De-Risking the Estate Administration process
The UK’s fast ageing population will bring much societal change in the years to come. Those over 65 will account for over20% of the population by 2030, rising to 21.8% by 2034 (1).
As the UK populations get older, focus on the redistribution of wealth accumulated through generous pension schemes and economic conditions the UK may not see again, becomes more significant and increasingly important to younger generations.
Last year, just 38% of the population confirmed they had a Will (2) , although with age that average rises steeply to85% of adults aged 65 and over. As the number of firms writing this business dropped below 6,000 for the first time last year, demand will inevitably simultaneously rise for Wills.
The opportunity
One area of estate administration bucking the consolidation trend is contentious Wills, probate and trusts. The LawSociety in England and Wales reports the number of providers offering advice in these three areas more than doubling since 2018.
The rise in firms reflects the increasing number of disputed Wills, contested probate and trust enquiries, with the number of firms dealing with the latter rising 51% to 197.
Britain’s decades-long wealth boom fuelled by house prices began being passed down to children and grandchildren in record amounts since the 2010s (3). Set against the backdrop of a volatile economic climate including the 2007/8 credit crunch, the pandemic and the cost-of-living crisis, expectations surrounding inherited wealth are entering a more combative era among beneficiaries.
Best practice: De-Risk the process
Beneficiaries are increasingly asking for the early release of all, or a portion of the estate funds due to outstanding debts or other financial pressure. No amount of due diligence checks can definitively protect the professional, the executor and the beneficiaries to de-risk compliance with this request.
At CLSQ, we offer estate administration insurance that offers a protection against many of the hazards associated with probate. If legal representatives offer a checklist of insurance options to beneficiary/ies at the outset, firms can protect all parties involved against a raft of due diligence liabilities.
Section 27 of the Trustee Act 1925 insurance covers a late claim from a third party with a financial interest in the estate. This allows for earlier dispersal of funds without the placement of/or expiry of a Section 27 notice.
Probate funds may also be paid out more speedily if a client chooses Early Distribution (Unknown Dependents) Insurance.This covers the liabilities of all parties if the estate is partially or fully distributed, even if a dependent makes a claim which is later upheld in court.
Protection is also available to cover missing Wills in instances where an estate has already been distributed but the legal document is later found. Missing Will Insurance indemnifies the personal representative, executors and beneficiaries of the deceased against a later claim on an estate, including where an intestate estate has been distributed following the rules of intestacy, or in cases where a testate estate has been distributed using a valid Will, but a later Will is found which alters the distribution.
If a share certificate has been lost or destroyed, there’s cover that offers both Countersign and shareholder indemnity to protect either the registrar or shareholder in the event of a third-party claim. Equally, at CLSQ we offer a Will Register Search backed by a comprehensive database able to geographically target Wills appearing as seemingly unregistered, and place a notice on a missing Will noticeboard.
Financial pressures are placing greater emphasis on the transfer of inter-generational wealth and, with increasingly complex family structures, the potential for the dispute of Wills is growing.For solicitors involved in this area, the message is clear – there’s a risk in deploying your role, but there is also cover available to protect both you and your clients from this risk.
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Notes
(1) UK Wills, Probate & Trusts Market 2024: Market Trends Report,December 2024: Executive summary, page six: https://www.irnlegalreports.com/store/UK-Wills-Probate-&-Trusts-Market-Report-2023-p512037828
(2) Wills and Probate Research Report2024: https://www.researchandmarkets.com/reports/5659637/uk-wills-and-probate-consumer-research-report-2024?srsltid=AfmBOoofIltlWwlIpkZWBfY9zBRpxAh4xcuwTul8mfAz8c7osEf40SDk
(3) The intergenerational wealth transfer: https://www.theguardian.com/inequality/2024/nov/16/middle-class-millennials-set-to-gain-most-from-unprecedented-wealth-transfer
