Being an executor

[factor-fiction]

If a family member of the deceased is the only executor of a will can he deduct expenses (pobate fees, travel costs, postage, time) from the estate before distributing the estate to the beneficiaries?

What happens if the estate is initially valued at �1000, the executor deducts �200 expenses and plans to share out the remaining �800 among the beneficiaries. But then taxman turns up and claim they are entitled to �1000 in unpaid tax bills from the deceased so in theory the net value of the estate is nil. Does the executor get to keep his �200 expenses or do the creditors get the first bite of the cherry?

[buildersmate]

I believe the answer is that the those who have a claim on the estate take the first bite. A lay executor is only able to deduct out of pocket expenses, so I believe these come further down the pecking order.
The scenario involving HMRC shouldn't occur; they are one of the 'standard' list of potential creditors that an executor should approach - the others being utilities and council tax authorities. The executor then uses a posting in the London Gazette to 'time out' any other potential claims against the estate. Thus any claims should be known about before the final accounts are drawn up.

[dzug]

Fees, travel, postage - yes. Time no - he's unpaid unless the will specifies otherwise.

The expenses of winding up the estate are a privileged debt. They rank equal with VAT (and only VAT in the tax line - income tax is unprivileged) so unless the unpaid tax is that he can keep them. If it was VAT he'd have to do a pro rata deal with the taxman.

In reality he should have found out about the tax bill before getting probate - and maybe decide it wasn't worth the candle and leave the taxman to wind up the estate.

[factor-fiction]

Thanks dzug. Yes, with hindsight, he should have waited longer before going to probate, I don't know the exact timescales but he wasn't told about the unpaid tax until a tax demand came in a few weeks after probate which was a couple of months after the date of death.