Estate Funeral Costs - What can be included

AlanXR

I am executor for my Mum’s estate following her death in April aged 90 from Covid-19.

It is a straightforward case with a bank account, her flat and a small insurance policy. I have navigated Probate, HMRC IHT (with enough forms despite it being a simple case) and even had confirmation from DWP that they have no claim and I may distribute when ready.

My sticking point at the moment is what expenses are appropriate to charge to the estate in respect of Mum’s funeral?

Given the current restrictions we had a direct (unattended) cremation and a separate scattering of Mum’s ashes in a remembrance garden to which only immediate family (children and grandchildren) were invited with no celebrant or vicar. These costs being charged to the estate. We did not charge the estate for the meal following the scattering. In order to allow friends and other relatives to remember Mum, we are putting together a remembrance book with photos of Mum’s life which we propose to send to those who could not attend. One of the beneficiaries is objecting to the cost of this being charged to the estate. Can it be? 

The estate is quite healthy funds wise and easily capable of bearing the cost of production and distribution if it is appropriate.

As a second question, if a beneficiary lived abroad and wants some estate items sent, should that beneficiary or the estate bear the cost?

Families eh! Thanks for your help. 

naedanger

What would the cost be? You seem to have a very fussy beneficiary.

I do not know the strictly correct legal answer, but assuming it is not excessive I wouldn't be worried about charging it to the estate. If a beneficiary disagreed they would need to take you to court and I would expect any small claim court would be highly likely to agree that such expenditure, especially in the circumstances, is within the executor's discretion. (I am assuming the will doesn't sound overly restrictive on funeral arrangements.) 

On the question of sending items abroad, if it is the fussy beneficiary who wants the items, or the cost of sending the items is significant, then the beneficiary should be asked to pay. However if the cost was small then I think normally the estate would pay.

Savvy_Sue

How much are we talking about in each case? 

I don't know the answer, and suspect that they are not strictly estate liabilities, but if we're talking about relatively small sums, I'd be inclined to suggest to the first that while their objections are noted, you feel that the costs of taking legal advice to check this for certain will far outweigh the cost of producing the book and sending it out. Depending on what kind of person they are, you could also suggest that if they wish to pay for advice themselves, you will be guided by that. You might also check whether they do or do not wish to receive this memory book, or whether they object to the very act of producing it. 

With the second, I do feel that if they want something sent, then they should pay. 

As you say, families eh!

xylophone

As a second question, if a beneficiary lived abroad and wants some estate items sent, should that beneficiary or the estate bear the cost?

This question came up for my relative who was the executor of an estate last year.

One of the beneficiaries lived in Australia and an artwork needed to be sent.

He took the view that he would charge the postage to the estate on the basis that to an extent   (as one of the  beneficiaries of residue) she was  indirectly paying part of the costs. 

As for the Book of Remembrance, it seems to me that this should be paid for by the estate, particularly in the "Covid" circumstances.

It really is only an extension of those (sometimes  very elaborate) Orders of Service - the estate would certainly have paid for the production of those had it been possible to have a normal funeral.

Dox

AlanXR said:

In order to allow friends and other relatives to remember Mum, we are putting together a remembrance book with photos of Mum’s life which we propose to send to those who could not attend. One of the beneficiaries is objecting to the cost of this being charged to the estate. Can it be? 

As a second question, if a beneficiary lived abroad and wants some estate items sent, should that beneficiary or the estate bear the cost?

Families eh! Thanks for your help. 

Money always did bring out the worst in people - and the more money there is, the worse the worst gets. I'm sorry you've got to deal with this as well as your mother's death.

No, you can't charge the remembrance book to the estate any more than the costs of a wake can be paid by the estate, unless all the affected beneficiaries agree. Even if everyone agrees, then it doesn't reduce the value of the estate for IHT purposes.  Maybe a remembrance book online would fit the bill, in all senses of the word?

If a beneficiary wants items sent abroad, much depends on the wording of the will. Shipping a grand piano to Australia and happily taking the cost out of the estate may not go down too well with the residual beneficiaries!

Mojisola

AlanXR said:

My sticking point at the moment is what expenses are appropriate to charge to the estate in respect of Mum’s funeral?

In order to allow friends and other relatives to remember Mum, we are putting together a remembrance book with photos of Mum’s life which we propose to send to those who could not attend. One of the beneficiaries is objecting to the cost of this being charged to the estate.

To keep things simple, if all the other beneficiaries are happy to contribute towards the book, divide the cost between them and give the one beneficiary their full share.

Of course, that beneficiary won't be entitled to a copy of the book.

We covered the cost of the wake as well as everything else out of the estate but that was with the agreement of all the residual beneficiaries.

xylophone

No, you can't charge the remembrance book to the estate any more than the costs of a wake can be paid by the estate, unless all the affected beneficiaries agree. Even if everyone agrees, then it doesn't reduce the value of the estate for IHT purposes.  Maybe a remembrance book online would fit the bill, in all senses of the word?

See  https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/864520/Guide_to_completing_your_Inheritance_Tax_account__IHT400_notes__-_English.pdf

Funeral expenses

You may deduct funeral costs and reasonable mourning expenses. You may also deduct the cost of a headstone or tombstone marking the site of the deceased’s grave.

These expenses may also include a reasonable amount to cover the cost of: • flowers
• refreshments provided for the mourners after the service
• necessary expenses incurred by the executor or administrator in arranging the funeral

AlanXR

xylophone said:

As a second question, if a beneficiary lived abroad and wants some estate items sent, should that beneficiary or the estate bear the cost?

This question came up for my relative who was the executor of an estate last year.

One of the beneficiaries lived in Australia and an artwork needed to be sent.

He took the view that he would charge the postage to the estate on the basis that to an extent   (as one of the  beneficiaries of residue) she was  indirectly paying part of the costs. 

As for the Book of Remembrance, it seems to me that this should be paid for by the estate, particularly in the "Covid" circumstances.

It really is only an extension of those (sometimes  very elaborate) Orders of Service - the estate would certainly have paid for the production of those had it been possible to have a normal funeral.

The items in question were not bequeathed but items from the estate the beneficiary would like to have (with no or low financial value). I feel they should pay for shipping abroad as they want them......

AlanXR

xylophone said:

No, you can't charge the remembrance book to the estate any more than the costs of a wake can be paid by the estate, unless all the affected beneficiaries agree. Even if everyone agrees, then it doesn't reduce the value of the estate for IHT purposes.  Maybe a remembrance book online would fit the bill, in all senses of the word?

Funeral expenses

You may deduct funeral costs and reasonable mourning expenses. You may also deduct the cost of a headstone or tombstone marking the site of the deceased’s grave.

These expenses may also include a reasonable amount to cover the cost of: • flowers
• refreshments provided for the mourners after the service
• necessary expenses incurred by the executor or administrator in arranging the funeral

Thanks Xylophone. These were not included as costs for IHT (estate well within allowance so not an issue) but this is about the actual estate funds and what remains available for distribution. 

AlanXR

Thank you all for your thoughts and advice on this. Given the estate is solvent and well able to fund the remembrance book, the cost is quite small (est: £2-300), the low funeral costs incurred to date and the unique situation that Covid has presented us all, I am intending to charge the cost to the estate and if this beneficiary has a problem then they can take me to court!

xylophone

 but this is about the actual estate funds and what remains available for distribution. 

It seems to me that if HMRC allow these items against the liability of the estate, then these must be expenses of the estate and therefore it is legitimate for the exor to pay from estate funds?