Why you should consider Missing Will Insurance Before Distributing the Estate

Missing Will insurance is an important insurance policy for any executor or personal representative. 

No one can be certain that the Will being used as the basis of distribution is the most current will. Even if a missing will search is conducted, as not all wills are registered with the National Will Register.

Where estates are being distributed as an intestacy, no one can be certain that there isn’t a will somewhere waiting to be discovered.

If the estate is distributed on the wrong basis, the executors and personal representatives can be held liable to put things right.  The beneficiaries may also need to repay their inheritance if they are not provided for, or on the same basis in the new will.

In the absence of insurance, this scenario could:

• Be a financial disaster for those involved.
• Lead to a significant professional indemnity insurance claim if a firm was providing a full estate administration or professional executor service.

The latest market data suggests that 20% of people who have a Will, later updated it with a different provider.  This could mean that 7 million Wills are out of date.

The above highlights the importance of offering Missing Will Insurance to every client or purchasing the cover if you are acting as the executor.

How to protect your the beneficiaries, or your firm and your clients

If you consider that ‘Once you are an Executor, you are always an Executor’, surely most people in this position would want to consider the cover to protect themselves and their financial future in the event of a claim, for as long as the liability lasts.

If the beneficiaries also understood the risk to them (which many don’t), many would want to at least consider buying a Missing Will Insurance Policy.

If a claim would happen, a Missing Will Insurance would fund:

• The legal defence costs associated with the challenge to the will
• Any other costs incurred by the insured with the prior consent of the insurer.
• The payment of damages and money owed to Beneficiaries if their legal challenge is successful.

Step 1.  Conduct a Will Search.  Such as with a firm like Inheritance Data, who provide this for just £105 +VAT.  They provide a Certainty Will Search of over £10 million records to help reduce the risk of an unknown will being found.  But this does not eliminate the risk as not every will be on the National Will Register.

Step 2.  Educate the clients on the risks.  You could provide them with Insuristic’s Complete Guide to Executor Insurance, which will explain why they need to consider Missing Will Insurance (and various other policies which might be appropriate for their circumstances.  You can find this guide here.

Step 3.  Once a missing Will search as been completed, Insuristic can provide you or your clients with a Missing Will Insurance quotation. Complete our online quote form in a couple of minutes, with quotes provided promptly offline.  You can get a quote here.

When getting a quotation, you should also consider including an Escalator Clause for a small increase in premium.

What is the Escalator Clause?

An Escalator Clause can help you avoid under insurance as it increases the limit of indemnity by 5% each year from the inception of the policy.

Imagine if a missing will indemnity insurance claim was made against the estate 5 years after distribution and the Estate’s value was £300,000.  If the value of the Estate at the end of the 5 year was now worth £382,884 (based on a 5% growth each year), the administers would be liable for the shortfall of £82,884. This is because the Limit of Indemnity was set at £300,000.

If the Escalate Clause had been included for a small increase in premium at the outset, there would have been no additional liability as the Limit of Indemnity would have increased each year to cover the Estates increase in value.

The Cost of Missing Will Insurance

The Missing Will Insurance policy provided by Insuristic runs in perpetuity, which means there is no expiry date to the policy.  This provides long-term peace of mind for executors, personal representatives, and beneficiaries.

The premiums are small, especially when you consider the risk the policy protects and the cover period.

The cost is usually calculated as a percentage of the total estate value, with the average premium being £450.  The actual cost will vary depending on the size and complexity of the estate.

To find out more or get a quotation, please visit https://insuristic.co.uk/missing-will-insurance/.

You can find out about all of our Probate Insurance products here.