By being the executor of someone’s will or the administrator if they did not have a will and managing how their estate is distributed, you are taking on a great deal of responsibility, more responsibility that many people realise.
Mr Glyne Harris lost an appeal at a tax tribunal relating to the inheritance tax due on an estate of which he was the administrator. Mr Harris was not a beneficiary of the estate, but after discharging the assets, he was informed by HMRC that more than £340,000 of inheritance tax was due to be paid. The main beneficiary had agreed to pay this bill according to Mr Harris, but the beneficiary, who had received £1.2m from the estate left for Barbados, where he lives, leaving Mr Harris unable to contact him.
By law, the estate executors or administrators are liable for any inheritance tax owed from an estate if the assets are released before the tax is paid. Unfortunately, this meant that despite his insistence that the main beneficiary was liable for the tax payment and that he didn’t have the funds to pay the bill himself, the tax tribunal upheld that Mr Glyne Harris was, in fact, liable for the tax in excess of £340,000 which was due. The tribunal stated that it was no defence that “someone else had allegedly undertaken to pay the tax instead” or that “Mr Harris had been unaware of his inheritance tax obligations”.
Advice for Executors and Administrators
If you have been tasked with the role of administering the estate of someone who has passed, it is important to ensure that you have received confirmation from HMRC that all of the Inheritance Tax has been paid before you begin to distribute the estate. This way the tax can be paid from the estate and you won’t have to pay the bill yourself. Otherwise, as in Mr Harris’ case, it may be near impossible to recover the assets from the beneficiaries to cover the cost.
If you are unsure when is the right time to begin distributing the estate it is useful to speak with a solicitor with experience in this field.
Instructing a solicitor for help with administering assets is also useful for a number of other reasons; not only do they have extensive knowledge of the laws surrounding wills and probate, but they are also able to spend the time needed to complete the process. Often the estate executor or administrator will have a personal connection with the person who has passed away meaning they are dealing with their own grief as well as trying to manage their duties, so having a legal professional who can advise throughout can relieve some of this stress.
Some estates can be complicated, especially if they deal with overseas property/beneficiaries, debts which outweigh the assets, or where trusts need to be set up so it is not advisable to try and manage this alone. By instructing a solicitor you can be safe in the knowledge that you will not be personally liable for any unexpected bills.
Farleys Solicitors’ Private Client team have a wealth of experience assisting with the administration of estates of all sizes. To speak to an estate administration specialist today please call 0845 287 0939 or contact us via our online contact form.