- Legal Futures - https://www.legalfutures.co.uk -

Rise in “DIY probate” is stoking risk of tax avoidance and fraud



uk/resources/services-directory/title-research” target=”_blank”>Title Research, which is a Legal Futures Associate, says government statistics indicate that the share of probates undertaken by solicitors has fallen from 72% of all probates in 2004 to just 65% in 2009

Julia Szczepanski of Title Research said: “An almost inevitable effect of fewer people using a solicitor or other professional adviser to undertake a probate is going to be a rise in incorrect distributions of estates, fraudulent distribution of estates and inheritance tax evasion

The idea that relatives can save on solicitors’ fees might be an attractive one but probate and inheritance tax (IHT) are incredibly complex areas and the chances of making a costly mistake are high

Title Research says that the rise in DIY probate could, in part, explain why there are an increasing number of legal disputes over inheritance that reach the courts and perhaps why HM Revenue & Customs are now so concerned over possible IHT evasion

There has been an 86% leap in the number of High Court cases launched by claimants dissatisfied with their inheritance

Legal disputes in the High Court specifically relating to the “provision for dependants” jumped to 80 in 2008, up from 43 in 2007

In 2006 there were just 10 such cases recorded

Ms Szczepanski added: “Law firms we work with are reporting a definite increase in contentious probate work

Legal disputes can quickly burn through the value of an estate, so DIY probates can be a false economy

” Further, DIY administrators can open themselves up to substantial legal claims, she said

“There are lots of ways to slip up, for example when you value a property you need to take into account the potential redevelopment value of that property and HMRC now expect you to get valuations from three estate agents rather than just two

Title Research said the problems with DIY probate are exacerbated by the fact that 60% (295,103) of registered deaths last year did not involve a will

“Law firms are very rigorous about appointing specialist firms like ourselves to search for potential beneficiaries – it’s questionable whether all DIY probates undertake proper searches

That corner cutting can leave the executor facing a substantial legal liability