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Key Risk Checklist: Administration mistakes17 July, 2014
Delay in finalising estates
☐ Set out at the start of the retainer how you will communicate with the executors, how often that will be, whether you will communicate with the beneficiaries or whether you expect the executors to do that.
☐ Give practice risk guides to executors and beneficiaries explaining what is required to manage the estate and what is expected of them and how long it will take.
☐ Have a summary on the inside of the file about your time and cost estimate and how often you are to communicate with the client. Regularly review these so you are doing what you said you would, and update the client on costs, particularly where the work involved is taking time or is outside the norm.
☐ Elevate supervision on your firm’s priority list!
☐ Audit how it is being done.
☐ Have regular meetings with staff to discuss how files are going, any unusual or tricky issues.
☐ Regularly review active file lists or inactive file lists to ensure that files are not stagnating.
☐ Encourage staff to raise concerns with files.
☐ Put in place appropriate training and mentoring for new staff.
Finalising estates too quickly
☐ Maintain a check list to ensure that all debts are accounted for and paid before finalising an estate.
☐ Recommend to executors that the estate not be finalised until all of the tax returns are received and all debts paid.
Acting for the estate – premature distribution
☐ Advise executors or administrators orally and in writing of the consequences of distributing within six months of the grant of probate or letters of administration, making it clear that the executor or administrator will bear personal liability if they distribute the estate early and a subsequent claim is made.
☐ Pay careful attention to the time frame and diarise appropriate dates, including any dates relevant to any notices of intention to issue an application.
☐ Act promptly in the administration of the estate to enable it to be distributed as soon as possible after the expiry of the first six months.
Mistakes in dealing with assets
☐ Act promptly when instructed to sell property, particularly shares.
☐ Always insist on written instructions from the executor when selling shares.
☐ When instructed to act in the sale of real estate promptly call for the certificate of title if no mortgagee is involved and don’t be put off by promises that it will be delivered later.
Dealing with real property incorrectly
☐ If instructing other staff members in relation to the transfer of property, ensure you describe the interest being transferred correctly.
☐ If there is to be a distribution of property, especially real property, other than as set out in the Will, all beneficiaries:
- should be warned there could be stamp duty implications;
- should be required to obtain independent legal advice; and
- must sign a written agreement evidencing the change.