Beneficiaries

Keep_pedalling

Jellybean_kittymorgizfud20051996 said:

I believe a large amount was paid but then when they sold other assets, the outstanding IHT wasn’t paid and they distributed the 2nd smaller payment. The solicitor asked for the tax to be paid in instalments but it was a mistake so the 2nd payment and overpayment given to us was too high. They had admitted this but their insurance company wants payments back. 

We were told the rest of some properties were being sold and another final payment to us would be received. 

The solicitor didn’t deal with me directly but this is what I am now aware happened 

I thought you only get money once it’s authorised to pay it or this could happen. To anyone, years after receiving. 

Very upsetting as I’ve never had anything left in a will before so didn’t know I should be checking things. 

I just bought a house and have a mortgage 😔

You have been very unlucky this is a very rare error and have done nothing wrong in using your inheritance to purchase a home. Do you have legal cover with your home insurance? If you do it would be worth speaking to them. If you are a member of a trade union they usually also offer members free legal advice. 

Ultimately it is the executors who are responsible for paying IHT and if they can’t recover it from the beneficiaries then they are on the hook for it. Sounds like the solidity have claimed on their public indemnity insurance who are now trying to recover their costs but try not to worry about their threat of legal action I doubt whether it will get that far and I don’t think they will be able to enforce this against you. The other executor on the other hand might not be so lucky as they were also responsible for IHT.

mattojgb

The claim against you is presumably being made on the basis of "unjust enrichment". There is a defence to such claims based on "change of position". You would need proper legal advice to determine if the defence applied in your case.

poseidon1

bobster2 said:

You say it's a huge amount. It's difficult to imagine how a competent solicitor helping deal with an estate could get things so wrong that a huge amount of IHT remained unpaid.

Have they explained what mistake was made? And how it came to light? E.g. did HMRC challenge something months after the original submission?

Evidently due to their gross negligence in distributing the estate without properly providing for IHT the firm has made a claim against their professional Indemnity insurance presumably for their insurers to pay the Iht now due. The insurers have decided they do not want to be out of pocket by meeting the claim, so via the solicitors are pursuing all the beneficiaries to cough up.

That the PI insurers have got involved, seems to suggest the solicitors were joint executors as well as administrators, which places an even higher duty of care in this matter since they together with the lay executor are personally jointly and severally liable to ensure estate liabilities are properly dealth with before distributing an estate. The lay executor is entitled to rely on the expertise and  best efforts of the professional  executor in this regard.

I would suggest the OP seek legal advice of her own, especially since  beneficiaries are not legally liable to pay IHT in these circumstances. Furthermore demand for a refund of her distribution will put her in severe financial distress, and it is the solicitor's insurers ( not it seems the solicitors themselves  )  who are seeking to avoid the financial consequences of the firm's gross negligence.

Jellybean_kittymorgizfud20051996

That’s correct. The solicitor was was an executor and the family member was a lay executor and beneficiary (also impacted) 

the solicitor admitted their error but it’s the insurance firm that’s chasing via the same firm that was an executor. 

Thank you all 

poseidon1

Jellybean_kittymorgizfud20051996 said:

That’s correct. The solicitor was was an executor and the family member was a lay executor and beneficiary (also impacted) 

the solicitor admitted their error but it’s the insurance firm that’s chasing via the same firm that was an executor. 

Thank you all 

Notwithstanding some of the comments on this thread, other than in very specific (statutory) circumstances, estate beneficiaries have no duty/obligation to pay IHT or to indemnify executors who for whatever reason have failed to do so ( case law quite clear on this point). 

More to the point you have no legal obligation to relieve the insurer of its contractual obligation to their client ( the solicitors) to meet the claim on the policy ( pay out the overlooked IHT). You should most certainly strenuously  resist their 'bully boy' tactics in this regard.

Going a stage further the family member executor/beneficiary should also consider their position and whether they too can claim a measure of relief in their  capacity as estate beneficiary.  Yes, their joint executroship status  places them in a more complex position, but arguably they are as much a victim of the solicitor's incompetence/ negligence as yourself. You may wish to reach out to them to similarly obtain legal advice in resisting the insurance company claim, since as a point of principle why should the company partly or wholly escape its legal obligation as insurer of first resort on behalf of the negligent solicitors. After all that is the whole point of professional Indemnity insurance. 

You may gather from my remarks I have no sympathy for the solicitor and even less for the insurance company!

mattojgb

poseidon1 said:

Jellybean_kittymorgizfud20051996 said:

That’s correct. The solicitor was was an executor and the family member was a lay executor and beneficiary (also impacted) 

the solicitor admitted their error but it’s the insurance firm that’s chasing via the same firm that was an executor. 

