Receiving estate accounts is often the signal that the administration of an estate has been finalised; the assets have been collected in, the liabilities paid and soon the estate will be distributed.

For most estates, the estate accounts are more or less a tick box exercise, and all is well. However, the importance of checking the accounts thoroughly should not be overlooked, as this is the stage that can make a big difference to the amount a charity receives and the reputation of the charity in the eyes of the executors, solicitors and other beneficiaries.

Shouldn’t issues be picked up throughout the administration?

Of course, a legacy officer will monitor the progress of an estate as the administration progresses and will pick up on any issues that arise. But, sometimes things don’t become apparent until the estate accounts are received, whether due to lack of communication, the right questions not being asked or the full picture not being visible until that point. There are many issues that may be highlighted by the accounts — anything from unusual invoices to incorrect allocation of funds and tax issues.

What a legacy officer considers before raising a query

Once an issue has been identified, the legacy officer has several factors to consider before raising a query with the executors or solicitors. These can be:

• the impact, both financially and reputationally, of raising the query weighed against not raising the query
• when there are other charitable beneficiaries who may ask similar questions, can a joint list of queries be sent or the charities share the answers to queries?
• whether issues may have already been raised during the administration of the estate and thus the answers are already on file
• and how well any previous interactions the legacy officer has had with the executors or solicitors have been received

For example, it may not be prudent to raise a small query of low impact, such as lay executors charging for their time when they are not entitled to do so and it equals to less than £100 for the charity when they are to receive thousands. The reputation of the charity in this situation is weighed against the gain to the charity financially. If you add in that lay executors can often be overwhelmed by their roles and find it more difficult than they envisaged, the reputation of the charity becomes paramount.

On the other hand, raising an important query about something such as the amount of tax paid and how it has been allocated, Re Benham or Re Ratcliffe followed, may not only result in a higher distribution for the charity but also for the individual beneficiaries as well.

For example, if the legacy officer checks the estate accounts and finds that the inheritance tax (IHT) has been paid at 40% rather than the 36% it may be entitled to, by raising this, the legacy officer could be helping all the beneficiaries have their distribution increased. If these beneficiaries are individuals this could be a positive experience for them and they may become supporters of the charity, possibly even legacy pledgers themselves, as a result.

This is where a Legacy Link consultant with their wealth of knowledge and experience can make a big difference, truly finding the balance between what will benefit a charity, not only financially but also reputationally.

How does this protect the trustees?

Each charity is the responsibility of its trustees and, similar to executors, they owe a duty to the beneficiaries of that charity i.e. those who benefit from the charity’s work. As such they have a duty to ensure that the charity receives their full entitlement from a supporter’s estate and the funds are used how that supporter intended. Legacy officers often have authority delegated to them by the trustees to allow them to deal with the day-to-day work concerning an estate from which the charity benefits. This includes reviewing, querying and approving estate accounts. Through correctly and appropriately querying estate accounts, legacy officers ensure that the charity receives their full and correct entitlement, thereby honouring the trustees’ duty to do the same.

Overall, querying estate accounts is more than just a tick box exercise to meet audit requirements and certainly more than just an accounting exercise. A knowledgeable and experienced legacy officer can deftly navigate the intricacies of balancing the charity’s reputation, the emotions of individuals involved and the duties of the trustees, to protect the charity on all fronts.