Beware: executors are liable for inheritance tax
Make sure you’re up to date on the responsibilities that come with being an executor before you agree to take on the role.
At some point in our lives many of us will be asked to be an executor for a friend or relative's estate. This can seem like an honour, but before you say yes, make sure you understand exactly what you are agreeing to.
When that person dies, you, as executor, will be expected to deal with their estate, making sure that their will if they had one is respected. As part of this role, it is your responsibility to make sure the deceased's estate is correctly valued for inheritance-tax (IHT) purposes, and that any tax bill is paid. While that may not come as a huge surprise, many people don't realise that the executor can be personally liable for the IHT bill, even if they aren't a beneficiary of the estate (it is possible to be both an executor and a beneficiary).
The Daily Telegraph's Adam Williams gives the example of Glyne Harris, who in 2013 was made the executor of a £1.2m estate. Harris filed an IHT return with HM Revenue & Customs (HMRC), and paid the initial taxes due. However, as the estate included land, the remaining balance owed to the taxman did not need to be paid up front, says Williams. So Harris arranged for the estate to be handed on to the beneficiaries. He said he handed over the bulk of the estate to one beneficiary, on the understanding that they would settle the remaining IHT bill.
Unfortunately for Harris, that beneficiary promptly disappeared to Barbados and didn't pay the bill. This left the executor liable to pay the remainder of the £340,000 bill. As he no longer had the estate's fund, he appealed, saying he should not be liable for it. However, a judge has ruled that Harris is in fact personally liable for the outstanding amount. HMRC could potentially go after Harris's own assets, including his house, Rachel Griffin of wealth manager Old Mutual Wealth told The Daily Telegraph. While this is an extreme example of what can go wrong, it shows just what a responsibility being the executor of an estate can be.
A big tax headache
A more common concern facing those dealing with an estate is the question of how to pay an IHT bill when assets need to be sold to fund it. The problem here is that HMRC expects IHT bills to be settled within six months of the person's death, after which it will start charging interest on unpaid tax. However, an executor cannot sell assets until probate has been granted, which can create a stressful situation. The good news is there are options open that don't involve you having to dip into your own pocket.
Firstly, if the deceased has enough cash or investments to pay the bill, then you can approach their bank or investment manager and ask them to release the money. Many will do this to settle an IHT bill. Secondly, if the estate contains certain assets that need to be sold in order to pay the bill, then HMRC will allow you to pay in instalments. This includes property and shares that gave the deceased more than 50% control of a company. The first instalment is due six months after the death date and the rest is paid in annual instalments until the asset is sold.
In the case of property, you can pay the IHT bill in annual instalments of 10% of the bill, plus interest, if a beneficiary chooses to live in the property, meaning it won't be sold. Be aware though that interest will be charged at 3% if you pay via instalments. Finally, a third option is to take out an executor's loan to cover the IHT bill until probate is granted. You can then raise the funds to cover the loan repayment by selling the deceased's assets.
If all this sounds like too much responsibility, remember you can simply say "no". Whether you are appointed under a will as an executor or you become an administrator of the estate by way of intestacy (this occurs where the deceased did not leave a will), you can officially "renounce" the nomination.
Pocket money don't miss your £54 refund from Apple
After last month's IT meltdown following on from a system transfer, there's more bad news for TSB customers, with fraudsters now swooping in to take advantage of the chaos. Criminals are managing to send fake texts that show up in the same thread as existing texts from TSB and have called people from what appear to be genuine TSB telephone numbers, says Jessie Hewitson in The Times. Action Fraud, the UK's fraud-reporting body, has received more than 320 reports of "phishing" scams from TSB customers in May, up from 30 in the previous month.
Although the computer meltdown may have locked out the bank and its customers from their accounts, it's thought that fraudsters were somehow able to access them. In some cases, the thieves have waited for TSB to refund the money and returned to steal it again, with some customers having lost up to £20,000 from their accounts.
If you paid for an iPhone battery replacement from Apple or an authorised service provider last year, you could be due a £54 refund, says MoneySavingExpert. However, you have to claim the money. Since the end of 2017, Apple has cut its fee for out-of-warranty replacement batteries for the iPhone 6 and newer models to £25, after admitting that software updates had slowed down some handsets with older batteries. Apple has promised to refund anyone who purchased a battery in 2017 the difference between the new price and the old £79 fee. If you are due a refund, you'll receive an email from Apple by Friday 27 July telling you how to claim.
Customers who switch from or close their TSB accounts also risk missing important bills because their direct debits, standing orders and other regular payments have not been correctly transferred, says Ali Hussain in The Sunday Times. (Errors have affected only a small number of customers, according to TSB.)
This is a blow to the government's current-account switch service, which has no system in place to confirm that any details passed from one bank to another are correct. Note that under the current-account guarantee, anyone who suffers a loss through problems with the process can claim a refund from their new bank.