There are numerous types of probate insurance that you may want to consider if you are tasked with the role of administrator or executor. In this article we take a look at the different types of probate insurance, what they cover and who may need them. Most of these insurances will be paid by the proceeds of the estate once probate is finalised. For some, with limited cash, this can pose a problem as fees need to be paid up front but there are some probate funding options which may help with insurance and other probate related expenses.
Empty Property Insurance
Empty Property Insurance is also known as Unoccupied Property Insurance. If a property is to be unoccupied for an extended period of time, which is common in a probate situation, normal home insurance might not be adequate. Most policies only cover unoccupied properties for a limited amount of time which is specified in the policy terms. When probate involves a property, it can often take some time to obtain probate and then find a buyer for the property. To protect the property and ultimately the inheritance that will result from the sale, it’s advisable to purchase Empty Property Insurance. The premium will eventually be paid for by the estate once probate is finalised.
Executor/Administrator Liability Insurance
Completing the probate process can be complicated and if the executor of the estate makes a mistake, they can be held personally liable. The role of executor or administrator can leave you exposed to potential legal claims by beneficiaries, estate creditors and the tax office to name but a few. Executor or Administrator insurance does not absolve executors or administrators of their responsibilities but does offer some protection if they make a genuine mistake during the probate process.
Lost Share Certificate
If it is known that the deceased own shares but the share certificate cannot be found, a replacement certificate will need to be requested. In these circumstances it’s likely that the company issuing the share certificate will insist that a Lost Share Certificate Indemnity Policy is purchased. The indemnity is to protect the share company in the event of identity or other fraud or of any other reason why the shareholder, or in this case the Executor or Administrator, was not entitled to the replacement certificate.
Missing Beneficiary Insurance
Once probate is complete and the proceeds of the estate have been distributed to the beneficiaries the process ends, unless an entitled person has been missed. This can happen when the family line is complex, for example when it involves identifying and locating distant relatives. If a beneficiary comes forward after the estate has been distributed it can get difficult, particularly for the executor or administrator.
Missing Beneficiary Insurance is an insurance that is normally only available when the insurance company is satisfied that all steps have been taken to identify and locate all beneficiaries and they will need to see evidence to prove this.
The insurance is designed to protect and indemnify the executor, administrator, trustee and the beneficiaries in case any beneficiaries that are unknown or missing come forward at a later date.
Missing Will Insurance
As the administrator of an estate, where the deceased did not leave a will, may have personal liability once the estate has been distributed, if a will is discovered after probate is complete.
As an executor of an estate, where a will has been located, may face the same problem, if a more recent and different will comes to light after the estate has been distributed.
The insurance protects Personal Representative (PR), Beneficiaries, Trustees, Executors, and Administrator if the will that is located after the estate has been distributed, would have resulted in a different distribution of the estate.
Probate Dispute – After the Event Insurance
This insurance is one that you purchase to cover the legal costs of a probate dispute. It’s unique in that it is offered after the dispute has started (after the event) and there are generally no upfront fees to pay. The cost of the insurance is taken once the dispute is finalised. The insurance and disbursements are deducted from the payout the insured receives as a result of a successful outcome. If the outcome is not successful, there are no fees to pay.
With this in mind, this insurance is only offered when the insurance provider is reasonably certain that there is going to be a successful outcome.
Final Thoughts
Insurance is not always necessary for the probate process but may be advisable in more complex probate cases where the executor or administrator is not seeking advice from a probate professional.
