Do I need an interest bearing Executors account?

Rostellan

Hi, As an Executor to an estate I am concerned about my personal Income tax. I have obtained grant of Probate and received the savings from the financial institutions. I used an old Nationwide Flex account to receive and pay out funds. The problem is with my MIL's flat which has structural problems. This is likely to cost a lot and take some time 1-2 years? I have distributed half of the savings funds the remaining half is contingency for the repairs. The retained £150k is in the Flex account which does not pay interest but if do invest it to gain interest it will be reported as my personal income. Nationwide do not offer Executor accounts, all institutions offer Gross interest not Net except for NS&I PSB's. Do I need an interest bearing Executor account with another bank and if so is it worth it for the interest that I will receive. Should I leave the money in the Flex account and receive no interest? Advice and options please! 

p00hsticks

Do the structural problems mean that it is unmortgageable ? 
What is the intention for the flat when they are addressed ? Sell it or keep it ? 

Zanderman

Why are you keeping the flat and spending estate money on it? Who are the beneficiaries and what is their view? Can they not be given the money, and the flat, and then sort it out without an executors account (which should no longer be needed once probate is granted and the estate distributed)

Marcon

Rostellan said:

Hi, As an Executor to an estate I am concerned about my personal Income tax. I have obtained grant of Probate and received the savings from the financial institutions. I used an old Nationwide Flex account to receive and pay out funds. The problem is with my MIL's flat which has structural problems. This is likely to cost a lot and take some time 1-2 years? I have distributed half of the savings funds the remaining half is contingency for the repairs. The retained £150k is in the Flex account which does not pay interest but if do invest it to gain interest it will be reported as my personal income. Nationwide do not offer Executor accounts, all institutions offer Gross interest not Net except for NS&I PSB's. Do I need an interest bearing Executor account with another bank and if so is it worth it for the interest that I will receive. Should I leave the money in the Flex account and receive no interest? Advice and options please! 

Not usually the executor's role to do all this, and as you can see, it creates problems if you take on a role you aren't required to fulfil. Any reason the flat can't be sold as it is? It may need to be a cash buyer, but virtually any property sells at the right price.

Rostellan

The costs for the flat are unknown, the issue is with facia on the whole block of flats which needs to be replaced. We have no idea how much this will be but quotes are being obtained by the management company. No-one is likely to buy the flat without some idea of those costs. 

RAS

So once that quote is in, aim to sell the flat pronto, advising the EA of the situation, and providing evidence. The cost of maintaining it longer could be substantial.

Marcon

Rostellan said:

The costs for the flat are unknown, the issue is with facia on the whole block of flats which needs to be replaced.  

But you come back to the question why you as executor are doing all this - does the will require you to sell and distribute the proceeds of sale, rather than beneficiaries inheriting the property?

Rostellan said:

We have no idea how much this will be but quotes are being obtained by the management company. No-one is likely to buy the flat without some idea of those costs. 

If you've got no idea, is it wise to have distributed any of the estate? It might be worth talking to a solicitor about selling with some sort of undertaking to pay the costs of replacing the facia once those are known. Otherwise you're going to be saddled with the possibility of paying all the running costs for a flat which is (?)unoccupied, including insurance, service charges and empty property council tax.

Going back to your original question - yes, you do need to be looking at some sort of interest bearing executor account eg https://www.caterallen.co.uk/accounts/specialist-banking/solutions-for-executors-and-personal-representatives

lincroft1710

As executor, you are obliged to carry out the wishes of the deceased and distribute the estate according to the wishes of the deceased. If an asset of the estate is worth less because of neglect or disrepair, then that is that. It is not the duty of an executor to make good with any monies that are part of the estate.

Rostellan

Thank you for your comments really interesting and enlightening on my distinct duties as an executor, I guess I am trying hard to sort it as one of the main beneficiaries is my wife, maybe too hard. Thanks again for your help.

SiliconChip

Marcon said:

Rostellan said:

The costs for the flat are unknown, the issue is with facia on the whole block of flats which needs to be replaced.  

But you come back to the question why you as executor are doing all this - does the will require you to sell and distribute the proceeds of sale, rather than beneficiaries inheriting the property?

Rostellan said:

We have no idea how much this will be but quotes are being obtained by the management company. No-one is likely to buy the flat without some idea of those costs. 

Going back to your original question - yes, you do need to be looking at some sort of interest bearing executor account eg https://www.caterallen.co.uk/accounts/specialist-banking/solutions-for-executors-and-personal-representatives

Why do you say that, is there something in the legal demands on an executor that would require it? I certainly didn't bother when I was executor for my mum, although it was a great deal simpler than the OP's case and the money was "only resting" in my account for a few weeks before I paid it out (and all the beneficiaries were close family members). 

Am I right in thinking that I read recently in another thread that you now have to be introduced to Cater Allen by an existing account holder? if so it may not be a viable solution for the OP. I had a business account with them many years ago but both the business and the account have been gone for over 20 years so I wouldn't be of any help.