What Are Reasonable Expenses in Probate?
24 July 2019
When someone is dealing with a deceased person's Estate, they may incur expenses. Generally, the person responsible for administering the Estate (the Personal Representative) should not be left out of pocket, so it may be possible for them to claim these back expenses back from the Estate. However, they are not entitled to charge the Estate for the time they have spent on the administration.
So, what exactly is and isn't classed as a reasonable expense?
There is no official definition of what exactly constitutes a reasonable expense during Probate, but there is some general guidance that has been set out in case law. Generally speaking, any expenses that are incurred by the Personal Representative as a result of them properly carrying out their duties should be covered by the Estate.
This would include any costs associated with administering the Estate, such as:
- Funeral expenses
- Costs associated with marketing and selling the property
- Probate Registry Fees
- Fees of any professionals who have been instructed, such as a Probate Specialist, a surveyor or a valuer
- Settling Income or Inheritance Tax that's due with HM Revenue & Customs
- Certain travel expenses
- Postage costs
- House clearance costs
- Gardening and house maintenance
Where matters become more complicated, though, is when it comes to expenses incurred by the Executor for their time. This is more of a grey area, as a lay Executor is not entitled to be paid for their time, but they also should not be left out of pocket because of the Estate administration.
One option an Executor has is to instruct a Probate Specialist to help them, which would reduce the amount of time that they would have to spend administering the Estate themselves. The Probate Specialist's fee is an expense that can be covered by the Estate.
What if A Personal Representative Tries to Claim Unreasonable Expenses?
Ultimately, the Executor or Administrator of the Estate has a duty of care to act in the best interests of the beneficiaries of the Estate. This is the main thing that will be considered when determining whether an Estate administration expense is reasonable.
The more money that is claimed from the Estate in expenses, the less there will be to distribute to the residuary beneficiaries. These are the people who will inherit what's left in the Estate after all debts and expenses have been settled. For this reason, the Personal Representative should consult with the beneficiaries before incurring any significant expenses, and all expenses that are incurred should be individually listed and evidenced with invoices and receipts wherever possible.
The residuary beneficiaries are the only people, along with the Personal Representative, who are entitled to see the Estate Accounts. If they feel that the Personal Representative has claimed more than 'reasonable expenses' then they can question this and request to see a breakdown of these expenses in the Estate Accounts.
If errors have been made or the Personal Representative has breached their duty of care, then the beneficiaries may take legal action against them.
If you are a Personal Representative and have any uncertainty as to what can be claimed as a reasonable expense, seek independent legal advice from a Probate Specialist, such as Co-op Legal Services.