The sting of penalties

Searching for missing or unknown assets can be a laborious and time-consuming part of estate administration. But it is a vital task that

all probate solicitors must consider to ensure the estate value and inheritance tax (IHT) due are calculated accurately.

In 2009, the government introduced the IHT penalty regime. It highlighted identifying assets as a key area of estates administration that should be approached with the utmost care and attention to detail. The regime states that executors and administering solicitors can face penalties if they are found to have been negligent within their search. For example, if the executors have not complied with the regime, they can be liable for penalties of up to 30 per cent of the tax due on any new assets identified after the IHT return has been submitted.

So, how do you ensure best practice when conducting your asset search? One option is to ?go it alone, but not all probate practitioners are familiar with the ‘reasonable’ practice steps that ?need to be taken in this matter. Fortunately, there is help at hand when dealing with the in-depth searches required.

Fraser & Fraser, a leading firm of genealogists and probate researchers, work alongside solicitors and offer their clients a simple solution. By referring your asset search to these experts, you can avoid the possible sting of penalties and be safe in the knowledge that a comprehensive search for assets is carried out and that the work is completed in a timely and professional manner.

“Now more than ever it is important that solicitors ensure this work is carried out by a firm that they can trust,” says Fraser & Fraser partner Neil Fraser, who has noticed an increase in the number of investigations by the Department for Work and Pensions, and HMRC.

Case under scrutiny

One such example clearly demonstrates the need for sufficient levels of scrutiny. In this case, land had already been uncovered by the administrators in a less comprehensive search. Complications, such as the deceased using two different names, meant that the initial search failed to flag up matches that led to the discovery of further assets.

As the deceased had worked within the property development industry, it was assumed that the known properties were the only assets that existed.

However, Fraser & Fraser’s more comprehensive search revealed that this was not the case and they identified more land as being a part of the estate. This shows it is vitally important that asset searches are carried out to the highest standard possible.

In addition to possible penalties for overlooked assets, there is another reason for trying to find as many assets as possible during the estate administration process.

While the majority of clients may well be pleased with additional assets coming to light after an estate has been distributed, if the asset is small, the costs of dealing with the lone asset may be disproportionately high compared with its value. Therefore, the beneficiaries may begrudge ?paying for any additional work carried out by ?the solicitors.

Fraser & Fraser partner Charles Fraser says: “By referring your case to a firm such as ourselves, you will be safe in the knowledge that we will leave no stone unturned in our search, and you are following best practice to ensure that you maximise the value of the estate and, in turn, the amount you can distribute to the heirs and minimise the risks involved with dealing with the administration ?of an estate.

“We endeavour to complete any asset search? in a timely and cost effective manner, while still ensuring that work carried out is conducted to the highest standard and meets the official requirements set out in the 2009 regime.”

Find what you’re looking for. Email legal@fraserandfraser.co.uk or call 020 7832 1430

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