Avoiding Estate Misdistribution

 In Probate

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AVOIDING ESTATE MISDISTRIBUTION

Title Research is primarily in the business of locating missing beneficiaries. However, another way of viewing this work is to say that we are in the business of managing risk for our probate practitioner clients and, by extension, for their clients, who are usually the Personal Representatives of the estate.

This is particularly important on intestate estates. Where there is a Will, usually the residuary beneficiaries are specifically named (unless there is, for example, a class gift of a share of residue to, say, “all my nephews and nieces”). The PRs therefore usually know exactly who they are looking for on a testate estate. However, this is not always true on intestacies, where sometimes even the class of kin whose members will benefit is not known with any confidence.

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Systematic Research

Our approach during the course of our investigation is to methodically reconstruct and document the family tree. We have systematic and structured working practices and our work path follows the logic of succession law. In plainer words, we address each of the classes of kin, as necessary, in the order in which they would become entitled: for example, we do not look at the grandparents, or the uncles and aunts, unless and until the prior class of half blood siblings has been eliminated. By so doing, we establish entitlement and verify the ID of the statutory next of kin, being the correct persons to whom distribution should be made. This ensures that no one is excluded from the distribution who should be included, or included who should be excluded.

Independent verification

Of course, sometimes the PRs, or family members with whom they are in touch, will state that they already know the structure and composition of the family. Why spend good money proving what is already known? The answer is that family is not always reliable. Although rare, it seems that some family will withhold information deliberately, because they do not wish certain relatives to benefit or because they wish to maximise their own share of the estate.

More frequently, family will withhold information accidentally, not realising its significance. And of course many times the family will genuinely not know the full situation, for example, not know of the existence of illegitimate kin, or of the earlier or later marriages of key family members. Finally, of course, the family may provide details of persons who are not entitled under the succession rules – for instance, foster or step kin (although, if the PRs wish, they can be accommodated within the distribution, with the consent of all affected parties, using, for example, a deed of variation ).

From our perspective, therefore, we can make no assumptions and must take a critical view on all information supplied to us at the outset of research. We document each and every relevant family event. This is not an academic formality. It proves kinship. It will differentiate between whole and half blood collateral kin in jurisdictions, such as England, where the former takes in precedence over the latter. It will identify legally adopted and step family.

Case studies

Case studies prove time and time again the good sense of independent verification in avoiding misdistribution of intestate estates.

One client approached us with information that the heirs at law were the issue of whole blood uncles and aunts. Most of the family was known but some lines were missing and our client was concerned to verify even the known lines to make sure that they paid out to the true heirs. However, approaching the matter systematically, it did not take long for us to find out that, unknown to the family, following the parents’ divorce the Deceased’s mother had emigrated to Australia, where she remarried and had two children. These two half blood siblings were located and, of course, were entitled in precedence to the many cousins. In this way, we managed to prevent inadvertent misdistribution of the estate.

On another intestacy, our solicitor client was in touch with cousins on the maternal side of the Deceased’s family. These cousins thought that the Deceased’s father had had two paternal aunts (and no uncles) and, furthermore, that those aunts had died childless many years ago. To be on the safe side, our client instructed us to look into the paternal family. Sure enough, there were indeed two spinster aunts, close in age to the Deceased’s father. However, there were no fewer than an additional seven older paternal uncles and aunts who had married and had issue. In fact, therefore, the paternal family was not at all as depicted by the maternal cousins – it was large and complicated and produced many heirs equally entitled to benefit.

The whole versus half blood distinction is also key to correct distribution wherever collateral classes of kin (siblings, and uncles and aunts) are concerned. On one case, our client and the somewhat reluctant lay Administrator instructed us, despite the protestations of some of the maternal family that everyone was known. It transpired that the maternal grandfather had married twice and the vociferous kin were descended from half blood uncles and aunts. Of course, as indicated earlier, it may be possible for the PRs to vary from a strict application of the rules governing intestacy, but it is imperative to establish the true facts of a case so that a decision can be taken on the basis of evidence.

In these cases, our work enabled the probate practitioner to distribute with confidence to the properly entitled heirs, avoid a misdistribution, and close their file.

Future claims on the estate

It is almost impossible to legislate against previously unknown kin emerging in future and making a claim against the estate. For instance, think of all the males on a family tree – maybe the Deceased but certainly the father, any brothers, the uncles and so on. How can we be sure that none of these men had illegitimate children whose existence might alter the distribution of an estate? Such children do not often emerge during the course of an average investigation, due to the way in which such births are customarily registered and indexed. Moreover, the rest of the family may not know of their existence or, knowing, may find it too embarrassing to disclose or not believe it to be relevant. Indeed, even the male himself may not have been aware of his paternity.

In this age of identity politics, illegitimate children and their descendents are, like adoptees, increasingly interested in their antecedents; recreational family history shows no sign of waning and more people will look into their roots; and, in an increasingly litigious society, it is likely that sooner or later claimants will emerge on estates which, it had been thought, had been correctly distributed. The best remedy for such claims will always be preventive – and therefore we strongly recommend that all probate practitioners advise the PRs for whom they act to take out a missing beneficiary indemnity insurance “comfort” policy even when there are no known or even suspected missing beneficiaries.

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