Thank you all 

Notwithstanding some of the comments on this thread, other than in very specific (statutory) circumstances, estate beneficiaries have no duty/obligation to pay IHT or to indemnify executors who for whatever reason have failed to do so ( case law quite clear on this point). 

More to the point you have no legal obligation to relieve the insurer of its contractual obligation to their client ( the solicitors) to meet the claim on the policy ( pay out the overlooked IHT). You should most certainly strenuously  resist their 'bully boy' tactics in this regard.

Going a stage further the family member executor/beneficiary should also consider their position and whether they too can claim a measure of relief in their  capacity as estate beneficiary.  Yes, their joint executroship status  places them in a more complex position, but arguably they are as much a victim of the solicitor's incompetence/ negligence as yourself. You may wish to reach out to them to similarly obtain legal advice in resisting the insurance company claim, since as a point of principle why should the company partly or wholly escape its legal obligation as insurer of first resort on behalf of the negligent solicitors. After all that is the whole point of professional Indemnity insurance. 

You may gather from my remarks I have no sympathy for the solicitor and even less for the insurance company!

A claim for unjust enrichment can be made in instances where a mistake has led to enrichment of a person not entitled to it. It is somewhat separate to the liability of the executor. In principle it requires the enriched person to be put back into the same position as if they had not been enriched. That is simple enough if the money has just been put in the bank (or even if used to pay off a mortgage). Problems arise if the money is spent, and that is where the change of position defence arises. If the money is used to buy a car then the car can be sold and the money recovered used to pay the claim. In this case the disadvantaged person cannot claim any more than the money recovered as that would then leave the previously enriched person worse off. There are further complications when the money is used to buy property. I don't think the law on this is settled.

user1977

I would agree this appears to be unjust enrichment, so it isn't improper for the insurers to try to recover the funds from the OP. But I don't know how far they can/will realistically push it. They may need to tolerate a very slow repayment plan...

poseidon1

mattojgb said:

poseidon1 said:

Jellybean_kittymorgizfud20051996 said:

That’s correct. The solicitor was was an executor and the family member was a lay executor and beneficiary (also impacted) 

the solicitor admitted their error but it’s the insurance firm that’s chasing via the same firm that was an executor. 

Thank you all 

Notwithstanding some of the comments on this thread, other than in very specific (statutory) circumstances, estate beneficiaries have no duty/obligation to pay IHT or to indemnify executors who for whatever reason have failed to do so ( case law quite clear on this point). 

More to the point you have no legal obligation to relieve the insurer of its contractual obligation to their client ( the solicitors) to meet the claim on the policy ( pay out the overlooked IHT). You should most certainly strenuously  resist their 'bully boy' tactics in this regard.

Going a stage further the family member executor/beneficiary should also consider their position and whether they too can claim a measure of relief in their  capacity as estate beneficiary.  Yes, their joint executroship status  places them in a more complex position, but arguably they are as much a victim of the solicitor's incompetence/ negligence as yourself. You may wish to reach out to them to similarly obtain legal advice in resisting the insurance company claim, since as a point of principle why should the company partly or wholly escape its legal obligation as insurer of first resort on behalf of the negligent solicitors. After all that is the whole point of professional Indemnity insurance. 

You may gather from my remarks I have no sympathy for the solicitor and even less for the insurance company!

A claim for unjust enrichment can be made in instances where a mistake has led to enrichment of a person not entitled to it. It is somewhat separate to the liability of the executor. In principle it requires the enriched person to be put back into the same position as if they had not been enriched. That is simple enough if the money has just been put in the bank (or even if used to pay off a mortgage). Problems arise if the money is spent, and that is where the change of position defence arises. If the money is used to buy a car then the car can be sold and the money recovered used to pay the claim. In this case the disadvantaged person cannot claim any more than the money recovered as that would then leave the previously enriched person worse off. There are further complications when the money is used to buy property. I don't think the law on this is settled.

Evidently the solicitor executor did not hold out much hope of being able to succeed in an equitable unjust enrichment claim against the beneficiary, otherwise a claim against their PI cover would not have been lodged. Indeed the nature of their negligence here maybe considered so egregious as to jeapodise their ability to obtain PI cover in future, so they would not have done so lightly.

The OP and anyone else interested in what a professional executor is supposed to bring to table and and the role  PI cover plays in 'protecting' executors and beneficiaries alike, may find the article below informative.

https://www.myerson.co.uk/news-insights-and-events/how-can-professional-executors-protect-your-interests

Needless to say, I do not believe a PI insurer would have a stronger case to pursue a beneficiary in a  claim for 'unjust enrichment' than the professional solicitor in this particular circumstance, or that a judge would ultimately choose to excercise their discretion to apply relief in favour of the insurer should they choose to take formal legal action against the beneficiary. That said, would be interested to hear what legal advice the OP eventually obtains in this regard.