Risk Management with Insurance

Risk management: collecting, gathering in and administering: how insurance can help

Jul 3, 2019 1:17:07 PM

By Jeff de-Rhune, Trust & Probate Insurance

Jeff de-Rhune is a Solicitor and Director of Trust, Probate & Estates at Trust & Probate Insurance – part of Legal & Contingency Ltd, a specialist insurance intermediary and Lloyd’s of London Coverholder.


Personal Representatives (PRs) are under a duty to collect, gather in and administer according to the law, all the real and personal estate of their deceased. In many cases, this might be a straightforward exercise. The chances are, however, that readers will have been professionally involved in at least one estate where it has not always been plain sailing.

First things first: is the estate testate or intestate? If there’s a Will, are the PRs sure it’s the deceased’s last Will? If the estate seems intestate, but friends and/or relatives claim that there’s a Will somewhere, what can be done? A missing Will indemnity could help by enabling the Executors to prove the existing Will, or the Next of Kin to extract Letters of Administration. If a Will (or later Will) turns up after the estate has been distributed, the “old” PRs will be indemnified in respect of any sums due to new beneficiaries named in that Will.

So, once we know whether we’re proceeding per the terms of a Will or as on intestacy, what about collecting, gathering in and administering? A typical estate will own at least a few stocks and shares and these will need valuing and, usually, selling. It’s not so unusual for share certificates to go missing, which in itself is not such a big problem but can be time consuming to deal with. Registrars will usually request an indemnity from the PRs. If the holding is modest, the PRs might be happy to give such an indemnity themselves. Where the holding is substantial, however, the registrars may ask for an acceptable insurer to join in the indemnity by countersigning it.

Similar considerations apply with regard to life assurance policy documents. Sums assured are usually at least in the tens of thousands of pounds, if not greater. As with share certificates, should the policy documents go astray, the life company may request an indemnity before paying out. The PRs can obtain insurance which will indemnify the life company for loss incurred as a result of paying out the proceeds of the life policy without the production of the original policy documents. This can avoid the need for the PRs to provide an indemnity direct to the life company and thereby incurring further potential personal liability.

When preparing for distribution, have the statutory section 27 notices been placed? If not, consider insuring against unknown creditors coming forward at a later date. Likewise, are the PRs sure that there are no potential Inheritance Act claims? Insurance could expedite matters and offer peace of mind against any such unknown claims.

Moving on to distribute the estate, do the PRs know who, and where, all the beneficiaries are? Once they’ve taken all the reasonable steps necessary to locate missing heirs and have drawn a blank, a missing beneficiary indemnity could help. Cover is available where there are known beneficiaries who can’t be found, or where a genealogist’s report indicates there are no known missing heirs but cover is required for peace of mind prior to distribution.

When instructing a genealogist in such cases, care should be taken to ensure that the genealogist’s research will be suitable for the purposes of obtaining insurance in respect of any missing beneficiaries or for peace of mind cover. An acceptable professional probate genealogist’s report will be an important part of the insurer’s underwriting process and will form part of the insurer’s best practice approach to mitigating risk.

Insurance cover will normally last in perpetuity and the beneficiaries of an estate can be indemnified as well as the PRs. Escalator clauses can be included to reflect potential interest on a beneficiary’s share of an estate, in the event of a claim.

Underwriters will always try to provide a bespoke solution for other problems that crop up and cover can often be offered to fit the particular circumstances of a case, no matter how unusual.

This blog is featured in the summer 2019 Edition of the quarterly news digest, Entitlement. Download your free copy of Entitlement for more informative articles and interesting case studies.
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Topics: Entitlement, Risk management, Insurance, Guest writer