Dealing with an estate when a beneficiary has passed away

[Crimpshrine]

Hi. UK based legal question. I am dealing with an estate where half of a house has been left to someone who unfortunately passed away before the sale completed.

Now the sale has completed I am about to distribute funds but am unsure of how to do so in this case.

The person who was due to receive this money had a wife and child. Do they need to provide me with anything so I can release the money. They state they want the child to have the money but normally it would go to the other parent as they were married? I don’t want to get caught up in sending the money to the wrong person as I think the other parent may be trying to avoid some taxes/avoid it effecting benefits by asking me to send to the child. Thank you for any advice.

What did the will say about distribution where one of the beneficiaries has died? Normally there's a clause saying 'Fred or their issue'. How long after the person whose estate you're administering did they die? There's a minimum gap I believe before their next of kin can inherit.

It’s was a 6 months gap. The will stated that the money should go to the child but because there was a gap and the other beneficiary had no Will in place I don’t think I can go by the original will. It states that if the other beneficiary passes before the will bearer which wasn’t the case.

You need to get proper legal advice based on the timing issue.

Different parts of the UK do things slightly differently as well, hence needing specific advice.

I’d agree that you need specific advise. I think it sounds like the spouse should inherit. Perhaps what you need is a deed of variation signed by the spouse so the money goes to the child. I think you should consult a solicitor to protect yourself though. Legal costs should be met by the estate.

Yep - IANAL either and I have a totally different expectation, so you certainly need proper advice!

I'd have thought that if the beneficiary was alive when the first person died, then the proceeds should now form part of the beneficiary's estate and shock be dealt with as part of that. I would not expect to need to move to the next step of the original will (the person who benefits if the original beneficiary has predeceased first person) unless the 28 day rule applies to this in the same way it does mirror wills.

Since the death of the beneficiary was after the original death, you need to follow the chain of wills / intestacy.

Therefore, Deceased left to Beneficiary.

Even though it wasn’t distributed, for inheritance purposes, the money legally belonged to Beneficiary from the moment Deceased died.

Therefore, the money now needs to be distributed according to the will of Beneficiary. If Beneficiary does not have a will, it needs to be distributed according to the laws of intestacy.

I would assume someone will be applying for probate / letters of administration (equivalent of probate if no will). You need to send the money to the executors(s) of Beneficiary’s will or the administrator of the estate.

That may be the wife. It obviously won’t be the child. The executor can then distribute the money according to will / laws of intestacy.

Your legal obligation ceases when you pass the funds to the properly legally appointed executor / administrator of Beneficiary’s estate.

Thank you very much for this clear response.

It may be too late. The beneficiary whose benefit is being reduced by the deed of variation is the person who was the original beneficiary. He therefore can’t consent to the variation as he is now deceased. It may be possible for the estate administrator to apply for a variation but that is likely to be complex and expensive.

I frankly can’t see the point - if the wife inherits from her husband, there is no inheritance tax. She can then give as much money as she likes to her child and as long as she lives 7 years, that’s tax free too.

Either way, the OP doesn’t need to get involved. She needs evidence that letters of administration have been granted in Beneficiary’s estate and then needs to pay the inheritance to the administrator. That ends her involvement.

Just to clarify, many wills have a 28 day survivorship clause. What I have said applies because the OP says the 2nd death was 6 months after the first death.

If there is a 28 day clause and the 2nd person dies within 28 days, the second person legally never inherited and then the survivorship clauses do kick in.

The current beneficiary could do a Deed of Variation to leave the money to the child.

Depending on the age of the child the money may need to go into trust.

I would talk to a solicitor about this. The cost can come out of the estate.

The current beneficiary has died.

Unless there is a fairly niche situation where if it passes through Beneficiary’s estate there is inheritance tax payable by that Beneficiary’s estate but there isn’t on the estate handled by OP, there doesn’t seem to be much point.

If that is what the wife is thinking, I’d say Beneficiary’s estate should bear the cost not the estate the OP is executor for.

Thank you all for the responses. I will just do my part and await the letter of administration. As long as I complete my legal duties I think it is best to stay out of anything else they have going on.

as above. you pass it to the persons executor (or administrator) when they produce evidence that they are the executor or administrator