The recipients would then potentially have to repay money into the estate, and if they refused to do so you would have to make up the shortfall from your own resources.

Another risk is that a substantial creditor crawls out of the woodwork a few years after death, which would cause similar problems.

You are the expert of course, with all that that implies. But surely those two scenarios that you describe would be highly unlikely. And as long as the Executor acted in good faith and adopted good practice guidelines, I struggle to see how he or she could be effectively held personally liable.

Moreover isn't the point of publicising a probate (from memory in The London Gazette and, I assume, the appropriate local paper)) to act as sufficient notice for any creditors?

If the risks you cite were more than a minute possibility it would surely be impossible to ever find an Executor willing to do the job. And in that case avoiding probate would also avoid executorship, which you seem to be making a good argument for doing!

I think Lootman has misunderstood what probate means!

Clitheroekid was discussing the advantages of probate (i.e. proving the will in court) vs an informal administration (and made it pretty clear).

GS

[Lootman]

It could be, for example, that after you've paid everyone a later Will is found leaving the estate to different people. The recipients would then potentially have to repay money into the estate, and if they refused to do so you would have to make up the shortfall from your own resources.

Another risk is that a substantial creditor crawls out of the woodwork a few years after death, which would cause similar problems.

You are the expert of course, with all that that implies. But surely those two scenarios that you describe would be highly unlikely. And as long as the Executor acted in good faith and adopted good practice guidelines, I struggle to see how he or she could be effectively held personally liable.

Moreover isn't the point of publicising a probate (from memory in The London Gazette and, I assume, the appropriate local paper)) to act as sufficient notice for any creditors?

If the risks you cite were more than a minute possibility it would surely be impossible to ever find an Executor willing to do the job. And in that case avoiding probate would also avoid executorship, which you seem to be making a good argument for doing!

Clitheroekid was discussing the advantages of probate (i.e. proving the will in court) vs an informal administration (and made it pretty clear).

Even in a formal probate process, an executor can be held personally liable in certain situations.

My point was more that if you are not the executor then you cannot be held personally liable! Just because a will nominates you as the executor does not mean you have to agree to perform the task. You may decline to do that for various reasons and then you are taking zero personal risk.

[Clitheroekid]

It could be, for example, that after you've paid everyone a later Will is found leaving the estate to different people. The recipients would then potentially have to repay money into the estate, and if they refused to do so you would have to make up the shortfall from your own resources.

Another risk is that a substantial creditor crawls out of the woodwork a few years after death, which would cause similar problems.

You are the expert of course, with all that that implies. But surely those two scenarios that you describe would be highly unlikely. And as long as the Executor acted in good faith and adopted good practice guidelines, I struggle to see how he or she could be effectively held personally liable.

But that's exactly the point. An executor who distributed the estate informally without obtaining probate would not be adopting good practice guidelines. In fact he would be blatantly flouting them. And he would be held personally liable - the courts would have no sympathy for him whatsoever.

Moreover isn't the point of publicising a probate (from memory in The London Gazette and, I assume, the appropriate local paper)) to act as sufficient notice for any creditors?

But we're talking about administering an estate without probate, so how can you advertise something that doesn't exist?

If the risks you cite were more than a minute possibility it would surely be impossible to ever find an Executor willing to do the job. And in that case avoiding probate would also avoid executorship, which you seem to be making a good argument for doing!

No - the risks cited nay be very unlikely (though I've had personal experience of both those scenarios) but the point is that if an executor does obtain probate he's protected by the law providing he acts in good faith. If he doesn't obtain probate then he's deliberately assuming a risk, even if it is a remote one, and he will receive no protection from the law, no matter how conscientious he may have considered himself.

[Lootman]

It could be, for example, that after you've paid everyone a later Will is found leaving the estate to different people. The recipients would then potentially have to repay money into the estate, and if they refused to do so you would have to make up the shortfall from your own resources.

Another risk is that a substantial creditor crawls out of the woodwork a few years after death, which would cause similar problems.

You are the expert of course, with all that that implies. But surely those two scenarios that you describe would be highly unlikely. And as long as the Executor acted in good faith and adopted good practice guidelines, I struggle to see how he or she could be effectively held personally liable.

But that's exactly the point. An executor who distributed the estate informally without obtaining probate would not be adopting good practice guidelines. In fact he would be blatantly flouting them. And he would be held personally liable - the courts would have no sympathy for him whatsoever.

OK but in the situation that the OP describes, the estate is very simple. The property had already been sold or transferred. And the estate consists of only "a small amount of cash". In fact I suspect that the Probate Office itself might advise that probate is not necessary.

