Executors question

sanfairyanne

My niece's father died, since his death a substantial insurance payment has been received. Both myself and my niece are executors of the will. We had to set up a joint bank account in order to receive the cheque. My niece now wants the funds transferred directly to her account, she suggests that if the money goes into her mother's account the money will be liable to inheritance tax.  She has been told that as executors we can do whatever we want with the money, but I would assume the cheque has to go to her mother's bank account. After that her mother could do what she likes with it. I'm in a sticky situation, I don't wish to be awkward, but I need to know I'm not doing the wrong thing. 

 

RAS

How old is the niece?

And who did the deceased nominate as the beneficiaries of the insurance payout

sanfairyanne

RAS said:

How old is the niece?

And who did the deceased nominate as the beneficiaries of the insurance payout

In her 40's, the deceased died leaving all his assets to his wife. He never knew about the insurance payout because it came about as a result of his death.

thegreenone

sanfairyanne said:

the deceased died leaving all his assets to his wife. He never knew about the insurance payout because it came about as a result of his death.

The pay out is part of his estate and should remain in the joint Exor account until the estate is settled and everything is then transferred to his wife with a set of accounts.   Wife will have his NRB to use against her own estate when she dies so unless that tops a million, there won't be any inheritance tax.   If there is, well, it has to be paid.

What is daughter intending to do with the money?  It will have to be declared for Probate if you are not at that stage yet.

sanfairyanne

thegreenone said:

sanfairyanne said:

the deceased died leaving all his assets to his wife. He never knew about the insurance payout because it came about as a result of his death.

The pay out is part of his estate and should remain in the joint Exor account until the estate is settled and everything is then transferred to his wife with a set of accounts.   Wife will have his NRB to use against her own estate when she dies so unless that tops a million, there won't be any inheritance tax.   If there is, well, it has to be paid.

What is daughter intending to do with the money?  It will have to be declared for Probate if you are not at that stage yet.

This insurance payment has taken roughly three years to be paid. So everything else has been settled long ago. Her daughter intends to give her children some of the money and split the rest between her mother and herself. She simply thinks this will stop her being at risk of paying inheritance taxes upon her mothers death. As I say, I'm just not sure it's legal, not just from a tax point of view. I would think the money has to go to her mother as it was intended to go to her.

Keep_pedalling

If the insurance payout has no named beneficiary then it is part of his estate, but your niece is totally wrong on every front. The executors have zero discretion on this if it is part of the estate then it goes to his wife as per the will. There will be no inheritance tax because anything passing to a spouse is exempt. 

sanfairyanne

Keep_pedalling said:

If the insurance payout has no named beneficiary then it is part of his estate, but your niece is totally wrong on every front. The executors have zero discretion on this if it is part of the estate then it goes to his wife as per the will. There will be no inheritance tax because anything passing to a spouse is exempt. 

Thanks, myself and my niece were informed we'd have to set up a joint bank account. We've done this and the money is now sitting in the account. I too agree there'd be no inheritance tax. So there's no logical reason why the money shouldn't go to the wife of the deceased.  

BooJewels

@sanfairyanne said:

Her daughter intends to give her children some of the money and split the rest between her mother and herself. 

I just don't see how that can even be an option.  Executors don't have a say as to how the estate is distributed - their duty is to 'execute the will' and distribute the estate according to the detail laid out.

If the deceased's spouse, as rightful beneficiary of the estate and therefore this payout, then chooses to gift some to her daughter and grandchildren, then that's another matter entirely.

Some life insurance and pension lump sums fall outside of the estate for IHT and go to a named beneficiary and don't form part of the estate, but if the insurance company wanted it to go to an executor type account, then that doesn't sound to be the case here.

sanfairyanne

BooJewels said:

@sanfairyanne said:

Her daughter intends to give her children some of the money and split the rest between her mother and herself. 

I just don't see how that can even be an option.  Executors don't have a say as to how the estate is distributed - their duty is to 'execute the will' and distribute the estate according to the detail laid out.

If the deceased's spouse, as rightful beneficiary of the estate and therefore this payout, then chooses to gift some to her daughter and grandchildren, then that's another matter entirely.

Some life insurance and pension lump sums fall outside of the estate for IHT and go to a named beneficiary and don't form part of the estate, but if the insurance company wanted it to go to an executor type account, then that doesn't sound to be the case here.

Thanks as one of the executors I'm just going to demand that the money be paid to the deceased's wife. After that they can do whatever they like with it. 

thegreenone

Does the Widow know about this money?

sanfairyanne

thegreenone said:

Does the Widow know about this money?

We believe so, but the widow is ageing and not so sure of matters such as this.