Reducing the risk of estate misdistribution

 In Probate

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Reducing the risk of estate misdistributionFor more than 50 years, Title Research has been in the business of locating missing beneficiaries and at its most basic level, this is what we do. However, another way of viewing our work is to say that we are in the business of managing risk for our clients and, by extension, for their clients, who are usually the Personal Representatives of the estate.

This is particularly important in 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. In instances such as this, we first have to identify who the beneficiaries are going to be, before we can locate them.

Systematic Research

We follow a systematic approach to researching a family tree, which may appear alien to a family member who has carried out their own family history research. We have developed our own best practices to ensure that we follow the relevant law of succession. 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 proved to be empty, or unless our client is completely satisfied. Our aim is to ensure that all entitled persons are included, and unentitled persons excluded.

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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 – most commonly we find ourselves proving that believed children are in fact 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).

We therefore assume nothing and must take a critical view on all information supplied to us at the outset of research. Documenting all relevant events of birth, marriage and death is vital, and not just a 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, for example – proving that a child was legally adopted into the family or merely fostered is vital to ensure a correct distribution.

Case studies

Over the years we have collected numerous case studies which demonstrate the importance of a professional verification as a tool for risk management.

Our solicitor client was administering the estate of a gentleman who died intestate, and they were in touch with two sisters who assured the solicitor that he never married and had no children. His parents having long since died resulted in the estate devolving to his siblings of the whole blood – the two sisters – fairly uncontroversially. In this instance our client was planning on relying on statutory declarations from the two sisters to protect themselves from any potential future claim. This is not something we would normally recommend as should a claimant come forward in the future, we feel that obtaining monies back from beneficiaries who may have been overpaid would be highly challenging. In this instance it came to light before distribution that there was an additional sibling – a brother – who had predeceased the Deceased. He left two children, who of course were entitled to half of their father’s share of the estate. In this instance we believe that the two sisters did not understand that their brother’s children would also inherit; however, a professional verification would have removed this risk cost effectively and efficiently.

On another intestacy, our client was instructed by a paternal cousin who had provided a partial family tree for his side of the family, and asked us to help confirm this and fill in the gaps. The PR was adamant that there were no family on the mother’s side, and despite our advice to the contrary refused to allow any expense to be incurred to verify this. We duly carried out our instructions and located 15 potential heirs on the paternal family and reported in full to our client who prepared to make a distribution – in time for Christmas. Just as the cheques were about to be sent to the beneficiaries, a Christmas Card arrived via the Royal Mail postal redirection service. This card was signed ‘Cousin Joyce’ and our client referred back to our family tree but could find no one with the name Joyce. Following further investigation it transpired that Joyce was in fact a maternal cousin, and that she and 17 other maternal relatives were also entitled to share in the Deceased’s estate. Fortunately, our client (and theirs) avoided a potential mis-distribution but this further highlights the importance of professionally verifying all family information.

Protecting against future claims on the estate

Genealogy is not an exact science, and it is almost impossible to legislate against previously unknown kin emerging in future and potentially 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 increasingly connected age where the interest in recreational family history shows no sign of waning, and where research resources are improving and becoming more and more available 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 always strongly recommend that all estate administrators 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. We will always recommend this at the culmination of our research, and specifically where one side of the family yields no heirs at all. In these instances, the final checking point for us – interviewing family members – is of course not available and so we feel that the support of an insurance policy is vital here.

Insurers do not normally make insurance available without a professional genealogy report being prepared first. However, all our reports are prepared with insurance in mind and our research methodologies are accepted by all major insurers such as Zurich and so we can normally arrange these polices on behalf of our clients. We charge no additional fees to prepare a report for insurance or to liaise with insurers on behalf of our clients. We see this as a vital tool in risk management.

In an increasingly litigious age, we believe our clients should do everything possible to protect themselves and their clients from any likelihood of potential future dispute. Title Research will always look to offer a beneficial and cost-effective solution.  Our preference is for fixed fees as this provides certainty for our clients, but we will always be flexible in our approach to meet our clients and in turn their clients requirements.

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