‘Many estates appear simple at first glance,’ says Safia Palmer, Wills and Probate Advisor in the private client team at QualitySolicitors Parkinson Wright. ‘However, once you look more closely at how assets are owned, how the will was drafted, and whether business or shareholdings are involved, complications can arise very quickly. Executors often do not realise the level of responsibility they are taking on.’
Safia highlights some of the most common probate myths - and explains what you need to be aware of.
Myth 1 – ‘Everything passes automatically’
You may assume that when someone dies, their assets automatically pass to their spouse, partner or chosen beneficiaries without much formality. In reality, it depends entirely on how those assets were owned.
For example, if property was owned as joint tenants it will pass automatically to the surviving owner. However, if it was owned as tenants in common, the share forms part of the estate and passes under the will (or the intestacy rules if there is no will).
Company assets do not belong to the shareholder personally.
Bank accounts, investments, digital assets and overseas property can all require different processes before they can be accessed.
Assets held in trust may fall outside the estate altogether.
Myth 2 – ‘Executors can just sell assets’
If you have been appointed as an executor, you may think your role is simply to gather the assets, sell what needs to be sold and distribute the financial proceeds. In reality, your powers are not unlimited. While there is not usually a strict legal duty to consult family members about personal possessions, particularly sentimental items, it is often sensible to do so where possible to avoid unnecessary disputes.
As an executor, you must act in accordance with the will and in the best interests of the beneficiaries. You owe fiduciary duties, meaning you must act honestly, in good faith, and solely for the benefit of the beneficiaries, rather than for your own personal interests, and you must exercise reasonable care and skill when dealing with the estate.
Before selling assets, you may need to:
- obtain formal valuations, particularly for property or business interests;
- consider inheritance tax, capital gains tax and income tax implications;
- review company documents if shares are involved;
- obtain consent from co-owners, directors or other shareholders, where applicable; and
- ensure that sufficient funds are retained to meet liabilities.
Being an executor carries personal responsibility. If you sell assets without proper authority or at an undervalue, you could potentially be personally liable. Equally, delaying action without good reason can also create risk.
Taking legal advice can help you strike the right balance and ensure you fulfil your duties correctly.
Myth 3 – ‘Shares are easy to deal with’
Not all shares are the same, and if you are dealing with shares as part of an estate, the process may be more complex than you expect.
Publicly listed shares are usually more straightforward to value and transfer once probate has been granted, although they still require liaison with registrars and completion of stock transfer documentation.
Private company shares, however, often come with restrictions. Articles of association or shareholders’ agreements may:
- restrict who shares can be transferred to;
- require directors’ approval;
- give existing shareholders pre-emption rights;
- trigger compulsory buy-back provisions on death; or
- specify valuation mechanisms that must be followed precisely.
There may also be important inheritance tax considerations, particularly where Business Property Relief is relevant.
Failing to review the company’s governing documents at an early stage can cause significant delay and even a dispute. If you are acting as an executor, it is important to understand both the legal and tax position before taking action.
Myth 4 – ‘Businesses continue as normal’
If the person who has died owned or ran a business, you may expect it to carry on without interruption. In reality, a death can disrupt a business overnight.
You may find that bank accounts are frozen, signing authority is unclear, or key decisions cannot be made until probate is granted. If the person was a sole trader, the business may technically cease on death unless appropriate steps are taken.
Staff, suppliers and customers may be affected if there is uncertainty about who has authority to act.
Without prior planning, a business can quickly lose value. Taking legal advice early can help stabilise the situation, protect ongoing trading and preserve the estate’s assets.
Myth 5 – ‘Probate is just paperwork’
From the outside, probate can appear to be a matter of completing forms. In practice, if you are an executor, you are taking on significant legal and tax responsibilities.
You may need to:
- identify and value all assets and liabilities;
- complete inheritance tax reporting and arrange payment of any tax due;
- deal with income tax and capital gains tax arising during the administration period;
- settle debts and any claims against the estate;
- prepare estate accounts; and
- distribute the estate correctly and fairly.
If you distribute assets before settling tax liabilities or potential claims, you could be personally responsible for any shortfall.
Why the wording of the will matters to you
If you are dealing with an estate, it is important to interpret the will correctly to avoid misunderstandings. The exact wording of the will can have a major impact on how the estate is administered and who benefits.
For example, if a will leaves ‘my shares in X Ltd’ but those shares were sold or restructured before death, the gift may fail altogether. Ambiguous drafting can create uncertainty between beneficiaries and lead to disputes.
The distinction between specific gifts and a share of the residue can also affect tax treatment and entitlement.
The risk of a dispute
Probate disputes are more common than many people realise.
If you are an executor, beneficiaries may question your decisions or request detailed information. If you are a beneficiary, you may feel concerned about delay or fairness. In some cases, individuals may bring claims under the Inheritance (Provision for Family and Dependants) Act 1975 if they believe reasonable financial provision has not been made.
Disagreements can escalate quickly, particularly where businesses or high-value assets are involved.
Clear advice and transparent administration can significantly reduce the risk of conflict.
How we can help
We regularly advise executors and families dealing with estates that involve business interests, private company shares and complex assets.
We can help you by:
- advising you on your duties and potential personal liability as an executor;
- interpreting wills and company documents to avoid costly mistakes;
- assisting with valuations, tax reporting and compliance requirements;
- advising on Business Property Relief and inheritance tax issues;
- helping you resolve disputes or reduce the risk of claims; and
- guiding you through probate clearly and efficiently.
Our aim is to help you administer the estate confidently, protect yourself from unnecessary risk, and ensure that matters are handled in accordance with the law and the deceased person’s wishes.
For advice on probate or estate administration, please contact Safia Palmer or a member of our private client team on 01905 721600 or via email worcester@parkinsonwright.co.uk
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.