So surely the OP would not in that case bother with all the form filling and hassle associated with probate. He/she would simply take physical possession of the cash. And then distribute that, after holding onto it for a prudent length of time to ensure that there are no creditors and that there is no subsequent will.

If the risks you cite were more than a minute possibility it would surely be impossible to ever find an Executor willing to do the job. And in that case avoiding probate would also avoid executorship, which you seem to be making a good argument for doing!

No - the risks cited may be very unlikely (though I've had personal experience of both those scenarios) but the point is that if an executor does obtain probate he's protected by the law providing he acts in good faith. If he doesn't obtain probate then he's deliberately assuming a risk, even if it is a remote one, and he will receive no protection from the law, no matter how conscientious he may have considered himself.

It still seems to me like a tiny risk. And often the executor is the next of kin and beneficiary, and so has an intimate knowledge of the affairs of the deceased, often their parent. His/her personal liability would surely be limited to that "small amount of cash".

Indeed, can I be legally regarded as an Executor merely by taking possession of a "small amount of cash" and doing nothing else?

[Clitheroekid]

OK but in the situation that the OP describes, the estate is very simple. The property had already been sold or transferred. And the estate consists of only "a small amount of cash". In fact I suspect that the Probate Office itself might advise that probate is not necessary.

So surely the OP would not in that case bother with all the form filling and hassle associated with probate. He/she would simply take physical possession of the cash. And then distribute that, after holding onto it for a prudent length of time to ensure that there are no creditors and that there is no subsequent will.

The discussion had moved away from the OP's specific situation into a more general one about whether probate should be avoided if possible. I don't know what the OP would describe as a `small amount of cash', but if he's the sole beneficiary of course it makes sense to avoid the (minor) hassle of probate. If it's destined for someone else he would have to decide whether it was worth the risk that he might have to reimburse the estate for the full amount.

If the risks you cite were more than a minute possibility it would surely be impossible to ever find an Executor willing to do the job. And in that case avoiding probate would also avoid executorship, which you seem to be making a good argument for doing!

No - the risks cited may be very unlikely (though I've had personal experience of both those scenarios) but the point is that if an executor does obtain probate he's protected by the law providing he acts in good faith. If he doesn't obtain probate then he's deliberately assuming a risk, even if it is a remote one, and he will receive no protection from the law, no matter how conscientious he may have considered himself.
It still seems to me like a tiny risk. And often the executor is the next of kin and beneficiary, and so has an intimate knowledge of the affairs of the deceased, often their parent. His/her personal liability would surely be limited to that "small amount of cash".

I specifically pointed out that where the executor is also the beneficiary the risk is probably justified.

Indeed, can I be legally regarded as an Executor merely by taking possession of a "small amount of cash" and doing nothing else?

Yes - it's called `intermeddling with the estate'. As soon as an executor does any action that involves actively dealing with the estate he's deemed to have accepted his appointment.

[Lootman]

can I be legally regarded as an Executor merely by taking possession of a "small amount of cash" and doing nothing else?

Yes - it's called `intermeddling with the estate'. As soon as an executor does any action that involves actively dealing with the estate he's deemed to have accepted his appointment.

Assuming that the OP is determined to avoid probate in this case, I can think of a couple of ways that the intermeddling dilemma can be worked around.

Firstly the "small amount of cash" can be placed in an account held jointly between the soon-to-be-deceased and the executor/beneficiary. Secondly the soon-to-be-deceased can make a gift of that amount to the executor/beneficiary whilst still alive.

In both cases there would be no need for any post-mortem activity to secure the funds. Hence no intermeddling, hence no presumption of de facto executorship, hence no personal liability.

Another possibility is to use that small amount of cash by putting it towards the cost of the funeral. If that then leads to the estate having no value then there is no estate to execute. Obviously such a funeral should not be extravagant if there are other claims on the estate. I actually did this once on a low-value estate that I was handling. I spend the lot (less than a thousand) on the funeral, and that was that. Job done, no probate.

[Dod101]

Personally I think that many people act as Executor without quite realising the risks that they are running, however remote these may be. I have done so myself a couple of times, all within the family but if the estate is at all complicated I prefer to hand it over to solicitors and they can take the risk.

On the current query surely the matter depends to some extent to whom the property is transferred and its value. There may be IHT to pay which could complicate things a bit.

Dod

[Lootman]

Personally I think that many people act as Executor without quite realising the risks that they are running, however remote these may be. I have done so myself a couple of times, all within the family but if the estate is at all complicated I prefer to hand it over to solicitors and they can take the risk.

Indeed and by the time you realise an estate has some problems and risks, then you have probably already "intermeddled" and so cannot easily back out. Then contract a solicitor as you say, assuming the estate has the funds to cover it. I assume solicitors carry insurance against any liability they incur from probate.

