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Senior Partner
Senior Partner, Solicitor
Category: Law
Satisfied Customers: 13329
Experience:  Solicitor with more than 30 years experience
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Good morning, my Father died in December 2007. My sister was

Customer Question

Good morning, my Father died in December 2007. My sister was Executor of the will. There was then an emphasis on making sure that my Mother was comfortable and catered for financially. Part of the will was to give each of the grand children (3) £10,000 each. In 2007, they were all in full time education. Reading the will, it appears that this was an instruction that was to be carried out on death. Given the emphasis, however, my sister didn't act on that instruction, however, one of the beneficiaries is now in full time work and the other two will also be in work soon. We want to give the kids the money without incurring tax (as would have been the case in 2007). Can we backdate these payments or use 3 years tax allowance or some other method? Thanks
Submitted: 4 years ago.
Category: Law
Expert:  Senior Partner replied 4 years ago.
Your sister had no right to withhold the bequests and is potentially liable to the beneficiaries for this. They should have been paid out of the estate and provided the estate paid IHT at the time there is no reason why the there should be any tax on the beneficiaries. If the bequest were a net amount that is what they should receive.Why do think there should be pay tax now?
Customer: replied 4 years ago.

The estate was in joint names and my Father's half was lower than the threshold for IHT so when it passed to my mother, there was no IHT liability at the time. The timing for payment to the Grandchildren isn't clear in the will and I understand that a beneficiary (my mother) can elect to pass through elements of the will without tax liability to the beneficiary (in this case the Grandchildren). That wasn't done but the point that I'm making is that as students, had they received the £10K each, then they could use their personal allowance to offset the benefit, however, as they move into employment, surely they now have an income or capital gain liability?

Expert:  Senior Partner replied 4 years ago.
There would be no IHT on a transfer to your mother anyway but if assets were in joint names they pass by succession and not through the will.
The fact remains if there was a bequest in the will it should have been implemented.Either there was gift of £10k per grandchild or not and if there was it should have been done when the estate was distributed unless it expressly said not until a letter date in the will.

A gift is exactly that and a lump sum cash gift is not subject either to capital gains tax or income tax so the tax allowances of the recipients are not relevant. They are not taxable on it either as income or gain. The only issue is IHT and if the estate was below the threshold it is not a problem.