Ads by Google

Matters to Consider Post Probate - Distribution

How to distribute assets

If the estate is clearly solvent there should be no harm in handing over specific items given in the will straight away. The executor or personal representative should always get receipts.

All outstanding debts should be cleared before any money is given to the beneficiaries of the will. If there are any debts which cannot be settled either because the amount is not yet known, or because the executor is disputing them, the executor must hold back ample funds to pay these debts at the appropriate time.

If you have advertised for creditors you will need to wait until the date specified in the advertisements (a minimum of 2 months and 1 day after publication).

Specific bequests of money should be given next. Note that gifts can be made "subject to" or "free of" Inheritance Tax. Money should be given by cheque or electronic transfer so that there is an indisputable record. If the account you are paying from does not send paper statements you should print out the statement and keep it with your records.

Arrange the transfer of any property. Lastly you should pay any residuary legacies i.e. the remainder of the estate. It is acceptable to do this in stages, as funds are received, providing the specific bequests are fulfilled.

Trusts

If any goods or money have been left in Trust the executor or personal representative should contact a solicitor to arrange this. Children under 18 cannot give a valid receipt and so anything left to them needs to be held in trust until they reach the age of 18. Small sums or items of small value can be inherited from the age of 16.

It is completely impracticable to use a solicitor if small sums of money have been left to children, because of the costs involved. The answer may be to open a savings account in the child's name which they will be able to access when they are 18.

Gifts with reservation of benefit

If the estate paid Inheritance Tax then IHT will also be due on any gifts made within seven years of the death. The executor must tell HMRC about these gifts using form IHT100 .

The recipients of the gift are responsible for paying the tax and it is payable within 6 months of the death. However, if it is not paid within 12 months then the executor or Personal Representative will become responsible. You should hold back money as a contingency to pay this tax. Alternatively you could agree to pay it out of estate funds and deduct the amount from the recipient's bequest, assuming they have one.

Gifts with Reservation of Benefit are different. The value of the gift is added to the estate and the tax comes out of the deceased's assets.

Ads by Google