Personal representatives often administer estates without a legal advisor. If administered incorrectly, there could be several repercussions for beneficiaries or the executors in a personal capacity.
Interpretation
Wills contain legal jargon which can be difficult to interpret. The Will may stipulate how tax is payable or make a provision if a beneficiary has predeceased the Testator. Wills also often create a trust which provides an ongoing responsibility for a trustee. It is crucial that advice is sought so the estate and trusts are administered correctly.
Taxes
Maximising the deceased’s inheritance tax allowances could significantly reduce a tax bill. The Residence Nil Rate Band is complex and is only claimable in certain circumstances and within a set time period. If inheritance tax is not finalised within HMRC’s timescales interest and penalties will be imposed.
Executors should also consider potential income tax or capital gains tax liabilities. With professional advice, there may be steps you can take to minimise capital gains tax.
Personal liability
Executors are at risk if they distribute funds too early, to bankrupt beneficiaries or if unknown liabilities or beneficiaries are discovered. Certain categories of people may also have a claim against an estate. A legal advisor can advise of potential claims and assist to minimise risk.
Variations
When a beneficiary inherits, their taxable estate increases. A Deed of Variation can redirect their entitlement to non-beneficiaries (e.g. children) reducing their taxable estate.
To discuss the distribution of an estate with an expert Solicitor, please call Sophie Westwood on 01825747122 or email ssw@dawson-hart.co.uk. We are here for you when you need us.