Elderly Clients - As Executors and Beneficiaries

Julia Abrey, Partner at Withers, examines some of the difficulties that elderly clients face when they become either executors or beneficiaries.

Elderly clients can often find themselves closely involved with probate; they may well be appointed as an executor of the will or their spouse and in many cases, even if they are not executors they will be beneficiaries. As with many legal processes, probate practice and procedure can seem complex, technical and confusing to clients in general but must be particularly so where the elderly are involved where failing mental and physical faculties may make understanding the concepts involved and making the necessary decisions all the more difficult.

Some of the things that we as advisers to elderly client can do to ease their way through the legal processes are no more than common sense and will enable solicitors to improve the service offered and our communication with out older clients. Recent articles (e.g. LSG 27 July 1994) emphasise that solicitors have an image in the minds of some older people as being unapproachable and aloof; too busy to spend time with their clients or too costly. Although dispelling the myth of solicitors' inapproachability is obviously a wider topic than acting for the elderly executors and beneficiaries of estates, it is particularly important in relation to probate which can seem an archaic and long winded process.

Solicitors and elderly clients; practical issues

Do clients have good physical access to solicitors' premises? The traditional first floor solicitors' office may cause difficulty to the older client because of the stairs and it may also not be near public transport. Solicitors therefore need to be flexible about offering visits at home if elderly clients would find a visit to the office not only difficult in practical terms but also daunting and stressful, especially at a time when they may recently have lost the support of their spouse. If the client is prepared to come to the office, why not make it easier by having information on how to get there? Perhaps a map printed on the back of a flyer with a note of the nearest available public transport and parking facilities.

As far as communication in general is concerned this falls into two parts. The first is making sure that the arrangements at the office are helpful and friendly (although of course this applies to all clients and not the elderly). The second part of communication involves the relationship between the individual solicitor and the client. In guiding an elderly person through the probate process it is important for the solicitor to understand that an elderly person may need more time to read and understand documentation and may be slower to grasp the concepts which are second nature to the advising lawyer. Falling into the pit of jargon is all too easy for us to do and we should avoid it at all times.

On a practical level, using a larger font on a word processing system for those whose sight is failing or arranging for particularly quiet conference room for a client known to be deaf is evidence of our sympathetic attitude. Company literature could be printed in larger type for older clients and Braille transcription service offered.

Elderly clients as executors

Flyers

Many clients (not just the elderly) may well not have been an executor before. They will need to be made aware of their responsibilities which should be explained in a clear and concise way. Why not consider having a brochure about the administration of an estate (perhaps even more than one) describing the job in greater or lesser detail according to what you think the client will be able to take in. Obviously leaflets of this sort cannot tell the client everything they need to know about the probate process but it will at least give them some background information and could also include a glossary of frequently used terms; "grant of probate", "deed of variation", "appropriation", "inheritance tax etc".
Action Plan

In relation to the particular estate of which the elderly person is an executor, why not consider an action emphasising the various stages of an administration as outlined in the more general flyer and applying them to the estate in question? The action plan could be in three columns showing the anticipated date on which the action will be taken, the details of what needs to be done and who is to be responsible. This is particularly important in complex estates where the solicitor is often the co-ordinator between various other professionals; chattels valuers, land agents, accountants etc. The action plan can be updated as the administration goes along as inevitably the timescale will need to be adjusted as the administration progresses. The action plan could perhaps be amended in a different font to highlight any changes. It can be used as the key document for the estate administration.
Information gathering and meeting

It is difficult to know when to have the first meeting with the executor. Obviously it is better to know as much as possible about the estate of which the elderly client is the executor before having a detailed meeting however it is often difficult to extract this information other than in an initial meeting. It might therefore be better to consider two meetings; the first to meet the executor and discuss administration generally (probably after they have had a chance to read the general information leaflet) and to agree who is to collect the information to apply for a grant of probate. Collecting and collating this information might well cause particular difficulty for an elderly person and therefore consider offering a trainee solicitor or legal executive's help (at a low charge out rate) in visiting the home of the person who has died to retrieve the papers.

