Dividend income after death

hannaford123

My Father died last June and my brother and I as Executors have dealt with his estate, and obtained Probate. We had to pay approx £50,000 of the total IHT due, out of our own money in addition to a few other debts. My query is whether we can repay ourselves from dividend income which has accumulated since Dad died, or does the dividend income have to go to whoever receives the shares when they are distributed? I realise that income tax will be due on the Dividend income.
Thank you

probate_slave

The dividend income is just cash in the estate and can certainly be used to reimburse the executors at once. The beneficiaries of the shares, if residual and absolute, will be deemed to have received the income after death even if they don't actually see a penny of it.

poseidon1

hannaford123 said:

My Father died last June and my brother and I as Executors have dealt with his estate, and obtained Probate. We had to pay approx £50,000 of the total IHT due, out of our own money in addition to a few other debts. My query is whether we can repay ourselves from dividend income which has accumulated since Dad died, or does the dividend income have to go to whoever receives the shares when they are distributed? I realise that income tax will be due on the Dividend income.
Thank you

If the investments were stock market listed, curious as to why you did not sell some to reimburse you for IHT paid thereon.

Be that as it may, agree probate_slave's view of the situation. 

However, are you familiar with what is required by way of  estate self assessment  tax reporting, and how that taxable income is then reported at beneficiary level? 

Furthermore do you know how to prepare executorship accounts to eventually accompany estate distributions to beneficiaries? 

Since the estate has been accruing  sufficient investment income for you to consider using it to reimburse your £50k personal expenditure, that suggests to me a certain level of complexity which justifies your instructing a firm of Chartered Accountants ( STEP qualified) to deal with the tax compliance and final accounts on your behalf. 

 Any estate generating the level of  dividend income you have intimated, is less then straightforward and would benefit from professional advice, for the ultimate protection of the executors if you are not the sole residual beneficiaries of the estate.

badmemory

If those shares are left to someone other than the executors/residual beneficiaries using that money could be a problem & will anyway possibly/probably need to be replaced - depending on the wording of the will.  I am a know nothing but even to me caution would seem to be indicated.  Can we assume that using this money would actually save the estate money in the long run?