In this series of articles, we are looking at the main heads of cover provided within Comprehensive Executor & Inheritance Indemnity Insurance. For the third and final part, we are looking at the risk of known missing beneficiaries coming forward after the estate has been distributed.
You would be forgiven for thinking that most people would jump at the chance to claim their inheritance following news that a deceased distant relative had included them in their will or had died intestate. When it comes to tracking down beneficiaries and distributing an estate, both solicitors and personal representatives often find it a challenging task.
The expectation of personal representatives is that they use reasonable efforts to locate any beneficiaries and they are also advised to place notices in the local press and the London Gazette. Further work may be required using tracing companies or genealogists.
Where beneficiaries are known but cannot be traced the options available include the following:
- Hold on to the funds due to the missing beneficiary for 12 years after which point, they would be unable to bring a claim
- Distribute the funds to the beneficiaries that have been located but have them provide an indemnity to pay the missing beneficiaries portion back in the event that they come forward at a later date
- Distribute the missing beneficiaries’ portion to a registered charity and have that charity provide an indemnity to pay the funds back in the event that they come forward at a later date
Each of these options leaves the personal representative and the beneficiary with uncertainty and risk and potentially further work to finalise the estate after a period of 12 years.
Missing Beneficiary Insurance
Executor & Inheritance insurance can go some way in protecting the beneficiaries from having to repay a portion of their inheritance long after the estate has been distributed. Such insurance would also cover legal defence costs for the personal representative.
Where a professional organisation is providing estate administration services then ensuring your clients are aware of the existence of such an insurance policy may reduce the chances of being found to be negligent. If such an insurance policy was in force and a known missing beneficiary successfully exerts a claim upon the estate, then it is possible that a professional indemnity claim against your organisation could be avoided with the associated legal defence costs and subsequent awards met by the Executor & Inheritance insurance provider.
With the state of the professional indemnity market as it is, any positive actions to mitigate against accusations of errors and omissions and the financial losses they cause will become increasingly more important and help your organisation manage risk.
Find out more
Hayes Parsons Insurance Brokers can help probate solicitors place executor and inheritance insurance. If you have any additional questions or would like a quotation, get in touch with our probate insurance expert, Paul Guest: