Rachel Giles is an Associate Solicitor for Taylor Walton Solicitors, a prestigious multi-service, award-winning law firm, with offices in St Albans, Harpenden, and Luton.
Rachel explains: “We offer a city firm quality level of service but with local knowledge and connections. Much of what we deal with might qualify as HNW, although there is really no precise definition of a High Net Worth individual – it’s a relative concept. Our private client team work on probate cases which range from estates under £500,000 to estates in the tens of millions. Estates worth over £2 million lose the residence nil rate band, so generally when we talk about HNW estates they tend to be larger – usually around £3-5 million in size. However, insurers might regard estates worth more than £1.5 million as “high risk” so HNW means different things to different people.
Understanding High Net Worth Estate Complexities
“HNW clients need their advisors to provide oversight of the big picture, and to pay attention to the detail of their affairs. The work begins during a client’s lifetime with a Will and lifetime planning that takes into account the individual circumstances and assets of the client. Succession planning can be more complex, particularly when it comes to business involvement. For example, with a farm or business there needs to be an appropriate person appointed to maintain the future of that business. Things need to be structured carefully to preserve inheritance tax reliefs, to help ensure such assets are protected as far as possible and depletion prevented.
“Age of inheritance and protection from third parties can also be a greater concern with larger sums. Trusts can be set up to ensure young people inherit only when they reach a responsible age, or that the assets cannot be accessed by others. Trustees must be carefully selected, who will prudently manage assets to preserve the wealth for the benefit of the client’s chosen beneficiaries.
“Probate is an emotional time, and we want clients to avoid the further distress of any contention. Therefore, we advise clients to be clear about their final wishes before they pass away to ensure appropriate distribution of the estate when the time comes. If there is an anomaly, we encourage discussion with the family so there are no surprises. Leaving a written note, can ensure transparency and help avoid litigation. It may be as simple as explaining why a beneficiary will receive less, (perhaps because they had already been gifted a certain sum when the testator was alive for example).
Addressing the challenges of High Net Worth Estates
“Estates belonging to High Net Worth individuals who have passed away are often more complex to administer than smaller estates. This is because there are often more assets to deal with and the variation and spread of assets involved, such as structured investments, insurance policies, trusts or offshore accounts may also need to be considered. Further, business assets or agricultural assets can benefit from different IHT treatment.
“Our approach with any probate case is to be clear with the family about what to expect, particularly in terms of the steps which need to be taken and how long they usually take. A lot of clients don’t realise how lengthy the probate process can be. The difference between settling the IHT position with HMRC and obtaining the Grant of Probate from the Court can also potentially be confusing for clients who may not realise they are two separate processes.
“We have to submit information to HMRC about the IHT position and tax needs to be paid before applying for the Grant of Probate, so it is essential that we establish the full extent of the estate as early as possible. High Net Worth individuals’ complex financial affairs can take longer to confirm, particularly where there are complex structures or foreign assets.
“With lower value estates, clients may have not engaged in a solicitor-client relationship before and can be reluctant to provide information. Therefore, building a rapport and helping individuals understand the parameters of the professional relationship early on is helpful. Interestingly, High Net Worth clients are often used to dealing with professional advisors, and so the management of the relationship can be easier.
“Managing expectations and clear communication with families helps them understand what to expect at a difficult time. We also like to inform beneficiaries about the size of the estate and the tax liability as soon as possible so they can plan for their own financial future.
Providing Comprehensive Support and Diligence
“Where one of our partners is the executor for the deceased’s estate, we use Estatesearch’s Financial Profile search as a matter of course to search for all the assets and liabilities and close off the position. This due diligence ensures that no stone is left unturned. If a lay executor is not confident about where everything is, or where the person who has died has not left their affairs in good order, we also recommend an asset search.
“A Financial Profile search will often uncover small investments that have been overlooked. A surprising number of forgotten bank accounts containing small amounts of money have been discovered over the years! The search will also establish liabilities such as mortgages or credit card debt. Even where no further assets are found, executors can have peace of mind that they have done all they reasonably can to establish the size of the estate.
“We also use Estatesearch to order placement of Section 27 Notices to inform creditors and for overseas bankruptcy searches if beneficiaries are based abroad. I like our personal connection with members of Estatesearch’s team. The company offers far more than searches and an ordering portal, we can always pick up the phone if we need further assistance.
“I believe our clients appreciate our matter-of-fact approach which is sympathetic to the loss they have suffered but is also pragmatic and calm. We focus on what needs to be achieved, helping them through the various steps. This activity can become part of the grieving process and ultimately helps them come to terms with their loss and move on. Our use of Estatesearch’s services, particularly to establish the assets and liabilities within an estate, ensures we work with efficiency and due diligence and means we can offer the best quality service possible to bereaved families regardless of the size of the estate.”
For further information about Taylor Walton please see: https://taylorwalton.co.uk/
Published in the Hertfordshire Law Magazine.