Specialist Lawyers Warn Of False Economy Of DIY Estate Administration

The average Brit is worth almost £150,000, a study revealed yesterday (27th March 2014).

Legal experts used a formula common in probate cases to calculate the average value of property equity, savings, pensions, investments, cars and possessions.

The calculations include the average person's current pension pot estimated in the region of £30,000, with mortgage equity accounting for an average of £75,000.

But the study of 2,000 adults found that 46 per cent had ‘no idea’ how much they are worth, while 11 per cent don’t know what the term ‘net worth’ even means.

Gillian Coverley, a wills, trusts and estates expert at solicitors Irwin Mitchell which carried out the study, said:

Expert Opinion

Many British adults feel they have very few assets to their name and consequently is it not worth them making a will.

"But the reality is very different in that most people will have assets tied up in investments they wouldn’t even think would count.

"so while the average British adult doesn’t have millions tucked away, they should still make sensible provisions and arrangements for their future." Gillian Coverley - National Head of Partnerships, Wills & Probate

The study shows 42 per cent of adults don’t think they are worth very much in monetary terms, and yet have equity of at least £75,060.45 in their mortgage.

In addition, a further £5,603.98 is stored away safely in a savings account and another £3,712.65 building interest in an ISA.

The average British adult has around £1,348.16 in their current bank account at any one time and puts money into a pension which is estimated to currently stand in the region of £30,000.

Finally, people can take their belongings into account by including the value of the car they own and the items in their home – which are worth an average of £6,706.55 and £15,077.90 respectively.

That’s a grand total net worth of £147,134.

But despite the facts and figures demonstrating the value of the average adult, six in 10 still don’t have any sort of will in place.

While a third have no plans to make a will because they don’t ever think they’ll need one.

Having no assets, having nothing to leave anyone and being in debt for the rest of their lives are some of the most common reasons why well over 16 million adults have no intention of getting the appropriate paperwork in place in the event of their death.

In addition, 47 per cent of people don’t know how assets are distributed after death, while 54 per cent are clueless about what accounts and investments their partner or family has.

Gillian Coverley at Irwin Mitchell added:

Expert Opinion

"Planning for the future is vital. Many people are attempting to save money by not making wills and then when the inevitable happens, they do it themselves in relation to the estate administration.

"What they find is that this is a specialist area of law and there are potentially serious pitfalls.

"While some may feel they can save money by avoiding legal advice, our experience is that such an outlook can create a false economy.

"This is because ultimately, if they do go it alone and subsequently hit problems, then it can be more expensive to sort out the situation in the long run.

"Common issues from failing to take advice include incorrectly distributing the estate and a lack of awareness of the tax issues which surround administering an estate – this can lead to missed tax deadlines and potential penalty charges.

"Also, with specialist advice, they may be able to look at ways to reduce the burden of inheritance tax to the benefit of families and charities.

"Finally, without the relevant experience, people may often be unable to properly and thoroughly assess all of the assets and debts of the deceased – an issue in itself which makes it more likely that distribution of the estate will not be undertaken correctly.

"The consequences of getting such issues wrong can be serious and Personal Representatives are personally and financially liable for any mistakes they make." Gillian Coverley - National Head of Partnerships, Wills & Probate

Read more about Irwin Mitchell's expertise in dealing with estate administration.