Probate beneficiaries - does the money HAVE to go to them?

NLDS

Hi, New to the forum, sorry if this has been asked before - I tried a search but no luck.

Does anyone know whether it is legal to NOT distribute the estate to beneficiaries, if this is in line with their wishes? And/or what documentation would be needed to support with regard to the estate accounts?

Here's my problem / scenario:
My sister and I are the executors of my late father's estate and our mother is the sole beneficiary.
We've been granted probate and have collected up all of the various investments, which have been paid into an executor account under my control.

So far so good

My mother has said to my sister and I, that she intends to distribute the estate to us in equal shares, and would therefore prefer it if I made a distribution directly to us, from the executor account, rather than via her first as the beneficiary. My mother has offered to get a witnessed statement saying this was what she instructed us to do. The main point of this for Mum really, is to save work (she does not want to use online or telephone banking, and so to get the funds to us would require trips to the branch which she'd prefer to avoid).

Although I would like to save her the work, I'm a bit nervous to take this approach, this is for a few reasons I suppose...

- I have to finalise up the estate accounts - I would have to put explanations in the accounts for why the money went to my sister and I but not to mum. I could perceive far less comeback (e.g. from HMRC) if it was obvious that the money went to the beneficiary account - as it is supposed to.
- there are some pretty clear statements on the HMRC website giving executor responsibilities, saying we should get in writing from beneficiaries that they received their share. (this would not be true in this case - but we could have the witnessed statement directing me to do otherwise)
- Not wanting to think the worst, but I do wonder what could happen if my mum fell out with either of us and/or became mentally unwell in the future? (it does happen - I've direct experience of fallings out over cash in other families - accusations of stealing etc)
Potentially she could accuse us of stealing the estate and there could be comeback.

Any thoughts or experience on this?

My gut reaction is that although mum doesn't seem too happy about it, doing it by the book is the correct thing to do.

SevenOfNine

Look at a Deed of Variation. We used one to redirect inherited funds we did not want to our grandsons. The documents were prepared by a STEP registered solicitors.

It must be done within 2 years of the date of death. I believe it's possible to DiY, but we wanted it done properly, to be watertight, & with legally correct terminology.

I should add that redirecting the inheritance did not affect our standard of living negatively, we are not on benefits of any kind &, if necessary, could fund our own care home fees or homecare assistance. Your mother must be mindful that she is not seen to be deliberately depriving herself of assets should she need anything like this in the not too distant future.

NLDS

Hmm thanks - very interesting, having read around I also think that instrument could be used to reduce future iht, by using up all £325k allowance with only the exempted remainder going to my mother.

Keep_pedalling

NLDS wrote: »

Hmm thanks - very interesting, having read around I also think that instrument could be used to reduce future iht, by using up all £325k allowance with only the exempted remainder going to my mother.

No it won’t save future IHT, as his NRB is transferable on her death so in the long run it makes no difference.

Tom99

If your mother and father were still married the most efficient option in terms of IHT is to let your mother inherit everything from your father. She will then also inherit his unused NRB and RNRB so by next April will have a personal IHT free limit of £1m.
Then, as a separate and unrelated transaction, she gifts you money/property ie effectively what she inherited from your father. The amount of this gift over £3,000 will become a PET on your mother's estate but if she survives 7 years from the date she makes the gift to you the gift will become an exempt gift so the £1m allowance will be available against her own estate at the time of her death.

getmore4less

The money does not have to go through her(mums) accounts.

she can gift it and the executors can deal with the transaction.

The estate accounts just have the distribution to mum to net out Zero at the bottom.

Estate acounts don't include real details of where the money went like account numbers.
(neither do the IHT forms)

Depending on what is decided re gift/DOV etc. that gets recorded for mums future estate.


Don't forget deprivation of assets.

Keep_pedalling

Does she have plenty of her own liquid assets to make sure she is comfortable in her old age? In your shoes I would be reluctant to go along with this if it left her in a position of not being able to afford to to maintain her house if she ever needs to carry out major repairs (new boiler, roof repairs etc.)

badmemory

If she thinks this is a way of avoiding paying care home fees. Well you could try taking her on a tour of the local ones. But if she lands up in hospital & they won't let her home because of her health & she has no funds she could find the LA won't fund her & probably can't afford to fund her. This is why there has been so much bed blocking in the last few years. My local hospital has for the last few years been sending people home to die in the next few days, basically just to get them out when in reality they lasted over 6 months.

Malthusian

Keep_pedalling wrote: »

No it won’t save future IHT, as his NRB is transferable on her death so in the long run it makes no difference.

Unless she remarries and is re-widowed. You can only inherit one nil rate band so if two husbands leave you their entire estate, the first one's nil rate band is lost forever.

The residential nil rate band goes up by £25,000 next year so in theory there could be a tax saving if it is used on her death rather than her husband's - but if the estate is large enough for this to be an issue, there is a good chance that inflation would render that moot.

NLDS

Thanks for the replies all, I'll read them properly later but for now I'll just make the statement that my mum is very comfortably off and ( I am 99% confident) could easily afford any care fees. I will look into this point more deeply though

Keep_pedalling

As it sounds like she is financially independent and that IHT might be an issue when she dies, then she should consider the option of keeping the inheritance and then gifting a each to each of you. If she survives 7 years from the date off the gifts then that sum will be excluded from her estate.