Can I spend money received in inheritance as soon as I have access?

jcuurthht

I am the executor and beneficiary. When I am given access to my late mother's assets that don't require probate e.g. current account, savings account, refunds from health insurance etc. can I immediately move that to my person account as the beneficiary and spend it?

Flugelhorn

well you can... BUT it is always wise to wait to check whether there are any significant debts lurking that you don't know about before completely carried away

I used the money that didn't need probate to pay gardeners, carpet cleaners, house insurance, house clearance etc (ie all estate related costs) 

jcuurthht

Flugelhorn said:

well you can... BUT it is always wise to wait to check whether there are any significant debts lurking that you don't know about before completely carried away

I used the money that didn't need probate to pay gardeners, carpet cleaners, house insurance, house clearance etc (ie all estate related costs) 

Yeah this is good advice. Currently I've paid the funeral, skip, water bill from my own funds. And I assume estate agent and conveyance fees will automatically come from the house sale proceeds. But I'm sure there may be some other things I haven't thought about, so I'll keep that money set aside for now.

Flugelhorn

certainly reasonable to refund yourself for the things you have paid as - the EA and conveyancing will be paid out of the proceeds of the house sale 

jcuurthht

Flugelhorn said:

certainly reasonable to refund yourself for the things you have paid as - the EA and conveyancing will be paid out of the proceeds of the house sale 

Because we live abroad, we also had to travel to the UK immediately after the death, and again next week for the funeral. So far that is 2500€ spent on flights, ferry, train, bus, uber, hotel, covid tests, food etc. Including the funeral, skip and personal charity donations, we have spent around 9000€. Fortunately this will be covered by inheritance, and we had cash readily available, we just had to take it from our mortgage down payment fund.

Flugelhorn

It is a problem - OK if you have the cash handy but there are significant costs to be paid upfront. Fortunately the only times I have had to do this there was a enough spare cash to do all that was needed 

Hope all goes OK with the funeral next week 

RAS

The funeral journey is probably a personal expense.

The funeral bill could have been paid directly from one of the bank accounts before you transferred it, banks are used to paying invoices direct to  funeral directors.  And that cost always take priority, so reclaim it now.

But the earlier journey would be an expense of the estate, as might be future journeys. So technically, you can just re-imburse yourself for those, and the funeral proving there's going to be enough left to cover any other debts.

What you might think about is what rules apply in Germany? What do they allow as executors expenses? It would be good to get all that sorted before you expatriate the funds.

jcuurthht

RAS said:

The funeral journey is probably a personal expense.

The funeral bill could have been paid directly from one of the bank accounts before you transferred it, banks are used to paying invoices direct to  funeral directors.  And that cost always take priority, so reclaim it now.

But the earlier journey would be an expense of the estate, as might be future journeys. So technically, you can just re-imburse yourself for those, and the funeral proving there's going to be enough left to cover any other debts.

What you might think about is what rules apply in Germany? What do they allow as executors expenses? It would be good to get all that sorted before you expatriate the funds.

Yeah I was told by the bank and funeral directors that the invoice could be paid directly from the bank account, but I just paid it upfront because it was the quickest and easiest approach.

Germany inheritance tax is different; they tax the individual rather than the estate. If the estate pays taxes in the UK, I don't know if any of this amount can be deducted from your personal tax obligation in Germany (fortunately for me this is not a consideration because there will be no estate tax in the UK). The threshold & tax rate depends on the relationship with the deceased and the amount of money inherited. For descendents the threshold is 400k €. After that, the rate ranges from 7% to 30%. Fortunetly I have a german tax advisor who specialises in UK & US tax to help me with this.

See here for more info: https://www.expatica.com/de/finance/taxes/inheritance-tax-in-germany-108115/

As a concrete example, I inherited 56k € from a friend. The first 20k € is tax free, then the rate is 30%.

Flugelhorn said:

It is a problem - OK if you have the cash handy but there are significant costs to be paid upfront. Fortunately the only times I have had to do this there was a enough spare cash to do all that was needed 

Hope all goes OK with the funeral next week 

Yes I consider myself very fortunate. It can add additional stress to an already difficult time. A good argument for an emergency fund (or 0% credit card)

Savvy_Sue

RAS said:

The funeral journey is probably a personal expense.

The funeral bill could have been paid directly from one of the bank accounts before you transferred it, banks are used to paying invoices direct to  funeral directors.  And that cost always take priority, so reclaim it now.

But the earlier journey would be an expense of the estate, as might be future journeys. So technically, you can just re-imburse yourself for those, and the funeral proving there's going to be enough left to cover any other debts.

What you might think about is what rules apply in Germany? What do they allow as executors expenses? It would be good to get all that sorted before you expatriate the funds.

I agree with you about which journeys are personal and which are 'of the estate', and it's worth making that distinction for anyone coming to this thread in the future. Also good for this OP to consider what tax might be due in Germany. 

But as the executor and - I believe sole - beneficiary, then no-one else is going to care how fast the OP moves and spends the money ... 

Always worth considering whether anyone is likely to contest a will, or an unexpected descendant will claim that they were financially dependent on the deceased, but a sole beneficiary is generally in a fortunate position - if unexpected debtors come knocking then NOT having spent it all is prudent, but at least there will be no arguments about who is paying this debt! 

jcuurthht

Interesting that my travels to the UK could be considered an estate expense. They could potentially be deducted when I calculate my inheritance tax in Germany. Something to discuss with the tax advisor.