Executor Liability for council tax

Legacy_user

My mum recently passed away she was the sole occupant of her small house which has no mortgage. She only had state pension so cash was limited. Once funeral expenses and credit card was paid there were no funds left. All utilities have been great saying that we can settle the bill once the house sells with the exception of the council tax. They have said I have to pay the amount owed personally and if I don't they will take steps to 'recover the debt' I explained I'd recently been made redundant and that I had every intention of paying as soon as the house sells (I've reduced the price to help this along) but they are quite aggressive. I thought Executors were not personally liable for the debt? I really don't need the stress of courts and debt collectors on top of everything else. Any advice would be gratefully received.

getmore4less

Are these council tax arrears?

There should be an exemption till 6 months after probate if it remains empty

Flugelhorn

This from Nothants website:

Council Tax Liability for Executors

Executors are the people appointed in the will to deal with the estate of a person who has died.

When probate is granted a document is issued to the executor providing them with the authority to deal with the estate.

If, after probate is granted ownership of a property is transferred to a beneficiary of the will, any liability for council tax passes to the beneficiary.

If for any reason after probate has been granted the property remains under the control of the estate for more than six months, a full council tax charge is due. The executor is responsible for making payment of the council tax.

The executor is not personally liable for council tax charges, and payment should be made from the deceased estate.

If the executor cannot make payment for any reason they should contact the council immediately.

If the property belongs to the estate until sold then they will just have to wait - if however it belongs to you then the council may try to get you pay the debt (I kept property in deceased name until sold - was not asked for any council tax payment)

Tom99

If the estate has no cash assets for the moment you are not obliged to put in your own funds.
Write them a letter giving an undertaking as personal representative that you will pay the debt (if any) when the house is sold.
That may get them off your back.

SevenOfNine

Same as Flugelhorn for us, twice!

Both times the charge stopped from date of death, & the property was to stay exempt until 6 months after probate was granted, but we sold both times within the 6 month exemption deadline.

Personally, I'd also email the local councillor for the area the house is in, explain the situation as you have done in your post here, & ask him/her to step in request a more reasonable & sympathetic approach from the council tax dept staff.

Assume the property is still registered in the name of your mother, & you have not occupied it at all?

CIS

Assuming England or Wales;

Assuming the property is standing empty then a Class F exemption should apply to the date of probate and then 6 months after that, if required. If the property is just standing empty and no-one other than the estate is the legal owner then the exemption should apply.

The council can take legal action against the estate for any outstanding monies - that doesn't require a liability order. It depends exactly on the reading of regulation 58(2) which covers liability on death:

"his executor or administrator shall, subject to paragraph (3) and to the extent that it is not in excess of the deceased's liability under the Act (including relevant costs payable by him) in respect of the matter, be liable to pay the sum and may deduct out of the assets and effects of the deceased any payments made (or to be made)."

Regulation 58(6) clarifies that

A sum payable under paragraph (2) shall be enforceable in the administration of the deceased's estate as a debt of the deceased and accordingly--
(a) no liability order need be applied for in respect of it after the deceased's death under regulation 34, and
(b) the liability of the executor or administrator is a liability in his capacity as such.

The liability falls to the executor in their legal duty to administer an estate. This can in some cases make an executor personally liable for debts but that usually requires maladministration by the executor.





Was there a liability order in place before the death ?

Keep_pedalling

If we are talking about arrears you should not have prioritised the credit card over any other creditor.

System

Thank you for all your responses, the amount is not arrears, we received the exemption for 6 months (it’s literally just ended) the house is still in mums name and is in England. She passed away in February and probate was granted a few months later, the bill was only sent a couple of weeks ago by the council based on the calculations for this year. The house was in disrepair and so we needed to fix it up ourselves to make it saleable which took about 3 months as there wasn’t funds to pay builders then we hit the quietest time of the year for selling houses. Hopefully the price reduction will help. The funeral expenses were prioritised and paid shortly after which essentially took all funds ( this is the first time I’ve been an executor and I believed these were the first priority). I will try the personal undertaking route as this seems a good option along with the suggestion to drop a note to the councillor. I’m sure being an Executor when people have reasonable savings and income is fine but when limited funds it’s very difficult to navigate without advice. Thank you all again

badger09

Are you also the beneficiary?