On the current query surely the matter depends to some extent to whom the property is transferred and its value. There may be IHT to pay which could complicate things a bit.

Sure although technically you can determine and pay any IHT due without going through probate if there is no other reason to do so.

[dubre]

My initial query was answered by staffordian and Lootman and I thank them. What is of value is that it enabled a discussion on other matters around the original subject. I asked the question out of curiousity as it does not relate to me . It came to my attention that an elderly spinster friend of the family had died some years ago, early in the second half of one year and her house was sold in the first quarter of the next .This ties in nicely to the length of time it would normally take to get probate. The thing is I can find no record of a will or of probate being obtained which is odd considering that the house sold for around £200k. Hence the question, could the house have been disposed of prior to death and the money "transferred away"?

Just idle curiousity. I have no financial interest.

[Dod101]

Personally I think that many people act as Executor without quite realising the risks that they are running, however remote these may be. I have done so myself a couple of times, all within the family but if the estate is at all complicated I prefer to hand it over to solicitors and they can take the risk.

Indeed and by the time you realise an estate has some problems and risks, then you have probably already "intermeddled" and so cannot easily back out. Then contract a solicitor as you say, assuming the estate has the funds to cover it. I assume solicitors carry insurance against any liability they incur from probate.

On the current query surely the matter depends to some extent to whom the property is transferred and its value. There may be IHT to pay which could complicate things a bit.

Sure although technically you can determine and pay any IHT due without going through probate if there is no other reason to do so.

To comment on your first point, I am quite sure that all solicitors will have professional indemnity insurance; indeed the Law Society will almost certainly require it I should have thought.

Dod

[Clitheroekid]

It came to my attention that an elderly spinster friend of the family had died some years ago, early in the second half of one year and her house was sold in the first quarter of the next .This ties in nicely to the length of time it would normally take to get probate. The thing is I can find no record of a will or of probate being obtained which is odd considering that the house sold for around £200k. Hence the question, could the house have been disposed of prior to death and the money "transferred away"?

Either it was disposed of prior to death or it was owned jointly with someone who became the sole owner on death. Had it been owned in the deceased's name then probate would have been essential.

To comment on your first point, I am quite sure that all solicitors will have professional indemnity insurance; indeed the Law Society will almost certainly require it I should have thought.

Correct. Every practising solicitor must carry PI insurance for a minimum of £2m cover. It's become increasingly expensive over recent years, and is one of the main reasons that so many small firms are going out of business.

But it's the SRA who regulate the profession and require PI insurance, not the Law Society. The latter is more like a solicitors' trade union (though a pretty useless one!)

[Lootman]

My initial query was answered by staffordian and Lootman and I thank them. What is of value is that it enabled a discussion on other matters around the original subject. I asked the question out of curiousity as it does not relate to me . It came to my attention that an elderly spinster friend of the family had died some years ago, early in the second half of one year and her house was sold in the first quarter of the next .This ties in nicely to the length of time it would normally take to get probate. The thing is I can find no record of a will or of probate being obtained which is odd considering that the house sold for around £200k. Hence the question, could the house have been disposed of prior to death and the money "transferred away"?

Just idle curiosity. I have no financial interest.

Since you have obviously looked at the public record of the property sale, did it identify who was the seller? If it was the owner, a trust in the owner's name or the estate of the owner then presumably the property had not been transferred prior to death. But in that case how did the sale happen given that the Land Registry requires probate to complete the transaction?

If we know for a fact both that there was no probate AND that the sale happened after the death of the owner, then it seems clear to me that there must have been a transfer prior to death. Or at death via a joint tenancy as CK suggested.

Which does rather beg your question of what happened to the sale proceeds since £200,000 is not a "small amount of cash"! Although it is also not enough by itself to trigger an IHT issue.

Can you ask the named executor or will that kick up a storm?

[Clitheroekid]

Since you have obviously looked at the public record of the property sale, did it identify who was the seller?

The Land Registry records don't disclose this information.

[dubre]

Answers to Lootman queries:

I took the sale details from http://www.rightmove.co.uk which gave the sale price and date, also basic detail about the property.

I know for a fact that there was no probate only as much as it does not appear on the government website for wills/probate.

Yes, the sale proceeds? Presumably they went to the person who acquired the property prior to her death or to her joint tenant.Perhaps a charity was involved?

Since I can find no record of a will or of probate I have no idea who the executor was. Approaching a distant relative of the lady, but not a relative of mine, may not go down well.

[staffordian]

I've no idea if this is legally possible, but in theory, at least, could the estate have been dealt with in another country, resulting in sufficient legal powers to sell the property, but, of course, there would be no UK will or probate record to find?