The second meeting could then be held when the solicitor has an idea of the estate assets and liabilities. The meeting could introduce not only the action plan, the estate summary, proposals for administration in general and any future planning arrangements including deeds of variation.

It is obviously much better to send out papers for meetings in advance so that the elderly client has time to read them before you meet.

Keeping the executor informed

Following the formulation of the action plan (which also deals with any deeds of variation or other planning proposals) it is then important to keep the elderly client informed of the progress of the administration and timings on the action plan. Keeping up to date and giving regular updates by letter or telephone will mean that the executor does not feel out of touch with the administration itself especially if it is complex and many different strands are being dealt with at one time.
Accounting

As far as accounting is concerned it must be emphasised to the executor that beneficiaries can call for the executors to account for their stewardship of the estate and that estate accounts are a necessity and not an opinion. Preparing accounts in simple understandable form is as such an art as a science and no one form can be said to be perfect for use in all cases. Depending on the length of the estate administration a decision will need to be made as to whether a running set of accounts should be kept which is updated at frequent intervals but which eventually encompasses the entire administration or whether it would be better to draw each set of accounts for a given period (a year at maximum) and start the new set from the next period by picking up the balances from the previous version.

There is not right or wrong choice however where there are complex and ongoing issues within the estate it may be better to have a single set of regularly updated accounts so that the whole picture can be seen even if these do turn into a substantial document at the end of the day. Either way accounts should cover the following key points:

Inheritance Tax. A calculation of the tax outstanding, payments on account and interest due plus a note of the values unagreed should be included.
Income Tax and CGT. Details of interest earned and gains made. The information should be in such a form as could easily be extracted to be used in the executors tax return.
· Remaining assets. The balance sheet and supporting schedules should show the assets disposed of and those remaining in the estate.
Costs. Charges made to date should be included as should a best estimate of future costs.

Elderly client as beneficiary

Acting for an elderly client who is a beneficiary of an estate may not in fact involve as much time as acting for an executor but of course this depends on the complexity of the estate concerned. Some of the things to look out for would be as follows:

Pecuniary legacies:Have these been paid within year of death? If not interest at 6% from the end of the first year of the administration must be asked for and accounted for. Specific legacies carry income arising from the date of death.
Residue or share of residue:Ask for a copy of the will and the grant of probate so that there will a clear note of the provisions of the will and confirmation that the executors are now authorised to carry on with its administration.
Distributions: Request an interim distribution within two months of that grant of probate. Unless assets are particularly illiquid this should be possible even if the amounts involved are modest and substantial reserves are kept.
Updates: Beneficiaries should receive updates regularly and at least once every six months.
Accounts Beneficiaries should ask for full accounts which should be prepared annually.

Other points to watch for:

Failure to account for interest on cash deposits. The deposit interest rules require all but very small balances to be placed on deposit and solicitors should check on behalf of beneficiary clients that all deposit interest has been accounted for.
Failure to issue deduction certificate. Beneficiaries of a share or residue should receive tax deduction certificates in respect of distributions made to them on an annual basis. Considering the new self assessment rules these tax deduction certificates should be received by August following the end of the tax year at the latest to allow beneficiaries time to decide whether they wish to prepare their own self assessment calculations for them. In the latter case, their return needs to be submitted by 30 September.
Legal fees. Solicitors acting for beneficiaries will need to be alert to the legal fees charged in relation to the administration of the estate. Under the Solicitor's (Non-Contentious Business) Remuneration Order 1994 it is now open to residuary beneficiaries to apply for a remuneration certificate under certain conditions.
Releases and indemnities. Beneficiaries may well be asked to sign releases or indemnities which could be regarded as over comprehensive or oppressive. Beneficiaries should be very careful about signing these.
Deeds of variation and disclaimer. The opportunities for these should not be missed and although they will often be suggested by executors and their advisers the beneficiaries themselves should watch for opportunities. The two year period for a deed of variation is very important and should be watched carefully.

J A Abrey, Partner, Withers Solicitors