The Importance Of Legal Advice During Probate

The administration of an estate must be carried out correctly; otherwise the personal representatives are open to attack by disgruntled beneficiaries as well as HMRC.  The administration process will start for most farming clients by submitting a difficult and lengthy probate form.  All assets must be declared correctly and if HMRC discover something that has not been declared fully or that any of the information is incorrect, then the Personal Representatives of the estate can face financial penalties.  How great these penalties will be will depend on whether HMRC feel that the error/omission was deliberate.

HMRC are most likely to object to forms that value the land, farmhouse and farm buildings as low a value as possible.  If the value declared is too low this can also have a drastic capital gains tax consequence in the future.  A higher value is not likely to create a problem for inheritance tax if the land/property qualifies for agricultural property relief or business property relief.

HMRC will scrutinise the information provided and the estate can end up in protracted negotiating with HMRC over the value of the land/property and the availability of relief. 

There is a common misconception that if a husband or wife dies without a Will, then the whole estate is to pass to the surviving spouse.  This may not be the case – the intestacy rules are unfortunately more complicated than this.  It is important that the administrators are fully aware of these rules as if they distribute the estate incorrectly they could end up being sued by the correct beneficiaries.