Cheques written by the deceased

naedanger

Sea_Shell said:

theoretica said:

Take things to the illogical extreme - someone clearly can't get around inheritance tax by making gifts of £3000 every tax year after they are dead.

Obviously not, but I did wonder about the post dated cheque scenario.  Which has now been clarified.

However on a small estate, whereby the will states that X and Y are equal beneficiaries, but might have no compulsion to share, could say £1000, having been drawn out in cash and earmarked (and documented) to be gifted to Z still be gifted, if physically the gift wasn't delivered before they passed?

Or is it purely on reliant on X and Y playing ball and not digging their heels in.

In an ideal world the will could be re-written, but a gift might want to be made at short notice to a non beneficiary.

The amount to Z should not be paid by the executor(s) unless X and Y play ball.
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm28300
"On the other hand a gift made by cheque that is not cleared by the date of death is not an allowable deduction and you should challenge the deduction claimed if the tax at stake is worthwhile. The gift is not complete - Re Owen, Owen v IRC [1949] 1 All ER 901. The most recent case of Curnock v IRC SPC/00365 upheld the principle applied in Owen."

I realise this is not quite the same scenario (undelivered cash in an envelope is not the same as a cheque), but I think the same rule will apply (namely that a gift is not completed until it is transfered to the recipient). That said, if the envelope said "property of Z" then that might be different in the sense that no-one (well other than Z) would know it was a gift to Z rather than Z's property.