When you have been involved in an accident, particularly in a car or at work, do you know your...
Avoiding Probate Avoidance Trusts
- AuthorHelen Newson
Go online nowadays and you will find numerous companies selling trusts for different reasons. One of the reasons often mentioned is the avoidance of "probate":
"Create a Probate Protection Trust and avoid the difficulties of obtaining probate when you die!"
"Having a Family Protection Trust means your family can avoid up to £8000 in solicitors' fees!"
I am a solicitor who has specialised in handling estates and trusts for over twenty years during which time I have administered and advised on hundreds of estates ranging from the small estate all of which passes to charity, through to the large and complex with multiple assets and beneficiaries.
Sadly, I now regularly come across clients who have been drawn in by these headlines and who have paid large sums of money to enter into such arrangements only to realise later on that they may have been misled.
Horror stories about probate have appeared in the press for many years and continue to do so, but these only serve to mystify the process. The grant of probate is simply the legal document shown to financial institutions and the like that the people signing to close bank accounts, sell land etc are the people legally entrusted to deal with the estate. It means that checks and balances have been carried out at the probate registry to ensure that a will has been properly signed and that there are no challenges to it, or if there is no will, the grant of letters of administration as it is called, is issued to the correct member of the family who takes on this role.
This does mean that in many estates, there are more formalities to be complied with compared with those that just consist of bank accounts that can be closed without a grant depending on the individual bank's rules. (Unfortunately, another other current trend is for some banks to close accounts without a grant which means that not insignificant cash sums might be over to people who are not entitled to it – but that's another story.)
This does not mean however that the process is anything like the stories cited in the press, and on some of the websites selling such "products". Every now and again there is an estate which can be difficult to deal with, if say there is a dispute between the people involved, or which takes a long time to wind up if there are tax related issues that need to be resolved, for example. More often than not, however, once we see a family to explain what is involved, the process is less difficult than they expect.
One way or another, there is always administration to be dealt with when someone dies, regardless of whether or not probate is required.
When it comes to charges for handling an estate, again, do not believe everything you read. You do not have to use a solicitor to obtain a grant. If you do, then they can carry out work to the extent agreed by your executors and their costs will be tailored according. It is simply not the case that all solicitors will simply take an exhorbitant percentage for administering every estate regardless of what the work entails.
One thing we have found where people have entered into these sorts of arrangements is that they often don't understand the implications of what they have signed. Creating a trust means that you are creating rights and responsibilities, and legal obligations and all too often this is not explained. Setting up a trust is not like opening a bank account that you control (as I have heard it described).
Very often, probate may still be required to deal with assets that a person holds when they die, that were never put into the trust in the first place, and so a sizeable amount of money can be spent on something that does not achieve what it purported to do.
When all is said and done, dealing with a person's estate after they die can be difficult at an emotionally difficult time and yes, there will be administration to be sorted out. However, this is the case regardless of whether probate is required, and if it is, in the majority of cases it is far from the daunting and expensive task that one might be led to believe. There are many professionally qualified solicitors out there who are very experienced and skilled at dealing with the legal, financial and practical aspects of an estate to whom you can go to for advice and support should you need it.