Misconceptions in Valuing an Estate for Probate. Pitfalls for Beneficiaries and the Disinherited

It is not unusual for misunderstandings to occur about the value of a deceased’s estate, risking substantial financial loss to a beneficiary or a claimant against an estate, if not legally advised.

“Joint Bank Accounts”

In my experience banks often mislead people that “Joint Accounts” are not part of the deceased’s estate. The ownership of a bank account held in more than one name depends on the circumstances.

An elderly widow befriended a gentleman. He suggested adding his name on her bank account to assist her with banking and she agreed. Later she died and left all her estate to her adult children.  The bank told the gentleman that as he was the survivor of their “Joint Account”, her life savings in that account were not part of her estate to pass to her children, the funds instead belonging to the gentleman, in the bank’s view. The account balance was £200,000. He never paid his own money into the account.  The children of the deceased lady were legally advised that the gentleman merely held the account on trust for the deceased’s estate and so her children inherited an additional £200,000.

Towards the end of their life a deceased may find it easier to undertake banking with the assistance of a trusted person and, for this reason, a second name might be added to their account which might seem, at first,  an easier solution than preparing and registering a Power of Attorney to handle financial matters.

Power of Attorney

A deceased appointed her son as her Attorney for her financial matters under a registered Power of Attorney, during which he bought a flat from his mother’s funds. His sister became executrix, responsible for collecting in the estate assets for the beneficiaries, herself and her brother after his mother died and spotted the payment to her brother from her mum’s savings whilst he was an Attorney. Following legal advice, due to the duties on Registered Attorneys and the rule against double portions, the son’s inheritance was reduced by the amount he had received from his mother.

The Deceased’s Property Jointly Owned as “Joint Tenants”

If disinherited, or not having been made reasonable financial provision for under a Will, certain groups are entitled to bring claims against a deceased’s estate under The Inheritance (Provision for Family and Dependants) Act 1975.

Financial distribution of an estate, under a Will or on intestacy (where the deceased left no valid Will), may be altered to provide “Reasonable financial provision” for a valid claimant, a child, including a child (even if now adult) treated by the deceased as their child without a biological link, spouses or ex- spouses, cohabitees, or anyone maintained by the deceased at the date of their death.

Whether a claim against a deceased’s estate is worthwhile may depend on the estate value. The Grant of Probate, issued by The Probate Registry, sets out the value of the deceased’s estate for probate purposes.

However, as explained above, there may be various misunderstandings as to what assets should be included in the deceased’s estate.

An additional example arose when my client sought advice on a claim for reasonable financial provision against his late mother’s estate, which left him very little under her Will. The deceased’s Grant of Probate indicated a low value estate, so the matter may have not been taken further.

However, the deceased had been joint owner with her sibling of a string of buy to let properties, bought cash, the value of which had not been included in the application made to obtain the Grant of Probate for the deceased’s estate.

The deceased’s executor thought it was not necessary to declare jointly owned property the deceased owned at her death as joint tenants.  This has nothing to do with renting and is a legal term of agreement that joint owners of property, held as  joint tenants, agree the surviving joint owner(s) will own the deceased’s share, so the deceased property share does not pass to their estate. As a result the surviving sibling automatically became owner of the deceased’s share of the properties on the death of her sister.

However, there is a little known provision relevant to inheritance claims allowing the Court to consider treating the deceased’s share of assets, not included within the estate, which on death have passed to the surviving joint owner(s), as part of the estate value for the purposes of an inheritance claim. In this case, it was a property portfolio held as joint tenants.

This raised the value of the estate considerably, and thereby the value of my client’s successful claim against the estate.

If you have any queries regarding a contentious trusts or probate matter, including disputes with Attorneys please contact Julie Bradwell CTAPS Solicitor, Registered Contentious Trust and Probate Specialist on York 01904 716000, Wetherby 01937 583210 or Malton 01653 692247 or email Julie.bradwell@warekay.co.uk.