Inheritance Tax Mistake!?

[Gromit2303]

Hi, I'm new to this site - about 5 minutes ago - Hope someone can advise.

Toward the end of last year we were fortunate to be 1 of 28 beneficaries of a will. We inherited just over £28k which was a god send and we used this to clear most of our debts.

My father in law was the Executor of the will.

However this week we have had a letter from the solicitor and we dont know what to do regarding what we received. I'll type the letter as it is so that it's clear what my query is....... here go's.

"We recently received an Inheritance Tax assessment from HMRC in relation to the Estate. We contacted them regarding this as it was our understanding that all Inheritance Tax had been paid. Unfortunately, although we advised the Distric Valuer that the property had been sold this information was not passed on to HMRC and the Inheritance tax on the property was not paid in full. This was not picked up by us at the time of completing the administration of the Estate and we apologise for this oversight.

We now require to pay Inheritance Tax of £64,655.91. This sun requires to be paid by 10 July 2009. We have prepared an amended account which is enclosed for your reference together wit a statement showing the sums we will require to claim back from the beneficiaries.

We require to ask you to let us have a cheque made payable to (Solicitors) for £4,170.77."


Obviously we have had a shock receiving this as we dont have this money. My Sister in Law has been asked to pay them £34k as she inherited 30% of the estate. We inherited 5%. She has spent a lot on doing up her house and invested the rest where she cant touch it.

Can the solicitors do this legally? It's their oversight? And 2 weeks notice to find the money?

Please advise if possible as we are at our wits end to know what to do. My father in law is terrified and feels he should have spotted this! The solicitors were paid alot of money to take care of this....

Do we have any legal rights?

Any advice will be greatly appreciated....x

[Lee Young]

Your father in law as executor is personally liable for the inheritance tax liabilites, as well as every other liability on the estate,. He quite rightly retained a law firm to undertake the role on his behalf but this does not negate the liability, merely giving him someone to sue if at all goes wrong.

The solicitors clearly have not done their job properly - this will have resulted in interest being payable on the unpaid IHT bill, but that shopuld not be the responsibility of the executor or the beneficiaries. You should at the very least ensure that you are not being asked to pay this amount also.

The solicitors can not compel you to repay the shortfall of the IHT. The executor, however, can.

The executor should be exploring with the solicitors the possibility of their paying the IHT up front (to avoid any further interest being payable) and then putting right their error by requesting the money from you the beneficiaries.

[Gromit2303]

Lee, thanks so much!

So first step will be to get my husband to talk to his father and in turn his father to speak to the solicitors and ask if any of this amount they are requesting back includes interest on the initial IHT bill? Then ask the solicitors to front the money and request that we pay them back. Am I correct that this is the advice you are giving?

Should we ask to see the correspondence between the Solicitor and HMRC? Do they have to show us this on request?

Much appreciate you giving your free time on here.

[Lee Young]

My pleasure.

I agree your first step - exactly what I was trying to say.

I would ask for the computations - you may not be entitled to them but if they want to paid.....

[Gromit2303]

Thanks again!

[Wilkinson1]

I have just stumbled upon this website while trying to do some research, and it looks like I am a beneficiary under the same will. Myself and my brother were both willed 1% which came as a complete surprise to us.

We recently received a letter from the solicitors who distributed the estate informing us of their error in the miscalculation of the IHT. We were shocked at the scale of this error.

Our problem is slightly different in that as a result of this miscalculation, we were underpaid the sum of £1043.35.

The solicitors have informed us that once the IHT has been repaid to the HMRC, we will be forwarded to the balance of funds.

I cannot find any basis (legal or otherwise) which would allow the solicitors (who essentially have made a big mistake) to retain the money owed to us until the IHT is paid.

I am pretty sure that it is a matter of the solicitors not wanting to pay out a number of beneficiaries from their own pocket while there is a taxman on their backs.

I would be keen to know whether the solicitors have any basis or authority at all for not paying the money due to us until the IHT has been paid.

Many thanks in advance for your help.