The first duty of an executor or administrator, usually called the personal representative, is to safeguard the assets of the deceased person. This can often create difficulty where the deceased was the owner of a business or a farm. If the personal representative cannot do so, a relative will usually take over the running of the business or farm until it can be transferred to the person entitled or until it is sold. It is important for the personal representative to ascertain that any property is insured. The insurance company should also be informed of the death of the policy holder.
Once the Grant issues from the Probate Office the task of collecting the financial assets can commence. Banks, Credit Unions and Building Societies, will upon the production of the Grant and signed withdrawal forms, pay over the proceeds of the accounts to the personal representative. Company shares held by the deceased can be sold or transferred directly to the beneficiaries.
The personal representative must ensure that all debts owed by the deceased are paid. These include of course, the funeral expenses. It is important for the personal representative to realise that if he or she does not ensure that all the debts are paid any creditor can make the personal representative liable to pay those debts. If therefore the personal representative has paid out the estate to the beneficiaries without making provision for the debts due by the deceased the personal representative will find him or herself in difficulty. Legally the personal representative can insist that the beneficiaries refund the money to pay the debts but this may not be easy to do in practise.
There are two debts in particular that personal representatives should be wary of. Firstly, there maybe a debt due to the Department of Social Welfare. This can arise if the deceased was in receipt of a means tested benefit and had not informed the Department of Social Welfare when applying for the benefit of the full extent of their means. The Inland Revenue Affidavit which is sent to the Revenue Commissioners is forwarded by the Revenue Commissioners to the Department of Social Welfare. A full list of the deceased’s person’s asset appears in the Inland Revenue Affidavit and the Department can compare this with the means which the deceased disclosed when he or she applied for the particular benefit. If the deceased was in receipt of a means tested benefit the estate should not be paid out until clearance is obtained from the Department. Secondly, there may be arrears of Income Tax due to the Tax Inspector and for this reason it is also advisable that a copy of the Inland Revenue Affidavit be sent directly to the local Inspector of Taxes.
Once all debts have been paid the personal representative can commence transferring the assets to the beneficiaries entitled. Land and buildings, if they are not being sold, are transferred to the beneficiary by way of a document called an Assent which must be signed by the personal representative and registered in the Land Registry of Registry of Deeds. The transfer of the assets of course raises the question of the beneficiary’s liability for Inheritance Tax.
There have been two important charges this year in relation to Inheritance Tax. For the first time ever the tax free thresholds have been reduced in line with deflation. Up to now they have always increased in line with inflation. . The second change is more welcome for personal representatives. Their liability for Inheritance Tax owed by the beneficiary has been abolished and they no longer need to obtain a discharge from Inheritance Tax before paying out any benefit to a beneficiary. Beneficiaries are now solely responsible for the payment of their own Inheritance Tax. This is a most welcome change which will make the administration of estate easier to finalise.