Do you know your role and responsibilities as an Executor?

By Paul Warren
In July 4, 2018
Comments off
42 Views

A recent article from the Telegraph revealed how a personal representative was left with a staggering Inheritance Tax (IHT) bill of £341,278 when he was administering a £1.2 million estate. Mr Harris misguidedly distributed the assets to the beneficiaries before all of the Inheritance Tax had been paid. He did this with the understanding that one beneficiary (who received the majority of the estate) would pay any Inheritance Tax that was still owed. However, this did not happen as the beneficiary left the country without paying, leaving Mr Harris to foot the bill.

In this case, Mr Harris was personally liable for paying any Inheritance Tax that was due on the estate, as he had taken on the financial and legal responsibility for the estate when he became the administrator in 2013. Mr Harris was appointed to distribute Helena McDonald’s estate by the court when she died without a Will.

When a Will has been left, a chosen Executor is stated and if they choose to accept the role, they will have this same financial and legal responsibility. Executors and administrators are by no means obliged to take on the responsibility. They have a choice of whether or not to accept the role, the right to seek advice from a professional, and can even ask a professional estate administrator to manage the estate on their behalf.

Mr Harris attempted to appeal his responsibility to pay the £341,278 owed to HM Revenue and Customs (HMRC) on the grounds that he no longer holds the estate’s funds. Harris’ attempt was unsuccessful as Judge Nicholas Aleksander rejected the tax appeal, stating that “IHT is clear. It is the personal representatives of the deceased (in this case, Mr Harris as administrator) who have the obligation to account for any inheritance tax arising in respect of the deemed transfer on death.”

He added, “It is no defence to any inheritance tax determination that Mr Harris may have transferred the assets of the estate to a beneficiary on the basis that the beneficiary would be responsible for payment of the inheritance tax due. Nor is it a defence that Mr Harris was ignorant of his obligations, as a personal representative, to pay the inheritance tax owing.”

This case highlights the lack of understanding amongst the public about what to do when someone dies and more specifically, the liability that is associated with administering an estate. Incorrectly distributing the assets or making mistakes whilst handling the estate can be of great consequence, as highlighted in Mr Harris’ case.

At Redwood Financial, we believe you should always use the best professional advisers to help you as little or as much as you and your family need at those most critical times but keep the control in the family. Our Financial Advisor team are always here to help guide and advise you with all your financial needs to enable you to grow, protect and enjoy your wealth.

To find out more about how Redwood can help you, come along to one of our FREE Public Seminars on Wills, Trusts & Estate Planning. Our next Seminar 17th July at The Langstone Hotel, Hayling Island. Book online at Book Me A Place!: call us on 01489877 547 or Email info@redwoodfinancial.co.uk.

Source: Kings Court Trust

Comments are closed.

Statement

Redwood Financial Family Wealth & Estate Planners Ltd is Directly Authorised and regulated by the Financial Conduct Authority. FRN number 774469.

Subscribe to our free monthly Wealth Management update.

Disclaimers

The Financial Conduct Authority do not regulate, Will Writing, Buy to Let Mortgages, Auto-Enrolment, Tax Advice and Estate Planning. Your capital is at risk. Investments can fluctuate in value and investors may not get the amount back they invest. The guidance and/or advice contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK. https://register.fca.org.uk/

Contact us

Telephone: 01489 877547
Email: info@redwoodfinancial.co.uk

Company information

Redwood Financial Family Wealth and Estate Planners Ltd Company Number: 08926661
Registered Office Address: Wellesley House, 204 London Road, Waterlooville, Hampshire,