IHT400 Box 76 Other assets due to deceased

[Overleigh]

My uncle was £400 in credit with his gas & electricity supplier, npower, when he died. No one is now living in his house, but I want the services to remain connected for security lighting and a little heating to keep out the frost.

Should I enter the £400 in Box 76 as 'a refund' that the estate is entitled to, but not ask npower for an actual refund until the house is sold? (It seems wrong to ask for a refund of £400 and then run up an energy bill with them which might not get paid for some months.)

A second question. The house was jointly owned (joint tenants) by his sister, and consequently she becomes the sole owner. She does not want to keep the house and is going to sell it asap. Is the house technically already hers (even if the deeds have not yet been altered) and should all the services (gas, electricity, water, house insurance .....) be transferred into her name during these months until it is sold, or can all the services remain in the name of the executors of my uncle's estate?

[maths]

Should I enter the £400 in Box 76 as 'a refund' that the estate is entitled to

Yes. This amount is due to the deceased's estate as the deceased did not, I assume, use gas/electric equivalent to this amount by the date of his death.

This amount forms part of the estate to be collected by the executors (assuming a will) for distribution per the will.


If the property is jointly owned beneficially (ie not as tenants in common) then the deceased's interest automatically, on death, passes to the survivor. Thus, the survivor owns 100% of the beneficial interest from date of death.

The legal title which can only be held jointly similarly passes on death to the survivor.

The deceased's beneficial interest does not pass by will and thus the executors are not involved; the executors are only involved if the beneficial interest in the house was held as tenants in common (ie not as joint tenants).

[Overleigh]

Thank you maths. My aunt, who now becomes the sole owner of the house, is also the main beneficiary of the estate. Consequently, whether bills for gas/water etc during the period of administration are paid for by the estate or directly by my aunt will not effect her bank balance once the estate is settled. However, am I obliged to get all the services transferred into her name rather than leave them in the name of the executors? It is possible that the house will be sold by my aunt before the estate is finally wrapped up.

[pqtaxation]

Should I enter the £400 in Box 76 as 'a refund' that the estate is entitled to
Yes. This amount ....... forms part of the estate to be collected by the executors for distribution per the will.

The legal title which can only be held jointly similarly passes on death to the survivor.......The deceased's beneficial interest does not pass by will and thus the executors are not involved.

Maths’ comments are doubtlessly correct technically (as always), but perhaps could be read as advising you, as executor, to avoid becoming involved in any way with the house now entirely owned (both legally and beneficially) by your aunt.

Thank you maths. My aunt, who now becomes the sole owner of the house, is also the main beneficiary of the estate. Consequently, whether bills for gas/water etc during the period of administration are paid for by the estate or directly by my aunt will not effect her bank balance once the estate is settled. However, am I obliged to get all the services transferred into her name rather than leave them in the name of the executors? It is possible that the house will be sold by my aunt before the estate is finally wrapped up.Thank you maths. My aunt, who now becomes the sole owner of the house, is also the main beneficiary of the estate. Consequently, whether bills for gas/water etc during the period of administration are paid for by the estate or directly by my aunt will not effect her bank balance once the estate is settled. However, am I obliged to get all the services transferred into her name rather than leave them in the name of the executors? It is possible that the house will be sold by my aunt before the estate is finally wrapped up.

My experience of being a lay executor is that there are some areas of grey and not everything is completely as black and white as Maths possibly indicates. At the end of the day (i.e. on completion of the estate administration) a lay family member executor (like you) wants to have complied with the will/wishes of the deceased and have beneficiaries happy with what you have done (you want them to approve the estate accounts) without creating any problems with any external third party or authority, such as HMRC.

You’ve posted quite a lot previously about your uncle’s estate. Your last post reads like your aunt (who presumably is elderly and does not seek additional further burdens) does not need the money from the sale of the house to live on and would be quite happy for you to arrange for its sale. You could do this as her bare trustee if she, her advising solicitor and your advising solicitor agree and that would be certainly easier for her and possibly for you.

If all the service suppliers to the house regarded your uncle as its sole legal owner then it may be easier just to continue with them as his executor and her bare trustee until sale. After sale you could have an accounting for the costs since your uncle died which might provide an opportunity to move value out of the aunt’s estate if she wished it. Accounting for the £400 credit balance on the utilities account as a debt of the estate increases the IHT payable. In practice npower are a nightmare on account administration and to get a refund and open a new credit account for your aunt is time consuming. Re-designating it as an executor account is easier and n power do realise that executors may have to await grant of probate to have funds to pay out. By way of contrast, there should be requested a refund of council tax from date of death, as no one is living in the house, which is accounted for as an asset of the estate as the refund will only be payable to the executor.

There can be other advantages and lower costs to your continuing to be involved with the house other than helping your aunt. For example: most insurers on being notified of the death and being told it is planned to sell the house will agree for the (pre-paid) insurance to continue until its next renewal, though possibly asking for any valuable items to be moved to safe-keeping; you should have written market valuation for the house (which may be challenged by HMRC) but free ones from estate agents followed by a reasonably quick sale should be satisfactory rather than a more expensive professional valuation.

In other words, in the circumstances where there is a tax paying estate to administer and there are elderly beneficiaries, such as your aunt, who may not be dependent on their inheritance to meet day to day living expenses then perhaps certain “pragmatism” in accounting is helpful for the relatively small costs that you mention (in the context of the total value of the estate) if doing so is acceptable to beneficiaries whose approval of the estate accounts will eventually be sought by the executor.

