ChatterBank0 min ago
Being an executor
3 Answers
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?
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?
Answers
1 to 3 of 3
Best Answer
No best answer has yet been selected by factor-fiction. Once a best answer has been selected, it will be shown here.
For more on marking an answer as the "Best Answer", please visit our FAQ.
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.
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.
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.
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.
1 to 3 of 3