This is from East Devon Council, which I have dealt with as executor recently regarding exemptions:

"Unoccupied properties - apply online
.....

F - Forms part of the estate of a deceased person and either probate or letters of administration have not been obtained, or if they have been obtained, a period of six months has not elapsed since they were. It doesn't matter whether the property is furnished or unfurnished.
This exemption does not apply if the deceased left the property to a beneficiary in their will or the beneficiary and executor are the same person(s). In this case the beneficiary can become liable for Council Tax at the date of death or probate, as they are considered to become the owner.

It is important that the executor(s) keep(s) us informed of:

• the date probate is granted,
• details of the transfer or sale of the property or the end date of the tenancy,
• when the estate is settled. Where a Council Tax bill is due to be paid, the executor is responsible for making payment. The executor is not personally liable for the Council Tax charge and payment should be made from available funds within the deceased estate. If there are no funds within the estate, the executor should contact us immediately.

During this time we may contact the executors periodically to review entitlement to the exemption."

This suggests that if you are both executor and beneficiary, you can become liable.

Perhaps CIS will clarify.

getmore4less

There is a link that I don't have to hand that disputes the assumption that the beneficial interest transfers at DOD to a beneficiary.

it is in relation to other taxes and came up on some other threads will have to go looking.

CIS

Part of the problem is that the wording of the exemption legislation is very, very poorly drafted.

Class F:

(1) an unoccupied dwelling--

(a) which has been unoccupied since the date of death of a person ("the deceased"); and

(b) in relation to which one of the conditions set out in paragraph (2) below is satisfied;


(2) the conditions referred to in paragraph (1) above are, subject to paragraph (3) below, that--

(a) the deceased had, at the date of his death, a freehold interest in the dwelling, or a leasehold interest in the dwelling which was granted for a term of six months or more, and

(i) no person is a qualifying person in respect of the dwelling; or

(ii) a person is a qualifying person in respect of the dwelling acting in his capacity as executor or administrator, and no person is a qualifying person in any other capacity;


Or
(b) the deceased was a tenant of the dwelling at the date of his death, and an executor or administrator acting in his capacity as such is liable for rent or, as the case may be, a licence fee, for the day;

(3) sub-paragraphs (a)(ii) and (b) of paragraph (2) above shall only apply, in a case where a grant of probate or letters of administration has been made, if less than six months have elapsed since the date of the grant;

It is s2(a)(i) and s2(a)(ii) which are the appropriate issue here, this is implemented via s3 of Class F once probate is granted.


For these purposes a 'qualifying person' is "qualifying person" means a person who would, but for the provisions of this Order, be liable for the council tax in respect of a dwelling on a particular day as the owner, whether or not jointly with any other person; So, effectively, a person who would fall liable for the council tax charge on the property - if that be the estate then it remains so (via the executor) otherwise it falls on whoever is usually liable. Under s6(2) of the LGFA 1992, for an unoccupied property, this would be the council tax definition of owner - the owner is the person who holds a freehold or leasehold interest of 6 months or more.

The question the comes is - is a beneficial owner actually a freeholder or leaseholder for these purposes. This is a relatively unsettled piece of law as it's not one, surprisingly, for council tax which has gone through the higher courts and relies on the use of aspects which fall far outside of council tax legislation and in to land law.

That being said, as far as I'm aware (and land law is not my usual area - very rare the issue comes up for council tax purposes), the freeholder or leaseholder holds the legal title whereas a beneficial owner only holds an beneficial (equitable) interest and is not registered on the title as holder of the legal title.

How this would be argued is another matter, different councils have different takes on it in my experience.


EDIT:

In this case the valuation tribunal were happy that the legal owner was the party named on the land registry and that party (who was the executor) was liable for the council tax as it had been transferred to their name following probate (so they were therefore the 'qualifying individual'). As they put it "The Appellant is identified as the owner within the Land Registry Title document and the Panel therefore agreed that he is a qualifying person in that capacity."