In my experience ( I’m now working on my thirteenth family/friend’s such estate which number hopefully will not be unlucky) it is beneficiaries, rather than HMRC for example, who query estate administration costs and by consulting and informing those beneficiaries as you proceed (particularly if they are fellow family members) any queries are minimised at the time estate accounts are to be approved as are overall costs paid out to third parties (e.g. insurance of the house put up for sale where another cost saving available as bare trustee is that my home insurance company allows me to add a holiday home for small additional cost when deceased’s insurance runs out – otherwise insuring vacant homes for sale is very expensive as few insurers do it).

Hope those few thoughts above help – though no advice intended – but being a lay executor has a steep learning curve that in most cases just goes to waste. But if that learning can be used in later estates it can result in lower costs/tax– possibly to your benefit if you are a beneficiary of the residue – and improved relations with family members

[maths]

I'm not sure much is to be gained by my commenting upon all the points made by pqtaxation. Whilst pragmatism may be appropriate, the role of executor is important and an understanding of the legal position is vital (although arguably less so if basically everything in this case goes to the sister).

However, what remains unclear is whether the legal title was held solely by the deceased or jointly with the sister ?

If the latter, then the executors have no role to play with regard to the house as the legal title automatically passes to the sister (as does the beneficial interest assuming held as joint tenants ?); all that is necessary is for the deceased's name to be removed from the LRegistry.

If the former, then legal title passes to the executors prior to transfer to the sister. However, in this case if the sister intends to sell then the executors may retain legal title passing it to the eventual purchasers and thus may have a role to play qua executor.

However, am I obliged to get all the services transferred into her name rather than leave them in the name of the executors? It is possible that the house will be sold by my aunt before the estate is finally wrapped up.

If legal title is held jointly, as indicated above, on death nothing passes to the executors; hence their name should not appear on any services. Strictly speaking, his name should be replaced by his sister's (or deleted if in joint names). However, in practice if the house is to be sold, it may be pragmatic to leave as is with either the sister or executors paying any amounts falling due and adjustment in the estate monies sorted out in due course.

[Overleigh]

Thank you pqtaxation for such a full and thoughtful response. Your words are much appreciated, and you have certainly sized up my situation very well.

My aunt, the main beneficiary and now owner of the house, is comfortably placed and not in pressing need of funds from my uncle's estate. When she was unwell a couple of years ago, she was advised by her GP to set up power of attorney for when her health failed which she duly did. We are in the fortunate position that her two attorneys are my cousin and myself, and we are also co-executors of my uncle's will. As yet my aunt's health has not failed and consequently we have not had to act as her attorneys. However, when she sees her solicitor next week to start the ball rolling with the sale of my late uncle's house, I am hopeful that she will ask that my cousin and I act as attorneys on her behalf in the sale. It is not that I want the extra work of selling the house, but as you have pointed out, I can see that it would save me work in the long run if I was involved.

You mentioned the council tax refund: to my surprise that was one of the first sums of money to come in. I never even requested it!

Returning to the matter of my uncle having a credit with npower, do you think I have a choice as to whether it appears on IHT400?

[Overleigh]

Thank you maths. Just to clarify, the house was owned jointly, 'joint tenancy', so, as you have rightly said, it now belongs to my aunt. Apart from entering a half share of the value of the house on the IHT forms I understand that, as an executor, I have no other part to play with respect to the house. However, as hinted at in my other postings, my aunt is not in a position 'to take charge' of what needs to be done in selling the house so, along with my cousin, I am thinking of the best way to smoothly and quickly help my aunt to sell the house.

[pqtaxation]

… 1) ....You mentioned the council tax refund: to my surprise that was one of the first sums of money to come in. I never even requested it!

2) ....Returning to the matter of my uncle having a credit with npower, do you think I have a choice as to whether it appears on IHT400?

1) How did the council find out about your uncle’s death? I have never heard of a council unilaterally initiating a council tax refund without a claim being submitted to confirm that no one is living in the house.

2) Well, life is always full of choices –some good, some bad though that can be subjective. An analogy might be ask you to ponder whether you’d cross over a pedestrian crossing with its light at red when there is no traffic to be seen and when a) a policeman is standing on the other side waiting to cross or b) when there is not a policeman looking at you. Choice could be: never, no or possibly as though technically to do so is against the law it’s hardly a big thing and gets me to same destination quicker if with a little more risk.

You write that your cousin is your co-executor so hopefully two heads are better than one on making both progress and such choices.

The only advice I would offer is to check on the insurance position on the house.

[Overleigh]

Thanks again pqtaxation. Having pondered these things this afternoon I have concluded that the £400 is part of the estate and should be declared as such. I hope that declaring it on IHT400 does not compel me to ask npower for a refund; I would much rather leave the credit with npower until the house is sold or the period of administration draws to a close, whichever comes first.

[maths]

Thanks again pqtaxation. Having pondered these things this afternoon I have concluded that the £400 is part of the estate and should be declared as such. I hope that declaring it on IHT400 does not compel me to ask npower for a refund; I would much rather leave the credit with npower until the house is sold or the period of administration draws to a close, whichever comes first.

There is no doubt that debts due to the estate (eg npower credit) of the deceased are subject to IHT and need to be included.

Assuming that without claiming the refund the estate can be administered (eg there are sufficient assets to discharge inheritances left to other than the sister and discharge other estate debts) in practice you need not effect the reclaim.