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JGM, Solicitor
Category: Scots Law
Satisfied Customers: 12087
Experience:  30 years as a practising solicitor.
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These are questions related to a current issue where a family

Customer Question

These are questions related to a current issue where a family member was appointed as an Executor, and I am one of the listed inheritors within the Will. There now appears to be growing problems concerning their duties and responsibilities post-HMRC/Sheriff's Court finalisation. Getting legal advice concerning the following questions would help considerably in making sure they correctly fulfill their duty:
1. After HMRC has been paid its Inheritance Tax, my understanding is that the individual inheritors rarely have to pay further tax on actual cash amounts inherited?
2. If any inheritors, however, keep some of their inheritance in shares (ie they don't sell all the inherited shares as they plan to retain a portion of their inheritance amount as shares), then they would be liable to pay tax on any dividends/shares sales profits made in the future? Are there any other exceptions?
3. That a inheritor/'seller' (they were never actually asked to sign off on the sale they requested/required - meaning it must have been signed off by the solicitor/Executor?) of an inherited property could be liable for Capital Gains Tax if they are classified as a UK Resident? A previous UK citizen who emigrated to New Zealand in the 1950s, who last returned to the UK to live for 2.5 years from 1968-70 (in order to be able to purchase a new car to take back to NZ and avoid paying car import tax), who formally obtained NZ citizenship in the mid-1980s and never again renewed their UK passport after obtaining their NZ one, has only visited the UK once since then (using their NZ passport, in order to take care of a family member for a few months), and has no UK bank accounts, etc. - should not be classified as a UK resident for tax purposes. They may, however, require to apply to the UK government with these back-up facts in order to have this confirmed and get official approval that they owe no CGT on the sale of the property they inherited and sold. Is this a correct analysis/expectation?
4. When a property is sold just after HMRC tax finalisation - who signs off as the seller/owner?
5. That all inheritors within a Will have the legal right to see all the Will-related HMRC documents? This question is directly related to seeing in particular the approved HMRC gift tax declaration.
6. Is there a timeframe within which an Executor (previously a co-Executor along with the deceased party's solicitor, and who, post-HMRC/Sheriff's Court tax finalisation dropped the solicitor to complete things like the inheritance distribution via their own bank account) should/must pass on from their private bank account the full inheritance amounts to the inheritors? This question relates both to cash inheritances, and the money made from selling a property. And if there is no set timeframe, then after formal requests for this money have been sent (stipulating a deadline), then is the next course of action for the deprived parties to pay a lawyer to send a formal demand for this? And if this is ignored?
7. What exactly are the full requirements for an Executor post-HMRC/Sheriff's Court inheritance tax sign-off and payment? This would include the finalisation requirements of a property sold, eg are there likely to be rates owning on a retired person's house, final electricity and gas bill confirmation, etc.
Submitted: 1 year ago.
Category: Scots Law
Expert:  JGM replied 1 year ago.
1. Inheritance tax is a tax on the estate. It is generally paid at the point of obtaining Confirmation (probate). If the executors do their job correctly, the beneficiaries will not pay any tax on their legacies.2. If the deceased's shares are retained by a beneficiary, they will pay tax on future dividends and potentially Capital Gains Tax if they dispose of the shares, based on the value at the date they inherited the shares and the date of eventual disposal. That would be the case with any shares, not just inherited shares. The fact that they were owned by the deceased is irrelevant.3. The executor is the only person with power to sell a deceased's property. If your question relates to a beneficiary having inherited a property and then sells it on, then CGT is likely to apply whether or not the person is a UK resident.4. The executor.5. The beneficiaries have no automatic right to see the HMRC documents.6. There is no set timeframe. Different estates will take different timescales to wind up depending on the nature and location of the estate. If a beneficiary thinks that the executor is delaying he can ask his own solicitor to write to the executors or he can raise an action of count, reckoning and payment in the sheriff court which would have the effect of the estate being wound up under the supervision of the court.7. The executor's job is to ingather the estate, pay off the debts and distribute what is left to the beneficiaries. Debts to do with the house would be finalised at disposal of the house although in many cases if the house is empty and unfurnished, the property may be exempt from council tax, certainly for the first six months of the property being empty and unfurnished.I hope that helps. Please leave a positive rating so that I am credited for my time.