Beware: Executors are Liable for Inheritance Tax [United Kingdom]

In the United Kingdom, an executor of an estate can be found personally liable for unpaid inheritance tax (IHT), even if they are not named as a beneficiary of that estate. This means if a beneficiary runs off with the funds of the estate while there is still IHT to be paid to the government, the executor’s own assets could be at risk. This type of situation is an extreme one, of course.

The common stressful issue of being an executor in the United Kingdom is that IHT is expected within 6 months of the person’s death and usually assets of the estate need to be sold to pay of the tax. But before assets can be available to sell, probate must be granted, which can mean more headaches and interest charges on the tax.

This problem is easily solved if the estate has cash or investments to pay off the tax. An executor could also ask Her Majesty’s Revenue & Commission (HMRC) permission to pay off the IHT in installments if selling off the estate’s assets is delayed.

If this seems like too much trouble resulting from the request to be a person’s executor, you can also “just say no.”

See Ruth Jackson, Beware: Executors are Liable for Inheritance Tax, Money Week, June 1, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.