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A simple guide to wills and inheritance risks

At a glance

  • What would happen if a relative came forward to claim a share of a deceased’s estate after all the assets had been distributed?
  • Zurich’s Trusts and Estates Centre can provide legal indemnity solutions to trust, probate and estate problems
  • We look at three wills and inheritance issues frequently faced by customers

From missing wills to lost share certificates, there are numerous trust, probate and estate scenarios that could see a customer turn to their broker for help.

Here, we look at three of the most common scenarios, and consider how insurance can provide a solution.

Missing wills

When somebody dies, an executor will be appointed to administer their estate in accordance with their will. This person is known as a personal representative. If the deceased died without having left a will, the personal representative will be responsible for distributing their estate to their spouse or relatives in accordance with the relevant UK intestacy law.

Problems can arise when the personal representative distributes assets in accordance with intestacy law, and somebody later produces a valid will; or if funds are distributed in accordance with the terms of a will, and a beneficiary later comes forward with a more recent will that supersedes it.

The personal representative may have a particular concern that a will/subsequent will exists, or may want the comfort of a policy, just in case one should subsequently come to light.

A Missing Will Insurance policy would allow the personal representative to distribute the deceased’s estate, safe in the knowledge that their insurer would pay the beneficiaries of any will that comes to light at a later date – provided that the personal representative has exercised due diligence, for example carrying out appropriate checks to identify whether a will might exist.

Missing beneficiaries

There may be occasions when it is impossible for a personal representative to trace all those entitled to a share of a deceased’s estate. Or there may just be some uncertainty as to whether all beneficiaries have actually been identified. This could apply equally to trustees following the winding up of a club, pension scheme, trust or other organisation.

Missing beneficiary insurance allows a personal representative to distribute assets, knowing they are protected if someone later comes forward to claim their share.

We are specialists in trust, probate and estate matters – we are a dedicated, specialist underwriting centre, providing bespoke solutions to customers, day in, day out.”

Jeff de-Rhune, Underwriting and Centre Manager, Zurich Trusts and Estates Centre

The risk of this happening is far greater than it was a generation ago, as Jeff de-Rhune, Underwriting and Centre Manager of the Zurich Trusts and Estates Centre, explains.

“Years ago, if somebody emigrated to Australia, the chances of them finding out about the death of a very distant relative, or the winding up of a club they used to belong to, were pretty remote.

“The internet has changed all that. Now, at the click of a button somebody can find out about the winding up of that old club or the passing away of a long-lost distant relative and claim their entitlement to a share of the assets.”

Lost share certificates

If somebody wishes to cash in high-value shares, but cannot find their original paper share certificate, the company registrar will ask them to provide an indemnity, protecting the company in which the shares are held, against any losses it could incur by issuing a duplicate certificate. They will also need to get this indemnity countersigned by a bank or insurance company, acceptable to the registrar.

Many banks and insurers, even if they are acceptable to the registrar, will not provide countersignatures – Zurich is one of the few insurers that does, especially when it comes to high value shareholdings.

Jeff says: “Problems can occur when somebody is trying to replace their own share certificate, or managing the estate of a deceased. Similar problems arise when life insurance policies are lost and the life company requires protection, before paying out under the life policy.”

Why insurance is the best option

Insurance is not always the only remedy to every trust, probate or estate problem, but it is often the best solution.

The Zurich Trusts and Estates Centre

Zurich has a specialist unit devoted entirely to providing bespoke legal indemnity solutions to trust, probate and estate risks.

Problems that may require cover include:

  • Lost share certificates
  • Missing/unknown beneficiaries
  • Unknown creditors
  • Issue risks
  • Missing wills
  • Ambiguous clauses in wills and trust deeds
  • Lost life policies
  • Trustees’ liability

With missing beneficiaries or missing will disputes, there can be two alternatives to insurance.

“The first is to go to court, which isn’t cheap or quick, and the outcome is uncertain,” says Jeff.

The second option applies when, for example, a personal representative cannot find every beneficiary but can work out exactly what they would be entitled to.

Jeff says: “In that scenario, the personal representative could consider putting money aside to cover the possibility that the beneficiary might later come forward, but that’s not ideal because it means that the personal representative still has to manage those funds and continue to look for the missing beneficiary. Solicitors and other organisations are under increased pressure not to simply sit on funds.”

With lost share certificates and many other trust, probate and estate problems, insurance can often be the best answer.

How Zurich can help

The Zurich Trusts and Estates Centre can provide legal indemnity cover for a wide range of trust, probate and estate problems (see box out).

Jeff says: “We are specialists in trust, probate and estate matters – we are a dedicated, specialist underwriting centre, providing bespoke solutions to brokers and customers, day in, day out.

“We provide in-perpetuity cover, which is really important for customers, because many of our insureds have personal liability and once they have distributed all the funds and assets, it is difficult to get them back. This liability can transfer to their own personal representatives on their death.”

It is important customers understand that an insurance policy will not absolve them of all their responsibilities. For example, a missing beneficiary policy will not be offered if the personal representative has failed to do all they reasonably could to identify and locate every beneficiary, including where appropriate employing professional genealogists.

“Insurance is not a shortcut to avoid due diligence,” says Jeff. “As part of our underwriting, we will check what due diligence has been done. Customers should see insurance as a way of complementing all the checks they need to carry out and providing that additional layer of comfort.”

For more information please speak with your local Zurich contact.

Image © Alamy

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