PROTECTION OF PERSONAL REPRESENTATIVES

Question 1

4

CLAIMS OF MISSING BENEFICIARIES OR CREDITORS
If the PRs cannot fnd a known benefciary or creditor, they have the following options:

Answer 1

1. Make the payment owed to the beneficiary or creditor** into the court** and distribute the rest of the estate.
2. Distribute everything with an indemnity from the ben-eficiaries (but this carries some risk for the PRs as the indemnity may prove to be worthless if the benefciary who gave it has no funds).
3. Seek a Benjamin Order. This is a court order giving PRs leave to distribute the estate based on an assumption set **out in the order (for example, that the missing beneficiary should be treated as having died before the deceased). Full enquiries are frst required for this. This gives full protection for the PRs.
4. Purchase** insurance** against the risk of a missing claim-ant appearing. Full enquiries may be required frst. This is likely to be cheaper and quicker than applying to court.

Question 2

3

CLAIMS OF UNKNOWN BENEFICIARIES OR CREDITORS

Answer 2

1. PRs are personally liable to any unpaid benefciary or cred-itor, even if not known when a distribution is made, unless they comply with s27 Trustee Act 1925.
2. Under the Act, PRs can protect themselves from liability by placing adverts in the London Gazette, a local newspaper (local to the area in which any land forming part of the estate is situated), and any other appropriate newspaper (for example, a trade journal in a situation where the deceased had run a business), requesing any person interested to contact the PRs’ solicitor within a minimum of two months.
3. PRs should also conduct search-es for land held for creditors and for bankruptcy declarations against the deceased and benefciaries (to protect against the trustee in bankruptcy).

Question 3

3

OTHER PROTECTIONS FOR THE PERSONAL REPRESENTATIVES

Answer 3

1. Claims for Financial Provision
2. Future and Contingent Liabilities
3. Failed Potentially Exempt Transfers or
   Chargeable Lifetime Transfers

Question 4

2

Claims for Financial Provision

Answer 4

1. Under the Inheritance (Provision for Family and Dependants) Act 1975, a person may apply to the court to set aside the terms of a will or vary an intestacy on the grounds that **reasonable financial provision has not been made for them. **
2. To protect themselves from a financial provision claim, the PRs should wait to distribute the estate until** six months have passed from the issue of the grant**.

Question 5

4

Future and Contingent Liabilities

Answer 5

Future and contingent liabilities include situations in which the deceased had acted as a guarantor on a loan or there is a possibility of legal proceedings against the estate.

To protect themselves from future and contingent liabilities, PRs have the following options:
1. . Estimate and set aside an appropriate amount (though this is unsatisfactory for the PRs);
2. Seek Indemnity from the benefciaries (but this carries a risk);
3. Arrange insurance and distribute the entire estate; or

4. **Apply to the court **for directions as to what to do.

Question 6

2

Failed Potentially Exempt Transfers or
Chargeable Lifetime Transfers

Answer 6

1. Liability for failed potentially exempt transfers or chargeable **lifetime transfers (discussed in your Inheritance Tax materials) by the deceased can arise if the inheritance tax due is still unpaid after 12 months.
2. HMRC will not pursue the PRs for these liabilities if they remain unpaid by the recipient(s), if the PRs have made fullest enquiries and have obtained a certifcate of discharge.