Coping with the rising tide of missing beneficiaries
April 2010
by Sandra Walsh
Around 300,000 people die intestate in the UK each year. This is a statistic with which many legal practitioners will be familiar. The majority of these cases are satisfactorily resolved with appropriate beneficiaries receiving a fair distribution from the estate of the deceased. But there are increasing numbers of cases that result in claims from missing beneficiaries.
Now in its fourth series the popular BBC One documentary, Heir Hunters, has brought the issue of intestacy into sharp focus. Judging by the record-breaking viewing figures, this programme appears to have struck a chord with a wide and very interested public. It's probably safe to assume that this interest is prompting more and more people to ask their solicitors about how they might protect themselves from long-lost or unknown relatives laying claim to a recent inheritance; or even to their own estate once they have died.
The more traditional solutions to this question include seeking a Benjamin Order or obtaining indemnities from known beneficiaries to reimburse the estate should a missing beneficiary appear. But these options aren't without their drawbacks.
And seeking indemnities from known beneficiaries is less favoured by most executors given the potential risk of these beneficiaries becoming bankrupt or dying. Added to which, keeping large reserves indefinitely can add complexity to the task of administration making it much more difficult for solicitors to wind up their clients' estates in a timely manner.
Judged against these options, missing beneficiaries insurance offers the principal advantages of increasing speed and surety, and reducing cost. It will cover both executor and beneficiaries against any future claims on the estate by missing beneficiaries; as well as any interest payable on the estate.
No doubt these benefits explain the rise in the numbers of probate lawyers who are turning to insurance to help them protect both their clients and, if they are administrators, themselves, against such claims.
There will certainly be comfort for many members of the legal profession that the Courts also seem to be supportive of the use of insurance. The often quoted case of Evans vs Westcombe (1999) highlights the growing consensus of Courts that insurance can be a practical and sensible means for resolving claims from missing beneficiaries. The general view seems to be that insurance has the benefit of being swift and efficient. Helpfully, the case of Evans vs Westcombe has also removed any doubt that a missing beneficiary insurance policy is acceptable as a reasonable expense of administration that can be borne by the estate of the deceased.
Genealogists on whose painstaking searches solicitors rely to pursue their applications for a Benjamin Order, now routinely recommend insurance. They say these policies provide added protection against claims and speed up the process.
Charles Fraser of Fraser and Fraser, the genealogist firm featured in Heir Hunters, says:
"A Missing Beneficiary Indemnity policy ensures that the known beneficiaries and administrator are protected in case someone with a prior or equal entitlement (who could not be identified using standard research) comes forward to claim all or part of the estate."
Hannah French of genealogists Kin, adds: "MBI allows the administrator to distribute with confidence. The estates we research can be worth anything from a few thousand pounds to millions of pounds, so this insurance really does provide peace of mind for everyone."
Recent research conducted by Certainty, the organisation behind the establishment of the country's first national will register and endorsed by the Law Society, revealed that 67% of people in the UK don't know where their parents' wills are. Nigel McGinnity, chief executive of Certainty says: "Certainty receives calls every day from the general public and solicitors who can't find wills they know exist, which we then trace." And while the issue of lost wills has now been addressed by Certainty, the quantity of lost wills implied by the research suggests that the current steady stream of missing beneficiaries turning up to stake their claims is set to increase still further - at least for the foreseeable future.
So whether it's missing wills or the Heir Hunters effect, it seems a fair assumption that the growing trend toward the use of missing beneficiaries insurance will only continue its upward trajectory, both in terms of frequency and volume.
Sandra Walsh is Head of Missing Beneficiaries at leading title insurer, First Title Insurance plc. For more details about how First Title could help you with missing beneficiaries insurance, call Sandra on: 020 7832 3148 or email her at: swalsh@firsttitle.eu