When can beneficiaries be paid?

Jet

I am executor to my late uncle’s estate. It’s been 18 months since his death and my solicitors have emailed me this evening to tell me that probate has finally been granted. However, I know that HMRC are questioning some of the valuations, so the tax situation is not settled.

I am residual beneficiary and I have requested to pay the inheritance tax in instalments.

Obviously I will speak to my solicitor as soon as I can, but can anyone tell me what the next steps are. I am keen to pay out the other beneficiaries as soon as possible. 

xylophone

Have you yet opened an executor's account?

Jet

As in a bank account? No, I haven’t. 

I had to continue running his business so opened a business bank account for transactions after his death, but it’s not an executor account.

xylophone

If there are multiple bequests and beneficiaries  and you need to pay IHT by instalments, it will make life  easier if you open an exor account into which you gather all funds due to the estate and from which you make all payments.

If there is some doubt about the amount of the estate's liabilities, be careful about paying bequests - you might wish to consider interim payments.

Jet

I’d expect there to be enough funds to pay the other beneficiaries and enough assets from the residual estate (even if something has to be sold) to pay the inheritance tax.  There will be no other liabilities.

Marcon

Jet said:

I am executor to my late uncle’s estate. It’s been 18 months since his death and my solicitors have emailed me this evening to tell me that probate has finally been granted. However, I know that HMRC are questioning some of the valuations, so the tax situation is not settled.

I am residual beneficiary and I have requested to pay the inheritance tax in instalments.

Obviously I will speak to my solicitor as soon as I can, but can anyone tell me what the next steps are. I am keen to pay out the other beneficiaries as soon as possible. 

If you are the sole executor, you can pay out what you like when you like (even before probate) - the caveat being that if you dish out cash to the wrong person, or in excess of what the estate can actually 'afford', you could well be personally liable for putting matters right.

Perhaps making interim payments to the beneficiaries, accompanied by an explanation that HMRC are still investigating the tax side of things, would be a reasonable halfway house for everyone?

Jet

Thanks.  I am the sole executor. My family aren't chasing me at all but I feel bad that it is taking so long.  There are multiple beneficiaries and no-one is being difficult but I do feel bad it is taking so long.  One beneficiary has a property to come to him so I assume he will just have to wait until the estate is settled.  What if HMRC take months or even years to agree the valuations?  

Marcon

Jet said:

Thanks.  I am the sole executor. My family aren't chasing me at all but I feel bad that it is taking so long.  There are multiple beneficiaries and no-one is being difficult but I do feel bad it is taking so long.  One beneficiary has a property to come to him so I assume he will just have to wait until the estate is settled.  What if HMRC take months or even years to agree the valuations?  

You'd need to take a decision about what you, as executor, are comfortable distributing and keep the beneficiaries informed about what's going on.